225 replies to this topic

[odyd]

Explo, is the reason for the negative article legitimate?

 

You are asking a second time a question without even bothering to show what "your" concern is? Put an effort and describe some details.

[explo]

Explo, is the reason for the negative article legitimate?

 

Some of the negatives listed might not be a big issue. Both CSIQ and JKS have performed major BS cleanup passed year to close at least half the gap to financial leaders JA and Trina and put them far ahead of financial dogs like YGE and SOL (not even bothering to mention STP, LDK and CSUN).

 

What I do agree with is that their weak manufacturing cost structure is a risk. This makes them dependent on high profitability in the downstream segment. My thesis is as always that industries are dynamic and margin move around based on over-/underinvestment in different segments and thus success over time belongs not to those in the right place at the moment but to those who are best in class in the segments of the industry they operate in. Downstream might get crowded and then being dependent on current high margin there to compensate for not making profit on panel sales is a risk.

 

That said I think CSIQ offers a great complement in a diversified portfolio with their strong downstream pipeline. My main objection with their stock the past year is that I think it has had a higher price to value ratio than other investable peers when I sum up all values and risks with all names.

 

This is my long-term perspective. Looking just at 2014 performance I think focusing on Q1 makes no sense as they'll totally dominate the CN solar group in 2H.

 

What we saw in Q1 when they recognized 125m project revenue, but mainly from US, is that not all the projects in their pipeline are strong enough to offset their weak panel business, but for rest of 2014 and next year I think they have a sufficient degree of these "power" projects that alone can be responsible for their profits at an attractive level. It's when I look beyond that that I like a low cost skilled company like Jinko better if I have to pick one to stand the test of time.

[pg6solar]

CSIQ has been reiterated by Northland Capital as a outperform at 46.0 (I assume its PT at $46). IMO still a safe double plus from current PPS. 

[odyd]

CSIQ should be bought at this price.  Their manufacturing is not as important of a money maker when compared to solar plant sales.  You do not buy CSIQ for manufacturing you buys JKS for it. However everyone experienced cost increase and they got more of it, due to fire. I lost interest, when writer said they have no access to China, the same as JInko, called it Jinko's preferential. This statement is clearly a lie or misrepresentation. 

[eysteinh]

I agree that is a silly statement. CSIQ has plenty access to china and ties to GCL and even some provinces there. Same author is very heavily into JKS (look at his other articles), I am all for that but not based on making out right lies or bashing other companies. It is enough to just focus on your own company and see what they have going for them. 

I think it is wise to be humble, I mean even I am fairly confident I see sometimes my memory slips me or I make small mistakes on the stuff that does not matter so much so I think is a good idea to always bring a source to what you are stating based on memory.  (I tought EU ended in end of 2015 but it will last until really 2016 so 1,5 year instead of maybe 1 year)  Anyhow : What possible source does he have for his statment that CSIQ is not preferred in China? I know we have many links here on this board where we have Canadian meet and greet in provinces signing MOU's and we all know of the ties with GCL - is that a sign of no access to China? Obiously not. Granted he could have argued they have a high overall cost that would make it low margins for them to sell there.  But that is something different. 

 

Anyhow I am all for CSIQ going forward as well if I was doing a basket of stocks. I am currently doing a more risk to get more reward hoping I know JKS well enough to have picked a winner in the sector going forward. TSL and JASO is also interesting, same DQ - so if I was doing more of a portofolio managment I would probably diversify into all of those and a cell maker (cells will get more orders now.)  And if I really wanted to sleep sound at night I would probably pick up FSLR to diversify in CDTE tech and a small portion in recsil to secure if cigs takes off (needs silane from recsil) or poly prices rised more than exected (not likely so would be a small hollding)

 

Also by the way more than 7 GW of polysilicon capacity has been announced recently, 6000 mt in taiwan, 25000 gcl and 12000 + dq.  And that is just the tip of the iceberg. So any squeeze will not last long unless demand explodes, and in such a scenario a slightly higher poly cost will not matter much. That is why I believe JKS has a very wise strategy, either poly falls with low demand and they survive in a low demand scenario, or demand explodes and they have slightly less margin in a high margin scenario. Either way JKS surges forward.  Same could be said about CSIQ, if demand is high then yes maybe higher asp from gcl wafers, but they still have a great time, if demand is low then GCL will lower prices and they will survive with more chance. I am more worried high blended cost but we know they got projects to carry them through the year and in 1-2 years from now we might see upgrades and a compleatly different situation on costs for csiq as well. (TSL is currently doing this and odyd is wise to see this comming with cell upgrades. Granted they also are aquiring old capacity.) 

[Lepv123]

You are asking a second time a question without even bothering to show what "your" concern is? Put an effort and describe some details.

 

Oh sorry. I was referring to the concern that CSIQ has a high cost structure as stated in the article. 

[odyd]

Oh sorry. I was referring to the concern that CSIQ has a high cost structure as stated in the article.

Why would this be a surprise? They do have a higher structure than JKS, but it is a better than standard. CSIQ is bought for their ability in solar plants sales.

[odyd]

Sunny, based on the US GAAP,  CB must be recorded at its full value. So since you cannot record this and again since the liability loss due to share value loss in the same time, those should come next quarter. I am taking this logical stand I think JKS will present their books on CB in the same way.

