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odyd12

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Monday, October 1st 2012, 8:33am

Solarzoom reports


explo

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Monday, October 1st 2012, 1:07pm

All these shut downs now are encouraging.

Uncle Chang

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Monday, October 1st 2012, 2:45pm

<<when the turnover got gloomier, some silicon material traders chose to expand shipments to improve their liquidity and avoid the adjustment of the price after the holiday...More and more enterprises shut down this week, and some of them withdrew from the market and even went bankrupt...>>

Other than what have been mentioned, cells makers also dumped Wafers, modules makers dumped Cells, I think they don't want extra "raw materials" sitting there if they can buy more cheaper later...

One thing that's for sure. They can't keep producing what they can not sell, and they can not keep losing money without getting into more financial troubles. This gotta come to the end at some point, we're not really watching Ocean-7 or 11, Chinese Solars can end up with just 5? How do they come from 11 to 5 is probably everyone's guess, even the top tiers look shakier than the little ones!

explo

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Monday, October 1st 2012, 4:36pm

It's time to forget too big to fail.

Instead it's easy to make a "too expensive to bailout" list. No one of solar 11 has a market cap much above 300m anymore, so the price tag for most of them are their net debts. Here are the net debts to bail out to give the different solar 11 and GCL capacity parks a sustainable financial structure:

GCL 3.16b
LDK 2.61b
YGE 1.86b
STP 1.63b
JASO 0.55b
SOL 0.55b
TSL 0.52b
HSOL 0.42b
JKS 0.40b
CSIQ 0.35b
DQ 0.29b
CSUN 0.21b

Who has technology/capacity that stands out? I'd say
GCL on poly and wafer
SOL on wafer
JASO on cell
YGE on wafer and cell

LDK is a mess and to expensive to bailout. Sell Mahong and some of the other decent capacity to someone that can make efficient use of it. JASO committed to build 3GW integrated in Hefei. Let them take over LDK's Hefei capacity on the cheap. JKS could use a poly plant at home, in Jiangxi province, maybe they can make LDK's Mahong as efficient as their other plants. STP is too expensive to bail-out. What do they have? A poster boy, a brand name and unfeasible cost structure?

I don't see much point in saving those two, just extract some of the useful parts for others.

YGE might hold the future tech, but is really expensive to bail-out. Hard to call, since short-term SOL and JASO can provide same quality panels at lower cost.

LDK and STP can fail because it is expensive to let them not and there's no real tech and knowhow there. Fail them to relieve Chinese PV industry of the debt burden their reckless management has brought upon it and then make better use of the capacity, overtaken at foreclosure prices.

DQ and CSUN? Too small to succeed?

redsolar

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Monday, October 1st 2012, 5:01pm

Good perspective Explo.
As per your net debt theory...don't you think CSI looks more interesting than others? I am asking this based on their project revenue prospects going into 2013 and their lean business model.

odyd12

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Tuesday, October 2nd 2012, 7:38am

I think that, some of those line of credits will be used for the asset purchases. Chinese banks can assist in helping to buy facilities, companies in the brand-name of large companies in global locations. It is natural to pick the best operational units not on the basis of their debt levels but quality, brand and operational efficiency.
I would not put too much emphasis into a size of a debt, but more into an ability to pay interest rates and manage operations.
LDK is unable to manage own operations, I am afraid.
TSL, YGE, STP, JASO are the four I would imagine things will concentrate around those names. HSOL is Korean, they are going that path. CSIQ is separated from the group, their path is of separation from Mainland. Renesola will make to the core I think but I am not convinced they are there today. The pressure could be from GCL to let ReneSola stand alone.

redsolar

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Tuesday, October 2nd 2012, 8:28am

I would list the specialists as follows..

GCL - poly
SOL - wafer
JASO - cell
TSL - modules
CSIQ - projects

JASO, TSL, CSI has the best probability to sustain long term.
CSI may very well turn around in the next 6-12 months.

SOL - operationally...they seem okay...but the poly plant could be a liability at least in the near term.

explo

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Tuesday, October 2nd 2012, 2:49pm

Red, yes i think csi is in a quite good position short-term, but long-term i think they are too downstream focused for my taste. The healthy balance sheet in their case is related to that they have not invested much in upstream capacity.

explo

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Tuesday, October 2nd 2012, 2:52pm

Odyd, i think the high debt level will be problematic for China PV. They have to let the banks take the punch here if they want to maintain and secure no 1 PV position.

redsolar

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Tuesday, October 2nd 2012, 3:47pm

Explo,
CSI has Hetero Junction cell tech (21% eff) ready to go. But this requires a lot of cash commitment. The CEO is weighing the benefit of building new cell lines now or wait for the project revenue to roll in.
Otherwise, I would agree...their best standard modules right now are going around 230-250w...which is way low compared to Renesola or JASO.

odyd12

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Tuesday, October 2nd 2012, 8:03pm

Explo, I think companies able to expand their capacity globally will be named to stay around. The ability will come from loans and full, 100% support by banks. Let's put it this way. I do not think that company with low debt is first on the list for survival. I do not think that company with big debt is out of the list. The size will matter, and the brand name as well. Operational capability also. Relationships favor STP, YGE and TSL for the first for consideration. I am not getting the same feeling from CSIQ, JA or ReneSola. Hanwha is Korean, LDK is done, Sunergy has not impact, Jinko in the same boat. DQ does nto exist as far as I am concerned.
Add GCL, Hareon and that is the leadership if banking is concerned.

redsolar

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Wednesday, October 3rd 2012, 12:34pm

Odyd,
I think you are wrong. Remember, LDK was a glorious company in its good times. And it had great relation ship with banks and politicians. LDK was down...simply because of their capacity incompetence. Same fate is in store for other companies as well. YGE may very well join the incompetence club soon. Their debt is their curse.
I don't think banks will throw their money at these zombies...knowing they are not going to get it back.

At this moment SOL and CSI looks like the best managed companies so far.

If you consider 1.5B$ revenue per year is decent for a tier 1 solar company. CSI already secured half their revenue for the next two years. You can't beat that in this market.

SOL, as long as these guy run at more than 70% utilization with positive operating cash flow...should be fine.

Just picture yourself...by taking 70% of Europe off the map and calculate the demand vs supply. This does look scary at least in the next 12 months.

As other technologies like CIGS start adding capacity...the capacity is only going to increase.

explo

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Yesterday, 7:40am

Quite interesting article here about how the banks won't, for the sake of Chinese PV industry, take the punch and bury the corpses they backed:

http://finance.yahoo.com/news/glut-solar…-094403814.html

According to the article Chinese companies are reluctant to admit failure and worse the banks that backed the failed companies are also reluctant to admit failure and thus supports continued failing. Result is that both more share holder capital and bank credit losses than necessary occurs when something is failing in China. A bit surprising is that the big banks cannot admit failure and reduce credit losses by taking them early.

This might increase the survival chance for the biggest losers (LDK, STP, YGE), like odyd is suspecting, instead of redirecting the production capacity (and possibly brand) to the smaller but more competent management teams.