13 replies to this topic

[sunnysky]

Not a big contract with 1.28 MW of modules, to be installed on the rooftops of 10 factories belong to UK's largest bread chain store Greggs. Some very nice comments on TSL's module quality and performance by the client. UK has one of the highest module ASPs in the world. All these should help.

 

http://news.solarbe....2/11/46046.html

[odyd]

While I was critical of TSL and their income statement in comparison to JKS, TSL has the most power to jump to EPS improvements. Their GM is high enough if they can get 500MW from NESL and another 500MW, with their GM of 16 to 17%, they will make money. No fantasy, just cool facts. They are the ones where scale makes their manufacturing cheaper and helping their EBIT. TSL can sell at $0.64 and make 15% GM, so it is easy to assume 17 or 18% with EU quotas, largest second one to YGE, plus boosted by NESL part, will be there. 

[sunnysky]

The report so far is TSL getting 400 MW from NESL and upgrading it to 500 MW. Also. they plan to build another 500 MW in YanCheng. And as for JASO, they are upgrading their 300 MW inactive capacity to be fully automated. Also, they plan to build another 500 MW (as part of phase II)  in Hefei. That will bring their total module capacity to 2.3 GW. There are quite a few reports indicating that JASO is selling out their products, many with contracts running to the end of 2014. Contrary to the Deloitte article, there is still no over-supply of modules in China. The only companies adding or considering to add capacity are the tier-1 module makers which together have a 30% share of the market. The tier-2 makers are keeping the same capacity while tier-3 capacities are gradually being discarded.  TSL's purchase of NESL is an example of merger and acquisition, which will continue in 2014.

 

As a long time holder of JASO (adding more recently), I share the same optimism with explo and others. As JASO starts to sell their modules with their cell capacity fully utilized and begin to realize revenue from their projects, they will catch up. I think we will see evidence more clearly in their Q4 earnings and Q1 14 guidance.

[Koolinv]

While I was critical of TSL and their income statement in comparison to JKS, TSL has the most power to jump to EPS improvements. Their GM is high enough if they can get 500MW from NESL and another 500MW, with their GM of 16 to 17%, they will make money. No fantasy, just cool facts. They are the ones where scale makes their manufacturing cheaper and helping their EBIT. TSL can sell at $0.64 and make 15% GM, so it is easy to assume 17 or 18% with EU quotas, largest second one to YGE, plus boosted by NESL part, will be there.

Odyd, I do hold TSL. However, I am wondering whether they will be the next to do share offering?

[explo]

Thanks for the update sunnysky. As always very valuable intel from what's happening in Chinese media reporting.

 

odyd, yes the smart NESL JV to quickly align module capacity to grow shipments and reduce cell dumping or underutilization from US sales is a major reason why I see Trina momentum continuing. Buying Taiwanese cells and dumping Chinese cell has a negative GM effect. Trina will have less negative GM effect from US market focus going forward as they align capacity better for this. JKS will on the other hand have more negative GM effect as they increase US market focus, but will also align capacity, depending on timing of focus and alignment the margin impact can be bigger and recover or just be the Taiwanese cell price penalty and not the GM dilution of dumping Chinese cells.

 

 

 

Also. they plan to build another 500 MW in YanCheng.

 

I have not heard any officially about this. Is this still Chinese media speculation or is there some official statement from company on this?

[odyd]

Explo , JASO have entire cell capacity with makes no sense in the US. Is this why it produces at 50% rate or less?, why is their module factories produce at 70% only? I find it academic discussing why someone spends 1% of their GM on Taiwanese cells, while there are companies with capacity utilization issues hitting 50% idle. One thing coming to mind is an expensive production lines. You said that purchase of wafer from Jinglong was state of the art? Where did you get this idea? You also say you love their low processing cost. Where do you see it, as I see nothing of this kind and I probably again proven just to my self that selling assets boosted their GM in Q3.

The plant was built in 2005, and as soon as it was sold to JA, Jinglong margins became much improved on wafer processing.  They never added any capacity, so that tells me the plant was a "drag". Is it possible there is a drag in JASO lines as recently admitted on 300MW retired capacity.

