31 replies to this topic

[odyd]

The overall interest bearing liabilities were at $726M. I got 404M long-term debt , 100M notes 182M short term plus 38M, so they are not using convertible balances as interest bearing, Are they accruing interest payments on those?  I think so in the sense the interest expense is not an actual payment, the supplemental data showed only $27M paid of interest in 2013. So the $23M is accrued interest payment of some kind.

[odyd]

I think the 15.8m amortization of CB discount might explain part of the discrepancy.

No, that is the difference between the fair value of the convertible bond (market value) versus the carrying value or the book value of it.

[odyd]

In 2011, the interest rate was 4.93% and interest expense was $26M. In 2012 the interest expense got to $48M, on an average interest rate of 4.20%, which is some $22M more than the year prior and a higher rate. In 2012 they spent $48M to buy $72M of convertible bonds, recording a loss. I am not sure what happened in 2012, but this was a start of this increased interest expense.

[explo]

The best clue I can find is this on page F-37:

 

For the year ended December 31, 2013, the interest expense for the Notes was RMB133,587,000 (US$22,067,000).

 

This is the CB component of the interest expense (i.e. not including interest expense for borrowings). It seems to include more than the pure interest cost at the 3.5% rate. It looks like the 6m CB interest on the original 172.5m @ 3.5% plus the 16m amortization on the CB, but it is still confusing since they repurchased around 72m of it during 2012.

 

To me it seems we should be able to model lower interest expense due to their low interest rate, but the CB does not mature until 2018 so maybe they keep accounting 20m interest expense a year just for that one..? Anyway their interest rate of around 3.5% on both ST and LT bank borrowings is exceptionally low. It's quite surprising to see some companies achieve these rates while others pay 6%. Maybe one of the benefits of a strong parent backing your loans with guarantees?

[abcdefgjoho]

paback, the reason is quite simple.

 

i tend to stay with the leaders for long-term investments.

 

for short-term trades I am fine with hsol, especially as they worked for me as a trade vehicle very well some years back :-)

 

for me csiq and jks are the leaders for various reasons ( cost structure, project business, capacity and so on).

 

then I see tsl and jaso.

 

then hsol.

 

things can change but this is my ranking after q4 earnings.

I wont be doing a long-term bet that hsol can catch-up with csiq or jks - normally the leaders of the market make the most money...

[odyd]

For the year ended December 31, 2013, the interest expense for the Notes was RMB133,587,000 (US$22,067,000).

Hi explo, I looked at as well. In 2012 20-F was $19M,  but I think this is the interest paid to date on convertibles, so the number for a 2013 was $3M, which correlates to interests remaining fair value of the bonds would generate. So I could not explain this by it. I also thought it was some sort of fee to Hanwha parent, but those are only 0.6%.

I have not heard from HSOL yet I hope I will. I only found this practice to take place in 2012 and 2013, so some $40M has been put like as intention to pay. I do not see any pre-payment items to account for it. I am confused at this point.

[explo]

Yes let's hope they can give some clue to the mystery and to when they expect the interest expense to go down to better reflect debt x interest rate. The big jump in interest expence happen from 4Q11 to 1Q12, but they just stated increased borrowings as cause. Coincidentally 1Q12 was the quarter where they made a big CB buyback ($50m), but accounted a separate loss for that. It's all quite confusing to me.

[odyd]

I was hoping for this one to be also tackled by Josh or Sunny. Spent $48M to eliminate $72M debt, yet they had 14M loss. This transaction confuses me as well.

[odyd]

Bottom line on Q1, the was a one time write off of $9M. This certainly is gone from their Q1 results. I have no reason to doubt they would meet own expectations of volume (CEDR) and they should be able to get ASP in line or above Q4. In this case I would say their margin would increase.

Their profitability is largely dependent on this interest rate. I always thought they had high interest rates, just looking at it, and actual value of their borrowing. My confusion creates curiosity and possibility that being "created" spent maybe serves a purpose to eliminate CB  in some accounting allowed way ahead of the deadline in 2015, a first time investors can recall this thing. 

[explo]

Bottom line on Q1, the was a one time write off of $9M. This certainly is gone from their Q1 results. I have no reason to doubt they would meet own expectations of volume (CEDR) and they should be able to get ASP in line or above Q4. In this case I would say their margin would increase.

Their profitability is largely dependent on this interest rate. I always thought they had high interest rates, just looking at it, and actual value of their borrowing. My confusion creates curiosity and possibility that being "created" spent maybe serves a purpose to eliminate CB  in some accounting allowed way ahead of the deadline in 2015, a first time investors can recall this thing. 

 

I agree. Gross profit should increase based on higher gross profit per watt (I expect both ASP and COGS improvement contribution, at least the lattter) at same shipment volume, then operating expenses should not change much. Below that I'm not sure what will happen. They had some help there in Q4.

[odyd]

They should get the same financial help from the convertibles and contracts. Their stock price is  $1 lower average this quarter versus Q4.

[explo]

They should get the same financial help from the convertibles and contracts. Their stock price is  $1 lower average this quarter versus Q4.

 

Thanks. Looks like Q4 theme of improvement momentum for laggards JA and HSOL will continue in Q1.