This means that both companies and particularly CSIQ is going to blow a hole in GAAP earnings. I could see them take the LDK charge, and still come in the area of $.50  cents.

[explo]

Sunny, based on the US GAAP,  CB must be recorded at its full value. So since you cannot record this and again since the liability loss due to share value loss in the same time, those should come next quarter. I am taking this logical stand I think JKS will present their books on CB in the same way.

This means that both companies and particularly CSIQ is going to blow a hole in GAAP earnings. I could see them take the LDK charge, and still come in the area of $.50  cents.

 

Just to settle this I looked up how Jinko reported 11Q2 after issuing a CB in May 2011. They accounted for the fair value change of it:

 

http://phx.corporate...6806&highlight=

 

I think that the fact that CSIQ did not account for it is a bit surprising.

[odyd]

 I think that is a capped option, another derivative built on CB. Anyways, we will see. For Canadian this could be a big chunk in Q2.

[explo]

 I think that is a capped option, another derivative built on CB. Anyways, we will see. For Canadian this could be a big chunk in Q2.

 

They accounted for both the CB and the capped call options fair value changes:

 

The Company recognized a loss of RMB20.1 million (US$3.1 million) in change in fair value of capped call options and convertible senior notes, resulting from the loss from change in fair value of the capped call options, partially offset by a gain from change in fair value of the convertible senior notes.

[odyd]

Yes I read the same thing. I expect no adjustments this time around in the same fashion as CSIQ. Rules probably has changed in this regard. If I am assuming too much for JKS, this is a given condition for CSIQ. I  can see around $1 for Q2 if the prices stayed around $25 for CSIQ. I suppose in my calculation on Friday I ignored financial instruments. So being at the level of $3 EPS is very possible.

[sunnysky]

 

Convertible senior notes issuance costs                                -             -              (30,154)            (4,665)

 

I think this is what I've been referring to as the excess value of the CBs over fair value of the offering. But I hope this amount for the new CBs will be small this time compared with the gain from fair value change of the new CBs from the offering date to the Q1 end date.

[Bodhi]

well CSIQ went down a tad today, but that's actually not the worst thing that could happen.  We got a 29 RSI today, and if we can manage to close above 30 RSI tomorrow, that's a bullkowski bullish indicator.  Hope we can get this tomorrow : )

http://thepatternsit...m/rsisetup.html

[explo]

Preso is out: http://media.corpora...014_v.Final.pdf

 

Cost is disclosed on page 16. Wafer cost went up to $0.23 and they still have the bullet point claiming they will secure Secure LT wafer supply agreement at $0.20/W or less for up to 1GW.

[explo]

Very nice presentation of their project pipeline. The closing TC Liskegard 1,2,3 in 2H will bring in almost $1 EPS by themselves. But then the Canadian super projects have been consumed I think. The Canadian BlueEarth and the two US projects closed in Q1 did not bring the same super margin. Then we have Japan for the following 2 years which should bring in new super projects according to management. What I think many wonder is what kind of normalized margin and long-term project pipeline ambition looks like, since the projects bring the dough (in serious amounts, but what's the normal size after 1 $/W proft super projects era?). I view CSIQ as primarily a project developer now. I'm excited about Japan and China market this and coming 2 years.

[Makan]

Explo, what is your outlook on value chain components? CSIQ claimed to have 55 cts blended for China manufacturing. TSL today say they had 53 cts. I think that is not a huge difference for now provided that their focus is a bit more different (CSIQ more downstream oriented), but also depending on how pricing for cells and wafer will further evolve. CSIQ is clearly more vulnerable right now. I would expect that over time CSIQ is in some disadvantage at this point when demand increases and cells and wafer capacity in the market becomes tighter. On the other hand we have seen cell and wafer pricing coming down a lot in Q2 according to pvinsights. What do you think?

[explo]

Makan, the difference is that when Trina say 53 cents and Jinko say 48 cents they include more and that thus better reflect true COGS per watt, compared to CSIQ "manufacturing" cost. Trina had maybe 21% GM on modules and CSIQ maybe 14%, both on around same ASP. That means the blended COGS per watt diff for modules is closer to 5 cents than 2 cents.

Jinko, Trina and JA can make good profits on panel sales. For CSIQ its about just covering costs and then the projects are needed to top that with profits. That's why project profitability retention is extra important for them.

[Pop2mollys]

Makan, the difference is that when Trina say 53 cents and Jinko say 48 cents they include more and that thus better reflect true COGS per watt, compared to CSIQ "manufacturing" cost. Trina had maybe 21% GM on modules and CSIQ maybe 14%, both on around same ASP. That means the blended COGS per watt diff for modules is closer to 5 cents than 2 cents.

Jinko, Trina and JA can make good profits on panel sales. For CSIQ its about just covering costs and then the projects are needed to top that with profits. That's why project profitability retention is extra important for them.

Explo are you planning on holding JKS into earnings?

[explo]

Explo are you planning on holding JKS into earnings?

Yes, they tend to shine through the clouds. I think they'll prove that they are still the leader, without a single PV plant sold to boost earnings.