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sony1

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Wednesday, April 24th 2013, 9:28am

Presenting SOL pumper chart of the day

Just wonder how can they be profitable before everyone else with the poly plant issues and all? Weird.

http://www.displaysearchblog.com/wp-cont…vercapacity.png

Courtesy of NPD Solarbuzz Marketbuzz 2013 Report

explo

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Wednesday, April 24th 2013, 10:09am

Profitability of SOL is not related to global poly capacity. SOL has a poly plant with 10 kT @ $18. They don't sell poly, but only have to outsource 30% of their need due to the in-house capacity (once ramped). So they both benefit from cheap poly and are hurt by expensive poly, but not as much as everyone else. Poly price doesn't dictate their cost as much as for others. SOL profitability comes from low opex. If poly price goes up pushing module ASP up and COGS of peers up while SOL COGS remains more unchange that would just be a profitability bonus.

ILOVEPV

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Wednesday, April 24th 2013, 10:27am

Specialist is trying to not let SOL go up misleading investors and traders putting a false info about real asks and bids. I just made a test making a big 50K buy order at bid 1.67 through EDGC market maker. This order appeared for only 1 second on L2 and then was deleted. I just called my broker and asked why I do not see my buy order. His answer was -an order is still in there but he (broker) has no idea why it is not indicated in any available tool. At the same time this order is on L3 that is unavaliable for retail investing public for any price.

Djovanny

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Wednesday, April 24th 2013, 10:33am

Sol polyplant will be outdated b4 it will payoff for itself IMHO

explo

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Wednesday, April 24th 2013, 10:39am

Djovanny, please explain. It's one of the lowest cost plants on the planet.

Pop2mollys

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Wednesday, April 24th 2013, 10:44am

For a second yesterday I thought Sony turned bullish and covered his shorts.... Phew Thank God.

I like that unique chart you posted as long as your in depth analysis. Just a heads up 2014 demand will be well over 40GW, might want to revise all installs up.

Djovanny

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Wednesday, April 24th 2013, 11:08am

Technology moving way too fast in this sector look at ldk yge dq any company who started poly got nothing but debt even gcl lowest cost producer most likely will never pay debt . Tsl cancel their plans to build poly plant and as result they are strongest financialy right now . New generation poly equipment claims 13 dollars cash cost , gtat is working on new wafer saw which will reduce poly use by 10 times , so i think oversuply in poly will be for years to come and price will keep going down . For short period of time sol mau enjoy some profit but they will have to upgrade equipment very often to keep up with competition giving their financial condition they will share ldk fate imho . Sorry for mistakes

Klothilde

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Wednesday, April 24th 2013, 11:18am

OMG I can't believe my eyes. The cult will not like this.

explo

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Wednesday, April 24th 2013, 11:35am

Djovanny, are you saying that the 4 incumbents hemlock, wacker, oci and gcl will shut down their existing capacity supplying the majority of current demand? Who will build all these new plants to replace this capacity that quickly?

This post has been edited 1 times, last edit by "explo" (Apr 24th 2013, 12:07pm)


odyd12

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Wednesday, April 24th 2013, 12:08pm

Poly cost is only relevant to SOL if their poly is more expensive than one you can buy. Another word if I produce poly at $10 per kg, but I sell at $25, is really irrelevant to SOL if they can do it at $20. They are saving money. They are only in trouble if I sell it below SOL’s production costs.

I truly believe in the phenomenon of control of pricing through cost reduction. The big operators have relationships with big manufacturers. Every time the gauge shows increase of the demand they will increase supply to prevent price from increasing further, and not allowing dormant capacity to comeback thus sacking the volume. Same goes for the manufacturers, I do not see why would they want huge ASP increase, they want to be profitable, but they do not want the competition. Selling low makes sense, and this is why I see $0.75 to be a top price for Chinese modules this year and less in 2014.

GTAT is an equipment manufacturer; they want more clients not less. If they have anything worth it, it will be bought by the guys who are having a hand on the production pulse. SOL will be the buyer; now having a plant they cannot stop improving. However gapping poly is not something I can see, and do not see benefit for SOL from it.

explo

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Wednesday, April 24th 2013, 4:20pm

Examples with 30% sourced poly at market price and 70% in-house at $18:

Poly ASP $13 (= SOL's cash cost, i.e. lowest price before suspending production)
SOL blended poly cost $16.5 => 2 cents per watt cost penalty

Poly ASP $28 ($15 per kg cash flow contribution of in-house capacity or 150m per year compared to sourcing 100%)
SOL blended poly cost $21 => 4 cents per watt cost savings

I think this is a valuable asset, especially considering it took 5 years to get to this (leading) cost level, but I understand that the view can be opposite too. Structures with 100% sourcing like JKS or 100% sales like OCi is more speculative on the direction of poly in my view. SOL has a structure that reduce exposure to volatility of market price of poly. High volatility in market prices can cause significant risks of ending up carrying high cost inventory.

This post has been edited 1 times, last edit by "explo" (Apr 24th 2013, 4:29pm)


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