Piyapong (Art) Pantipjatuporn; Liefeng (Richard) Zhang; Meiling Liu

*Introduction

*Company Overview

*Macroeconomic & Industry Review

*Financial Analysis and Projections

*Valuation

*Recommendation

[1] 03-2008: Bought 200 Shares @ $78.15

[2] 12-2008: Bought 400 shares @ $14.43Average Down: $35.67 per share

[3] 11-2010: Sold 200 shares @ $12.41. Realized loss: $4,652

[4] 12-2010, Bought 200 shares @ $12.02 

[5] 10-28-2011, Price: @ $ 6.64Unrealized Loss: $ 4192, 51.27%,

Data Source: Yahoo Finance

* Based in St. Peters, Missouri; Founded in 1959* Global leader in the manufacture and sale of silicon wafers for semiconductor and solar material

industries* SunEdison, North America's largest solar energy services provider*MEMC’s stock is traded on the New York Stock Exchange under the symbol WFR and is included

in the S&P 500 Index.

MEMC. Inc

Data Source: 10-K, http://sec.gov/Archives/edgar/data/945436/000119312511042346/d10k.htm

Business Areas

* Semiconductor Materials* Solar Materials* Solar Energy

Products: Semiconductor Materials

* 4 categories: prime, epitaxial, test/monitor wafers and silicon-on-insulator (SOI) wafers.

* Range from 100 millimeter to 300 millimeter* Starting materials for microprocessor, memory, logic and

power devices. In turn, these semiconductor devices are used in computers, cellular phones and other mobile electronic devices

Products: Solar Materials

*Multicrystalline: primarily 156 millimeter silicon wafers

*Manufacture and sell monocrystalline wafers through the acquisition of Solaicx.

* Starting material for crystalline solar cells which could be further used to make solar panels

Data Source: 10-K, http://sec.gov/Archives/edgar/data/945436/000119312511042346/d10k.htm

Products: SunEdison

* Provides solar energy services that integrate the design, installation, financing, monitoring, operations and maintenance of PV solar energy system

* Compete on the basis of the price of electricity to consumers* Heavily dependent upon government subsidies, e.g. federal incentive tax

credits, state-sponsored energy credits and foreign feed-in tariffs

Data Source: 10-K, http://sec.gov/Archives/edgar/data/945436/000119312511042346/d10k.htm

Revenue Breakdown- By Geography

Data Source: 10-K, Q1, Q2 Earning call conference; www.sec.gov

Revenue Breakdown- By Business

Net Sales   Q2-2011 Q1-2011 2010 2010(%)

Dollars in millionsSemiconductor Materials $275.3 $251.5 $992.60 44.3%Solar Materials $323.1 $326.3 $826.10 36.9%Solar Energy $181.2 $254.8 $420.50 18.8%

Total Net Sales % of 2010: 34.8% 37.2% $2,239.20

Net Sales 2010Dollars in millions

North America $250.00 11.2%Asia Pacific $1,338.00 59.8%Europe $651.00 29.1%

Total Net Sales $2,239.00

Last 3 Years Price Index

Data Source: 10-K; Bloomberg

* Wafer Price Index has dropped more than 50% in the past three years

* MEMC stock price dropped more 50%

* Price Index: BNEF survey on 6 inch Multicrystalline Silicon Wafer Average Price

Business Strategy ONE: M & A History

2009: SunEdison Downstream leadership in solar project development

2010: Solaicx Enter monocrystalline for solar market

2011: FRV US SubsidiaryIncrease solar energy projects and pipelines

Business Strategy TWO: Operation Locations

Data Source: MEMC.Inc Website

* Cost Reduction: In the process of transferring semiconductor wafer manufacturing to our new facility in Malaysia. Will continue to invest to expand production capacity in South Korean to Lower Cost

* Better Customer Service: Global Operation, Closer to Costumers

SWOT Analysis

OPPORTUNITIES THREAT

STRENGTH WEAKNESS

SWOTS

* Synergy Effect: downstream Supply Chain Integration, from material business to solar energy business

* Leading market positions in its businesses, more than 50 yrs material business history, North America's largest solar energy services provider

* SunEdison business is seasonal, and heavily dependent upon government subsidies

* Higher cost of manufacturing than its Asia competitors

* Difficult to distinguish itself from competitors

* Bright future in solar energy business as a whole

* Government support for renewable energy industry

* Strong Pipeline growth in SunEdison

* An excess supply of polysilicon wafer

* Price Competition from lower cost manufacturing countries

Source: Department of Commerce and Federal ReserveEffect of American Recovery and Reinvestment Act of 2009

