371 replies to this topic

[Pop2mollys]

Hit the nail right on the head odyd.

I am thinking of shooting ed an email raising the same points.

Please let me know what ED says. I see no reason why he can't give more clarity on Japan. Odyd thanks for your analysis.

[odyd]

I am going to publish something quick today on our site.

[hellosolar]

What is that about?

[odyd]

when you read it you will know.

[hellosolar]

Hope something good surprise.
It seems solar stocks are still tighting with oil.

[odyd]

Hope something good surprise.
It seems solar stocks are still tighting with oil.

I am not sure, we will see

http://solarpvinvest...-canadian-solar

[kknd1234]

Fx risk has become a huge  issue in Q4, Yen depreicated about 12%, so i think Japan will no longer be an attractive market for cn4.

[odyd]

Sure it can, if the same yen price remained during the quarter. Tracking GADP the price went from 0.64 in August to 0.62 in October. This means that price in yen actually increased against the drop of value. If yen price followed it would be around 10% drop to 0.60. I think CSIQ had adjusted its GM to reflect that. I think companies hedged a lot of contracts as well. It was expected that Yen will drop.

Prices in yen will go up, as the dynamic of development is measured in the US dollars.

[kknd1234]

No one expected that Japan would increase the size of QE back in Oct, it was an unexpected move, so i doubt companies had plan for it. it is highly likely that the cn4 will take a huge hit in q4 with the fx exposure.

[odyd]

I think all companies were fully aware of the situation with yen, as per their statements, but perhaps JASO when shipping the largest amount to Japan could be hit the most, unless most of their volume is OEM. It looks like they have at least 300MW to Japan.

[kknd1234]

It is not just Yen, euro and Chinese yuan also went down alot. so i highly doubt we will see January rally for solar stocks. The fundamental is not there anymore when compare to q1 14.

[odyd]

It is not just Yen, euro and Chinese yuan also went down alot. so i highly doubt we will see January rally for solar stocks. The fundamental is not there anymore when compare on q1 14.

I think the price today takes this under consideration. what lies ahead, is the decent volume, which can actually increase local currency ASP and level off the exchange losses. CSIQ has around 41% of its business from the US markets so I am excited to find out, how manufacturers fair in this area going forward, hoping CSIQ will remain as a strong presence there. 

[Makan]

I am not sure, we will see
http://solarpvinvest...-canadian-solar

Odyd, 31 GW left is only for utility scale? Meaning roof top installations could add some more?

[odyd]

Odyd, 31 GW left is only for utility scale? Meaning roof top installations could add some more?

31GW is a result of what has been accepted for grid connection versus what has been connected to grid. The number is 41GW as given by GS, but it is what happened in August. The figure constitutes all applications approved for grid connection without distinction of the location.

[uchsteve]

Please let me know what ED says. I see no reason why he can't give more clarity on Japan. Odyd thanks for your analysis.

FYI: Ed is out on vacation through 1/5/15.

[Makan]

In regards to CSIQ, I have to say I am quite disillusioned of CSIQs position in Japan. Based on market share of grid approved projects they have only about 0.5%. So as a developer they are a very marginal playe and I wonder what they have been doing there for 2 years, and I doubt they can play that assumed role as consolidator for the reallocation of the now left grid approved cake.

So that fits to their strategy of watching first before drive. They were rather late and/or slow entering Japan. However, whatever they have grid approved should be little risk, but they did not make that huge feast. I readjusted my own assumption to only 200 MW late stage, all else is too uncertain at this point.

[odyd]

Pragmatically speaking that thumb-sucked 200MW is 200MW more than Jinko or JA Solar will ever have in Japan, which makes CSIQ once again a development leader among Chinese companies. Considering that JKS is producing at 70 to 80% nameplate capacity, that number appears even larger, so I would say that is pretty good deal to their business strategy. However, I consider 400MW to be reasonable figure, since 250MW have been acquired outside of the suspended regions, in addition to 150MW already grid approved. I would also not dismissed abilities of the company. Their marginality comes from being a foreign entity in a traditionally close to foreigners environment. Reading the interview with Mohrstedt and him describing Japan's application process as flocking to a gold rush resulting in thousands of MW, but with only fraction being developed, I am pretty sure that Canadian will be able pick low hanging fruit, if that fruit is available.

As far as the reference to what are they doing there for two years? They have collected 540MW of late stage projects having at least two certifications plus land. Another 500MW in early stages. They have also dedicated their time to collect cash flows, while every other company has spent theirs. That 400MW is more than they have ever in Canada (not including EPC), which now will probably offer greater than 25% margins to buyers.

While there is uncertainty about the benefit, there is limited downside to what has been suspended, and even that may turn positive. 

[odyd]

Based on market share of grid approved projects they have only about 0.5%. So as a developer they are a very marginal playe and I wonder what they have been doing there for 2 years, and I doubt they can play that assumed role as consolidator for the reallocation of the now left grid approved cake.

I ran some analysis on project announcements completion, construction and plans for last 3 months of the year. I found 1.1GW of volume and 55 companies involved. There are actually more companies as they are many joint ventures. Out of that group I found Marubeni with 131MW, including 80 from another timeline. GE Financial was the largest partner in some jvs including up to 7 companies, They had 272MW,

Some of the articles speak of hundreds of the producers and their applications. I would imagine that there are maybe 10 companies with more than 400MW planned and rest or 500 plus entities if not more hold on average 90MW or less.

I think Canadian is easily within top  10 to 15 developers.

[Makan]

Ok, good one. The big question is if capacity that cannot be build will be reallocated or cancelled for solar without replacement. It looks like solar in Japan is not politically first priority and support anymore. Maybe there is interest now that government want to build out as little as possible and that would have been an elegant way to achieve that. For me i have to say that I exited the position again yesterday. Its value is 1.4 bln now, although I certainly acknowledge mgmts achievments, it is a lot more than other CN3 and twice book value and also considering adding NPV of late stage pipeline, so still quite a lot of growth assumption in valuation. Right now I dont see this really being justified with known situation and profitability of pipeline. The hotspot place in 2015 will likely be rather in China and that is not focus for CSIQ). Lets see if they get Recurrent. Have to choose between the lesser bad, The other CN3 are not better fundamentally, e.g. seems to have not connected their projects and TSL, JASO same crap. At least they are valued for it and have much lower production costs for module than CSIQ. Still, all 4 have impairment risk if they cannot connect to grid in China and CSIQ for the pipeline in Japan they have acquired but cannot develop.

[odyd]

Ok it appears every time selling take place a bit of knocking follows, so nothing new in this neck of the woods. To be honest, I suspected that selling took place when there was no projects left. Interesting "less is more" approach, when failing just in China, makes the world of fewer evils, may become trend for 2015.