212 replies to this topic

[sunnysky]

Lumpiness of earnings was a concern I raised back in Dec or Jan but some had brushed this aside as a non-issue, which I think is wrong. On the other hand, this should be just a growing up pain and should smooth out in time.

[odyd]

I think market is concerned that CSIQ will fall of the cliff in terms of new projects at good margins starting from 2016.

 

They have over 3.2GW in project pipeline. China is 1GW imminent 1.3GW so there is another 1GW out there.

I do not share this motion, what is the logical reason they would not be able to continue grow their projects? They are the only affected by GMs everyone is doing, better, then why?

They are on a forefront of innovation, they should have a lot of cash to go in the avenue to remain leaders or lead. I think by 2016 there will be 2 times more need for projects than they are today and probably half of today's companies.

This concern if it is real, will never cease to exist. What about 2017 or 2018 or 2019, those questions would apply to every company in the group, including FSLR and SPWR, and to be honest, cannot be logically answered.

Those two have higher margins than CSIQ, from projects, so CSIQ projects are not high margin projects they are high for the Chinese.

I am not concerned to be honest. I believe in their ability of collecting today the amount of projects they have not to cease to exist, but improve, while other learn to do it.

Besides this too much of an abstract to make such a concern without any indication for it to exist.

[spiritcraft]

I think CSIQ will lead at least initially in US project development in terms of CN companies.   The USA will be opening up in states we have never seen any large scale development in to date.  These new states will each be multi GW markets. There are other global markets they will be present and be a leader in.  The theory that they disappear after fulfilling the current pipeline doesn't make sense.  I see them getting stronger and carrying their leadership globally.  

[Scsnospam]

Ok, thanks.Great entry price. I was traveling and missed the opportunity yesterday.

[explo]

What is your share count? I included the new shares but not the warrants - not sure how JKS does this. If I include the warrants as well, I have:

 

Shares used:                     59,428K    

 

EPS:                                         0.35  (compared with 0.39 of Q4)

Average analyst estimate:        0.12

 

I don't have it here, but I think I used 54.2m.

[Makan]

Funny, I use 57 mln. including stock option plan, excluding CB (PPS is under strike price)..

[explo]

Funny, I use 57 mln. including stock option plan, excluding CB (PPS is under strike price)..

 

Yes, I don't think I had included options. 57m might be a more proper number. $0.13 still holds (rounded up with 57m instead of down with 54m).

[nanofrogfish_spf]

The one thing, which continue to bother me is the presentation's 14 to 16% GM for Q1, including projects business. We discussed this with the sale of Little Creek, assuming not being part of that GM prediction. It would be brilliant if they came out to say this, adding couple of points.

 

Odyd, not sure what you're trying to say here. What exactly is it that you think CSIQ should do?

 

They will update Q1 guidance, if they so choose, when they announce Q1 ER date...just like they've always done. Likely at the end of this month or first week of May. I prefer the company concentrate on meeting it's business objectives, be visible and predictable, and not waste their time reacting to share price fluctuations that are out of their control just to accommodate short-term traders.

 

Just FYI for anyone who cares;  as Odyd was referring to in regards to Q1 estimates...Little Creek is in addition to guidance given for Q1 in the last ER (and in addition to what's shown in the March IR presentation).

 

Before Little Creek; $422M / 15.6%GM / $0.12 EPS

With Little Creek; $479 / 16.7%GM / $0.31 EPS

 

My EPS estimate includes $4M forex loss provision.  I believe these numbers are in the right ballpark. Looks like the analysts are slow to react to the Little Creek news (as usual) in updating their estimates...maybe for once it can work out in our favor. 

[odyd]

What I am hoping for is the release updating the GM and quarter. If the sale is not included updating this should not be hard to do, but can help  the group.

[sunnysky]

Lets first set the Little Creek sale aside, I wonder how come they could have guided a blended GM that low.

 

With $420 M revenue guidance, you figure the revenue break down is

 

$324.3 M Module Revenue, 77.21% of the total

$  95.7 M Plant Revenue,     22,79% of the total

 

Assuming only 28% GM for plants and 14.49% of GM for modules (0.59 cost vs 0.69 ASP), you still have a blended GM of 17.57%.

 

28%*22.79%+14.49%*77.21% = 17.57%.

 

In Q4, their plant (system) was 23.40% of the total and they achieved a blended GM of 19.49%.  Nano, how did you arrived at 15.6% GM?

 

When I thought about this some time ago, I thought one possibility might be some kind of one-timers like a write-off. But only TSL had a plant write-off being treated as part of cost of revenue, others have been lumping these  into G&A, thus no impact on gross margins.

[hellosolar]

Sunny, I am thinking that they maybe counting ldk case and the fire damage. These one time charges made them more conservative on the numbers.

[odyd]

The fire damage was 1%. So we would get to 17%, They sell one plant worth 10MW and they jack up to 19%, something is not included here,

How does LDK case influence gross margin?

[nanofrogfish_spf]

Nano, how did you arrived at 15.6% GM?

 

I have slightly higher system revenue, but overall GM on that segment I have at less than 28%. Hope they do better.

 

LDK is a real wild card right now...just want to get it over with, one way or the other. We'll know soon enough.

[odyd]

Since HSOL managed to settle with LDK, I think CSIQ can as well. I really hope they going to take if there is a hit in the Q4 2013.

[sunnysky]

Thanks Nano. I updated my original post with my estimate of a $22.5 M loss from warrants. This would only affect GAAP EPS.

[explo]

In Q4, their plant (system) was 23.40% of the total and they achieved a blended GM of 19.49%. Nano, how did you arrived at 15.6% GM?



When I thought about this some time ago, I thought one possibility might be some kind of one-timers like a write-off. But only TSL had a plant write-off being treated as part of cost of revenue, others have been lumping these into G&A, thus no impact on gross margins.

 

In Q4 their GM was 16.8% before the one-time warranty liability write-down of $14m. Note that in my 13 cents I did not add Little Creek to guidance. If I do that I arrive at 32 cents EPS instead and adjusted GM on par with Q4 (16.9% vs 16.8%). It looks like I'm in same ballpark as Nano.

[odyd]

Thanks Nano. I updated my original post with my estimate of a $22.5 M loss from warrants. This would only affect GAAP EPS.

 

I read more into it and you are talking about option to buy $20M more of the bonds? 

With prices CSIQ is at, they are looking to gain on derivatives. The convertible price being $45 based on $36 equity.

[odyd]

I got the e-mail from CSIQ IR, the sale of the Little Creek is included in the guidance for revenue and margin. They were not forthcoming on value of derivatives. 

[pgo]

I got the e-mail from CSIQ IR, the sale of the Little Creek is included in the guidance for revenue and margin. They were not forthcoming on value of derivatives.

If Little Creek is included, why would margins go down? Also how should the bottom line be viewed?

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[odyd]

The GM is reduced by the 1% based on the fire in the factory. I figured they should be in the area of 17.5%, without that impact.

I am not sure what the bottom line looks like, to be honest. They sold a lot to India, the most out of CN8, Japan is not as big, which could be good for forex. It is  embarrassing to see they lost 51M in 2013 in this line alone, that was $1 EPS at one point.

 

Their project output in the rest of the year is what is attractive about CSIQ, namely 400 to 500MW in 2014 versus 131MW in 2013. That is a real money maker. Their yearly ASP looks like 0.64 so that is 17% GM. I hope Q1 is one to be put behind us quick.