Does it not seem strange that company is talking about expanding, but cannot sell current capacity? It does not if you accept that their machinery is old. GM is weaken by it and they only produce what makes them gross profit. The other three (cos) have no such issues.

It clearly makes sense that they are cashing on every share, as what they are holding is not doing them the favor. So expanding in this case is replacing, very expensive proposition and quite complex.

I think this is a lot more reasonable to understand stock under this light. I hope it will works out, but in order to do it it is not Q4, but Q4 2014, where things may be fully harvesting value, while right now sounds a bit as smoke and mirror.

 

[sunnysky]

Does it not seem strange that company is talking about expanding, but cannot sell current capacity?

 

Not any more since at least from late October, based on news reports.

 

explo, TSL's Yancheng plant is not from official word so far. 

[explo]

I'm not sure how my praise of TSL's capacity alignment strategy and how Jinko's related outspoken increased US focus and similar capacity alignment approach come to be about JASO. JASO is in the same situation as others. It sucks to have to buy Taiwanese cells for panels sent to US instead of using your own cells. That does not change my analysis of TSL vs JKS on the "supply the US strategy" and the GM effect we will see from that. We see TSL 15% and JKS 22%, I'm saying its not the whole picture unless you understand the dynamics of how buying Taiwanese cells and selling your own cells impacts reported blended GM negatively.

 

Can we move the discussion of the quality of JA's mono wafers etc. to a separate topic?

[odyd]

I'm not sure how my praise of TSL's capacity alignment strategy and how Jinko's related outspoken increased US focus and similar capacity alignment approach come to be about JASO

It simple, I see that you are poking into some of the circumstances of three other companies.  If you see a fault here, you must recognize the fault there. If existence of the fault is constant across the platform, it is indifferent to either company, therefore it becomes only an academic discussion, which I do not understand agenda for.

[explo]

It simple, I see that you are poking into some of the circumstances of three other companies.  If you see a fault here, you must recognize the fault there. If existence of the fault is constant across the platform, it is indifferent to either company, therefore it becomes only an academic discussion, which I do not understand agenda for.

 

I praised (not poked) TSL for aligning its capacity structure to the US market situation to enable its reported blended GM as well as sales volume to go up. I don't see what the issue with that is?

 

We're both not holding TSL, right? I'm just sharing my analysis of what the impact of future TSL reporting could be on this news. I don't understand your comment about agenda. This is me sharing an analysis of TSL. I'm positive on it despite not holding it. Period.

[odyd]

I praised (not poked) TSL for aligning its capacity structure to the US market situation to enable its reported blended GM as well as sales volume to go up. I don't see what the issue with that is?

 

We're both not holding TSL, right? I'm just sharing my analysis of what the impact of future TSL reporting could be on this news. I don't understand your comment about agenda. This is me sharing an analysis of TSL. I'm positive on it despite not holding it. Period.

I think I explained what the issue is.  Jinko and JA delivered as many modules to the US, 3MW more for Jinko in Q3. You know the GM for both in Q3.

I would say instead of saying that Jinko may have negative impacts on the US market based on TWN cells, would not be appropriate to say that JA is affected by it to a point of under-utilization of is cell lines up to 80% at the time? Which impact seem larger to you?

Anyway, wrong thread.

[explo]

JA already has selling cells impacting its GM. If they would like TSL reduce that then the GM impact would be positive. For Jinko it is about timing of having additional module capacity mathcing purchased cells which I think they will hit, so GM impact (or at least blended cost impact) will just be the cost of Taiwanese cell purchases. This will affect any who increase Taiwanese cell purchase JA too, but JA is not at peak margin due to underutilization. JA is a separate case that differs more from TSL and JKS and that difference could be covered in another topic. I'm comparing TSL and JKS blended panel cost trend and impact of recent announcement here.

[explo]

I'm happy to discuss JA if there are any question or concerns, but I don't think it belongs under Trina topic.