Jinko fundamentals vs peers?

littleguyintucson

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Wednesday, February 20th 2013, 9:10am

Jinko fundamentals vs peers?

Has anyone ran numbers based on MW shipments and profitability per watt to determine an amount of shipments required to make $1 in EPS and then calculated a growth percentage to reach it and crossed this to current share price to determine a fair valuation to peers?

Jinko Solar fundamentals

30M per Q Opex, $15M interest = $45M quarterly @ 350MW
Current gross per watt $0.06 expected gross per watt sometime in 2013 of $0.10
Shares outstanding 30M
$30+$180=$210M
$210/$0.10 = 2100MW
Increased shipments of 1GW = $70M in Opex or 1400MW more in shipments.
Total Opex and interest + profit = $350M
Total shipments 3.5 GW needed at $0.10 gross to make $1 in EPS.
Growth required to earn $1 = 2300/1200=191%
current estiamted growth 30-50%

At $0.15 gross per watt =1400MW or an increase of 200MW from current
Increased shipments of 200MW add $14M in Opex or needing 200MW more shipments
Total shipments 1600MW at $0.15 gross per watt to reach $1 in earnings.
Growth required to earn $1 = 400/1200=33% growth.

Profit growth 25% to reach $0.10 gross
Profit growth 100% to reach $0.15 gross

Target ASP $0.65 for $0.10 gross
Target Cost process/Si $0.45+$0.10 = $0.55

Target ASP $0.65 for $0.15 gross
Target Cost process/Si $0.40+$0.10 = $0.50

How doe other peers stack up for required growths based on costs and required growth? Is JKS now over valued or undervalued?

This post has been edited 1 times, last edit by "littleguyintucson" (Feb 20th 2013, 9:16am) with the following reason: correction of value Growth required to earn $1 = 2800/1200=123% s/b Growth required to earn $1 = (3500-1200)/1200=191%

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sony1

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Wednesday, February 20th 2013, 9:45am

They have 21m outstanding sh I think.

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explo

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Wednesday, February 20th 2013, 9:51am

I liked JKS a lot 6 months ago because they had 50m market cap at $2 PPS. Fundamentally they have great operating efficiency and a procurement strategy that allowed them to respond quickest to material market price declines (that benefit of course reverses when prices rise now). Now at 5-fold the stock price you have a totally different price risk scenario. Before if stock went to $3 it would be great, now not so much. Nothing has changed fundamentally in my view, just the price of the stock. In fact the relatively best position for the (bad) scenario at hand that they were in before no longer applies. Other names offer more value per market cap dollar now. In my view Jinko should be a stock that follow the sector wave with a bit less magnitude due to its operative structure. The drop to $2 was unwarranted. The sector outperm with a 400% run since then was also excessive. I rode the first part and then switched to lagging names that offered more value for your dollar.

On your $0.10 poly cost assumption. Jinko procure on spot market so price will be great now, but assuming this will last is risky. Jinko is leading on cost now, but I fear ASP might slump in Q4 with a lot of domestic sales.

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littleguyintucson

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Wednesday, February 20th 2013, 10:57am

Thanks Explo

There are 2 laggards that look to offer the best values relative to peers. These would be SOL and Jaso. Both announced good news today and have relative low costs and inventory. Jaso is a bit higher in costs due to the over build and they took out some depreciation in the form of factory write downs in Q3. If they continue to execute on the move to Modules adn projects, they would be in better position than YGE but without the current brand recognition. SOL has very good potential for upside, however they have never performed very well in the margins department vs peers and you do not know the levels of focus on ramping modules and other products vs it being a wafer company.