U.S. GDP FORECAST (2009-2019)

* Industry : -4.8% from 2006-2011

* Production outsourcing, price decline (shrink of demand and global economy weaken) and recession deterred revenue and industry growth

* 80% of revenue comes from export

SEMICONDUCTOR INDUSTRY

Source:http://clients.ibisworld.com/industryus/default.aspx?indid=752

Source: http://www.isuppli.com/Semiconductor-Value-Chain/News/Pages/The-Die-Hard-Semiconductor-Market-IHS-iSuppli-Slightly-Raises-2011-Chip-Forecast.aspx

GLOBAL SEMICONDUCTOR GROWTH FORECAST

* Average price still continue to decline but investment in R&D will encourage growth (Recent innovation: carbon nanotubes)

SEMICONDUCTOR INDUSTRY

Source:http://clients.ibisworld.com/industryus/default.aspx?indid=752

* Industry :15.9% from 2006-2011

* The federal investment tax credit (ITC) has spurred significant investment in solar generation plants over the past five years

* Solar energy account for 0.02% of total electricity generation in the U.S.

SOLAR POWER INDUSTRY

Source:http://clients.ibisworld.com/industryus/default.aspx?indid=1914

* Concentrating solar power (CSP) is a technology that uses mirrors to focus sunlight on a particular surface to create electricity

* CSP has higher energy efficiency than Photovoltaic

* Large-scale deployment of this technology is anticipated during the next five years

A parabolic trough CSP

CONCENTRATING SOLAR POWER

* Beyond 2012, government legislation is uncertain, depends on new congress

* Housing crisis and tough economic conditions cause reduction in electricity power.

SOLAR POWER INDUSTRY

* The solar panel can be used as a component of a larger photovoltaic system

*Most solar modules are currently produced from either monocryatalline or multicrystalline

* The high cost solar photovoltaics and its weather dependency have restricted its use in the United States

A photovoltaic solar panel

PHOTOVOLTAIC SOLAR PANEL

* Industry : 34.8% from 2006-2011

* Falling silicon prices (a vast oversupply during recession), growth in demand and government incentives are major factors for high growth

* The RPS (Renewable portfolio standards) stipulate certain States must generate a percentage of their total energy from renewable energy

SOLAR MATERIAL INDUSTRY

Source:http://clients.ibisworld.com/industryus/default.aspx?indid=754

* Higher steaming coal price will have positive affect on solar panel demand.

* Heavy price competition among global players

* Increased R&D costs will weigh on profit as US firms try to compete with low-cost producers

SOLAR MATERIAL INDUSTRY

Semiconductor Materials* Shin−Etsu Handotai : Silicon wafers and ingots for producing chips* Sumco: Silicon wafers for semiconductor devices and solar cells

Solar Materials/Solar Energy* LDK Solar: Multi/monocrystalline solar cells and develop solar power

projects* First Solar Inc. Solar modules (thin films) and provide integrated

services for solar power system * Yingli Green : Photovoltaic products* Sun Tech : Photovoltaic products and offer photovoltaic systems

integration services

COMPETITORS

Source: Yahoo Finance, MEMC 10K, CapitalIQ

COMPETITORS

Company R&D Cost (2009) Revenue($mm)

MEMC Electronic 3.50% 2,834.7

LDK Solar 0.80% 2,862.28

Yingli Green 2.50% 2,326.56

Sun Tech 1.81% 3,396.43

First Solar 3.78% 2,507.77

Shin-Etsu Handotai 3.70% 2,449.76

Sumco Corporation 3.50% 1,617.21

Source: Individual company annual report/10K, CapitalIQ

Five Force Analysis

Competitive Rivalry: High

Buyer Power: High•Excess Supply

Supplier Power: Low

•Producer of starting materials for downstream •Business Integration of Supply Chain

Threat of Substitution: High•Both material business and solar energy business compete on price•Government Subsidiaries to other kind of renewable energy•Technology innovation of materials

Threat of new Entry: Medium•High Capital Expenditure•Bright Future of Solar Energy Industry

• Low customer loyalty

• Global competition on price and services

• Low differences in products

20.00% 15.00% 10.00% 8.00% 9.00% 8.00%9.00% 8.00% 5.00% 4.00% 3.00% 2.00%0.00% -3.00% -2.00% -3.00% -4.00% -3.00%

60.00% 12.00% 10.00% 11.00% 13.00% 17.00%40.00% 9.60% 7.00% 5.00% 7.00% 6.00%0.00% -3.00% -2.00% -3.00% -4.00% -3.00%

