SolarPVInvestor Forums

Thank you greatly! It's hard to keep track of all the little numbers sometimes and get the big picture! I feel better about immediately losing four cents a share on the investment. I've traded SOL before, but I feel they may be about to gain a major share of the solar market.

Tariff security: Outsourcing cells to Taiwan. Again has poly plant in China. Overseas module & wafer tolling arranged

Of what you wrote, this is what I like best.

Quoted from "chrisceeaustin"

I bought some SOL today. Hope you don't leave me holding the bag. Now can someone tell me with three bullet points why I did not make a mistake?

I'm long on SOL and in it for the long run, yet I think LDK's results are going to drag us down one last time before we jump. I'm just too much of a wimp to trade it during this time... (or anytime for that matter, as I've been holding an averaging down for the past 2 years...)

Yes, I'll be chocked if LDK doesn't chock the insightless market. I expect very bad things.

Well, I did not toss too much money at SOL. Just enough to catch some of the wave if they can exploit their advantages in the Americas.

I am concerned that tariffs -- import duties -- will make it harder for some companies. I think SOL may be one that benefits. I also believe SPWR, FSLR, WFR, and CSIQ may have some edge in this department.

Yes, the one thing that makes me more comfortable holding SOL than other solar11 is that their module business is less tariff exposed.

Quoted from "chrisceeaustin"

I am concerned that tariffs -- import duties -- will make it harder for some companies. I think SOL may be one that benefits. I also believe SPWR, FSLR, WFR, and CSIQ may have some edge in this department.

SOL was only chinese solar not effected with US tariffs. Other solars still found way to work around it but I'm sure it costed them more. Again with Europe SOL already set up outsourcing months ago. They can meet their anticipated 30% demand from Europe all through outsourcing. I have personally beaten this to death but SOL has minimized all risks for Tariffs. Along with Explo this is one of many reasons why I'm heavily invested in SOL.

BTW I have written SOL IR department many times. One of them was addressing profitability. In the email they responded by saying they haven't announced there exact time of profitability in 2013 YET. With the "YET" in big letters. They then followed up by saying they are becoming very confident in the remainder of 2013.

This leads me to believe we will see "update" on profitability soon. If this happens... Boom goes the dynamite,

Somebody big IMO is holding SOL down for the simple reason cause they want to load up near the lows. The manipulation that is going on out there is amazing. Once they had their fill they will unleash the beast, and then watch out. SOL is not for day trade. It is to have money in the side lines and to keep loading at the lows. So buy and hold IMHO.

thanks for the great responses.

Quoted from "chrisceeaustin"

Tariff security: Outsourcing cells to Taiwan. Again has poly plant in China. Overseas module & wafer tolling arranged

Of what you wrote, this is what I like best.

I believe all of them are outsourcing through Taiwan. It's not just a Renesola thing. They circumvent. JA which was mainly a Cell Manufacturer worked on that issue almost a year before it came to fruition. They had very limited exposure as a result.

July, nobody pays the tariffs. It's a question of cost to make tariff free products in different volumes. SOL has less than 20% cell capacity, so they can make a lot of tariff free cells before they have to take the cost of idling own lines.

• Added CSUN (R.I.P.).
• Changed TSL depreciation from 25m to 30m based on recent 20-F (improves its EBTDA and EBITDA ratio a bit).
• Removed net assets and net debt rows (simply derived) to clean up. Note that the leverage and decay ratios are still based on assets and debt net of cash.

Explo, am I to assume that your R.I.P (and looking at the numbers R.I.P it is) on CSUN suggests that you think they are going bankrupt?

Technically the R.I.P. means that at the Q4 rate of development their equity will be negative by now. Negative equity makes equity based ratios irrelevant.

Explo,
The stats you provided here is a great effort! Please keep it going.

Since the sheet excludes all non-cash charges, I think it does not give the full picture of the state of business.

Some of these non-cash charges are of more non-recurrent nature than others. Equipment disposal or impairment charges and charges related to long-term purchase commitments are not part of daily business decision, so I'll keep those excluded from the state of Q4 business (the Income section), but anyone who want the full management quality breakdown picture should look these up. These non-daily business management quality impacted charges are however part of the aggregate of total business performance since inception, covered by the equity development history section.

Other non-cash charges are however related to management quality of daily business operations. These are the inventory write-downs and provisions for doubtful accounts receivable. The former means product inventory was built (through a combination of procurement and production) at a cost that is above what it is sellable at (i.e. the market value of the products). These charges are listed as unsellable. The latter means that built inventory has been sold to customers unable to make payments. These charges are listed as uncollectable. Both these charges are rated against revenue. A high uncollectable ratio means that reported revenue was attainable because the company did not limit itself to only sell to non-doubtful accounts – an indication that the company had problems selling its products during the quarter. A high unsellable level means that the company's gross cost of making its products is higher than their current value on the market, i.e. the company built its inventory with poor business conditions. The ratios for these two business conditions are summarized as ineptness.

Although 12Q4 is an unusually difficult quarter in terms of the PV industry condition, the ineptness ratio still shows who is able to do business that make sense under tough conditions.

Some clean up and adjustment was also made. Summary of changes:

• Unsellable row added
• Uncollectable row added
• Ineptness row added
• OLEV row removed
• ROE (under Balance) row removed
• Earned row removed
• Total row removed
• Slight correction of GCL's admin cost

The removed rows were considered redundant due to their straightforward derivation.

Explo, If you were to calculate current assets by taking a company's capacity and multiplying by X amount per watt (or kg for poly), what would be a fair price per watt/kg to use for poly/wafer/cell/module plants? I just want to see if that calculated asset number will come close to the number companies are reporting as assets (plus their inventory and a few other things like wire manufacturing, micro inverters, etc...). Thanks.

Quoted from "solarcat"

Explo, If you were to calculate current assets by taking a company's capacity and multiplying by X amount per watt (or kg for poly), what would be a fair price per watt/kg to use for poly/wafer/cell/module plants? I just want to see if that calculated asset number will come close to the number companies are reporting as assets (plus their inventory and a few other things like wire manufacturing, micro inverters, etc...). Thanks.

In the sheet attached in this thread I've only used numbers reported by companies. In some of the lines for the Income section the non-cash charges have been removed, but it is still based on reported numbers, no estimates. The Balance and History sections are exacty as reported.

In my own analysis of companies I do estimate actual asset values instead of using reported ones, but this could have flaws unless you know details about the assets. For example using same replacement value for poly, wafer, cell and module equipment for all companies you get that Yingli overspent compared to Trina for example. We should consider that 12Q4 was one of the worst quarters in the history of the industry in terms of ASP, so a lot of impairment tests should have been triggered and thus company assets should at least be expected to be valued at breakeven gross margin ability. Still breakeven on gross margin is not much to cheer for.

Solarcat, I was on my way out so I did not have time to finish. To answer your question I use the following to estimate PPE replacement value.

Poly $35
Wafer $0.25
Cell $0.18
Module $0.04

Note that this is a very crude approach, different poly technologies might have different capex levels for example. Note also that after Q4 the risk of further impairments should be limited unless ASP resumes decline. This does not mean that some don't have more bloated PPE than others though.