Not to harp on this issue, but I was speaking with my friend MacMurray Whale at Sprott Securities about the SunPower IPO and, after some back-of-napkin calculations here’s what he had to say about the potential valuation of ATS Automation’s solar group based on how much the SunPower offering is expected to raise.

I won’t go into the fine details, but Whale believes that SunPower’s market cap after its IPO would be somewhere close to $1 billion (U.S.), based the company’s plans to raise $115 million and its intention to reach 75 megawatts of solar PV manufacturing capacity. This would work out, he said, to about $15.40 per megawatt of capacity.

Given that ATS Automation’s solar group has 33 megawatts of capacity from its France-based Photowatt operation and 20 megawatts coming online with the launch of Spheral Solar — amounting to 53 megawatts total — Whale figures ATS’s solar group is worth roughly $960 million (Canadian).

What’s incredible is that this values the solar group alone at $16 per share of ATS, which today is trading as a consolidated operation at below $13 a share on the Toronto Stock Exchange.

Even, as Whale points out, if you are very conservative and estimate a $6 (U.S.) IPO for SunPower, it would imply a $600 million plus market cap for the ATS solar group.

In a research brief, Whale concludes: “This analysis indicates that despite the impact of higher depreciation, amortization of pre-production expense and lower gross margin as SSP launches in this quarter, the (ATS) Solar Group is greatly undervalued relative to peers.”

Food for thought.

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