60.00% 14.00% 18.00% 19.00% 17.00% 22.00%40.00% 9.60% 8.50% 9.60% 8.50% 8.00%0.00% -3.00% -2.00% -3.00% -4.00% -3.00%

Revenue Growth AssumptionsSemiconductor Materials Optimistic Case Best Guess Dow n SideSolar Materials Optimistic Case Best Guess Dow n SideSolar Energy Optimistic Case Best Guess Dow n Side

2008 2009 2010 2011 2012 2013 2014 2015 2016

923.10 586.30 992.60 1,081.93 1,168.49 1,226.91 1,275.99 1,314.27 1,340.55 1,081.40 573.50 826.10 1,156.54 1,267.57 1,356.30 1,424.11 1,523.80 1,615.23

- 3.80 420.50 588.70 645.22 700.06 767.26 832.48 899.08 2,004.50$ 1,163.60$ 2,239.20$ 2,827.17$ 3,081.27$ 3,283.27$ 3,467.37$ 3,670.55$ 3,854.86$

Actual Revenue Forecasted Revenues

Semiconductor Materials Solar Materials Solar EnergyTotal Revenue

Price Range for Optimistic Case: $8.66 - $10.91 ($9.69)Price Range for Best Guess: $5.32 - $6.76 ($5.98)Price Range for Down Side: $4.27 - $5.47 ($4.82)

ROE (CAPM)Rf (BLOOMBERG) 2.20%Risk Premium (BLOOMBERG) 8.69%Beta (BLOOMBERG) 1.59ROE 16.02% 14.84%

Cost of Debt 6.27% (from Bloomberg)Cost of Equity (CAPM) 16.02%Risk Free Rate 2.20%

% of Debt 22.60%% Equity 77.40%

Tax Rate 15%

WACC 13.60% 12.69%

Sustainable Growth Rate 2%

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016Terminal Value

Net Income 131.36 144.40 149.53 164.29 269.21 312.21 312.21 Depreciation 193.45 190.52 188.56 187.43 187.14 187.55 187.55 (CapEx) (565.43) (154.06) (164.16) (173.37) (183.53) (192.74) (187.55) Change in NWC 102.84 18.91 35.22 45.20 (62.52) 7.73 7.73 FCF (137.79) 199.77 209.14 223.54 210.30 314.75 TV 2,812.83

NPV (121.29) 154.79 142.65 134.22 111.15 146.44 1,308.68 Value of firm 1,876.64 Value of firm's equity 1,378.14 Price Per Share $5.98

$5.98 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50%12.10% 6.52$ 6.82$ 7.15$ 7.52$ 7.92$ 8.37$ 8.87$ 12.60% 6.06$ 6.33$ 6.63$ 6.96$ 7.31$ 7.71$ 8.15$ 13.10% 5.64$ 5.89$ 6.15$ 6.45$ 6.76$ 7.11$ 7.50$ 13.60% 5.26$ 5.48$ 5.72$ 5.98$ 6.27$ 6.58$ 6.92$ 14.10% 4.90$ 5.10$ 5.32$ 5.56$ 5.81$ 6.09$ 6.39$ 14.60% 4.57$ 4.76$ 4.95$ 5.17$ 5.40$ 5.65$ 5.92$ 15.10% 4.27$ 4.43$ 4.61$ 4.81$ 5.02$ 5.24$ 5.49$

GROWTH RATE

WA

CC

Price Range for Optimistic Case: $8.66 - $10.91 ($9.69)Price Range for Best Guess: $5.32 - $6.76 ($5.98)Price Range for Down Side: $4.27 - $5.47 ($4.82)

Competitor Business Segment P/S P/B P/E Forw ard P/EShin-Etsu Co. Semi materials 0.39 0.28 4.65 N/ASUMCO Semi materials 0.82 1.13 N/A N/ASuntech Pow er Solar materials 0.15 0.3 3.07 N/AYingli Solar materials 0.27 0.45 2.4 11.28LDK Solar Solar materials 0.2 0.43 1.98 13.35First Solar SunEd 1.58 1.07 8.17 5.25

Min 0.15 0.28 1.98 5.25MEMC Electronics 0.49 0.58 19.51 5.65Max 1.58 1.13 19.51 13.35Price RangeMin 1.46$ 2.77$ 0.30$ 0.79$ Average 5.53$ 6.03$ 0.61$ 1.49$ Max 15.36$ 11.16$ 2.93$ 2.00$

Weightage 30% 30% 20% 20%

Multiples Valuation $3.89

*Valuation: $6.00/share*As of this morning @ $5.69 *Hold*Visibility within the solar industry is very

poor *Would take a while to take off as it is still

a pretty green industry