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  3. Klothilde

    Daqo (DQ)

    China solar wafer makers to demand polysilicon price cuts https://www.digitimes.com/news/a20190115PD200.html I know asking is not the same as receiving but this is something to keep an eye on nevertheless.
  4. Last week
  5. dydo

    Genomic Index

    Jan 11, 2019
  6. Klothilde

    Daqo (DQ)

    Fair point with the stock-based compensation. I would counter that OPEX&NI was already around $9M before that bump and will probably increase once 3B shipments are ramped. Also fair point with the capitalization of interest. As to the magnitude of debt I keep thinking we could end up north of $300M. They indicated that total 4A CAPEX is RMB3.2B: "To answer your question, I think 4A total investment is around RMB 3.2 billion, equivalent to USD 500 million." https://seekingalpha.com/article/4173971-daqo-new-energys-dq-ceo-longgen-zhang-q1-2018-results-earnings-call-transcript?part=single At today's exchange rate it's more like $475M. Currently they have around $110M in cash. Adding your midrange earnings of $47M and an estimated $36M in depreciation gives a total of $193M in cash available for CAPEX. Leaves a financing gap of $282M. Throw in some working capital requirements and you're easily above $300M.
  7. SCSolar

    Daqo (DQ)

    This year there was a significant bump in Opex as of Q2. The increase was indicated as non cash based compensation and was indicated to be going forward for Q3 and Q4. This was a 3.5Million per Q jump in Opex. I might expect that to drop in 2019. https://seekingalpha.com/article/4195800-daqo-new-energys-dq-ceo-longgen-zhang-q2-2018-results-earnings-call-transcript?part=single The increase in SG&A expenses was primarily due to the increase of noncash share-based compensation costs, which related to the company’s 2018 share incentive plan, which, in aggregate, increased our noncash share-based compensation expense by approximately $3.5 million for the second quarter compared to the first quarter. We expect to be at similar levels of share-based compensation expense for Q3 and Q4. As for Interest, yes if they take on $300M in debt that could cause $16M in interest at 5%. That would be when the plant is fully operational and IF they accumulate that amount of debt. While in construction the loans are typically short term and carry lower interest. The interest payment is also capitalized into the cost to build. That would not show up as debt payments until atleast 2020 when phase 4A completes I also do not believe the costs to add capacity would not be at $10/KG as your debt would suggest. That was a price range from 5 years ago(2014) when ReneSola was adding capacity. On a side note earnings goes up when they add 35K MT of ultra low cost Si to the production volumes. At $2/KG per KG profit, they add $70M in gross income. Given your bearish scenario of $16M interest(doubtful) and a doubling of Opex from the non sharebase compensation of $16M per year(worst case), the Opex and NI would be $32M. That leaves $38M before taxes or $30M after taxes. That is $2.50 a share in EPS added. Even at a $1.50 spread they still roughly $1 in EPS from the new capacity. And I will note I do not expect $300M in debt rather $150M if they do not do an equity offering. I also do not expect Opex to run $16M a year for the 35KMT but closer to $10M a year.
  8. Klothilde

    Daqo (DQ)

    I'm fine with your gross numbers but I think OPEX&NI will be higher. Over the last 2 quarters they had around $11M in OPEX&NI taking out one-timers. That would lower your EPS estimates to -$0.07/ $0.07/$0.22 and assuming a spread of $2.00 it would lower EPS to $0.17/ $0.37/$0.57. Continuing your calcs I end up with a fair market price of $8. I see further downside with OPEX&NI expanding beyond the current $11M. Shipment and production ramp will increase OPEX but I see a particular hidden risk in NI. Reason is they have to dish out nearly $500M in Capex for 4A and their operating cash has already been squeezed to a minimum. Also there might be some additional payments left for 3B. If they take on let's say $300M in debt that would increase NI by nearly $4M per quarter at 5% interest rate. And who knows if interest rates go higher after 5/31. What is your take on debt and interest payments going forward?
  9. dydo

    Genomic Index

    Jan 10, 2019
  10. SCSolar

    Daqo (DQ)

    Those are reasonable estimates depending on ramps and cost reductions. I would expect them to maintain a minimum of $1.50 price spread between cost to manufacture and ASP. With a gradual ramp I can see gross over the next several quarters as $10M, $12M, $14M. Depending on Opex increases from the new ramp and the interests, they will run between $6-$8M per quarter. This would put earnings around $0.22/ $0.36/$0.52. I see an upside currently to the spread of $1.50 $0.50 based on the average selling price in China from Energy trends which is upper $9 range for Mono Poly. That is about 10% above outside China prices of $9 that Klothilde has suggested. This increase could push earnings to $0.96/$1.77/$1.38. The mid range between the 2 would be $0.60/$0.77/$0.95. That mid range from the $1.50 spread to the $2 spread falls within reason to Shen's estimates. I would not say that his estimates are overly conservative nor exaggerated. Slapping a PE of 6 at the low end of a $1.60 EPS puts downside risk (unlikely ) at $10. The upside potential(also unlikely) of $5.30 in EPS and a PE of 8 could push the price to $42. Thus a fair midrange would suggest $3.50 in EPS and a rPE of 8 gives a fair market price of $26. I do expect that legacy capacity will be written down at some point for all Chinese solars once the new capacity is ramped. Daqo tried to sell off the legacy Poly capacity that has the higher $9+/Kg capacity. This is the downside concern I see for their initial plant as it is in a higher cost electricity region. Of course local provinces to keep jobs could always drop the electricity rates significantly thus making that capacity a little more cost competitive. It seems that China is experiencing shifting solar manufacturing bases to lower cost areas similar to the auto industry and the Chip sector moving from higher norther US and west coast areas to the Southern states back in the 80'2 and early 90's.
  11. Arrowhd

    Daqo (DQ)

    Hi Klothilde, virtually all of my positions end up being a trading position because you never know what is around the corner. Last year at this time we had a robust market move up and then in February it cratered. I am quick to pull the trigger so what I hoped was a long term position became short term. We could see the same pattern this year with a February retest of the 4Q lows but in the meantime I think DQ and JKS are constructive. DQ maybe to the low/mid 30s and then comes back in if there is weakness of some kind later this quarter. The analysts that have a rating are either a hold or an accumulate. Often the trend line of a recovering stock starts to move up before its industry bottoms. The market discounts the bottoming process as a known event and focuses on the future. Anyway, Philip Shen is the analyst who is most wired in to DQ and I listen to all of the DQ CCs. Shen has the 4Q EPS at 0.12 and revenue at 72 million. Shen is often the only published analyst so his estimates become the street estimate. He is always conservative so I would post an EPS of about 0.20 on the Estimize site of which I belong. The 3Q CC was rather morose with depressed spirits. At the end of the year and now into 2019 the DQ IR team is much more optimistic. Phase 3B went great and they see a turnaround in Chinese solar manufacturing requiring DQ poly. They are still the low cost manufacturer so their umbrella is the biggest one. The consensus of $4.23 for 2019 is old data. Right now Shen, who is about the only one who projects out a year at a time, has the 4Q 2018 number at 0.12, 1Q at 0.60, 2Q at 0.75, and 3Q at 0.93. If this is accurate that is a trailing EPS of $2.40. The 1Q number of .60 may be a bit high but DQ does have some pricing power over competitors because they are the low cost manufacturer and the most likely to survive any catastrophe. Buyers of poly will pay up to secure commodity from a reliable source which is the least likely to disappear. Nothing puts a going concern in jeopardy more than an interrupted supply chain of critical commodity. Beyond that it gets cloudy in a positive way since Phase 4 is a current work in progress by then. Add to that the possibility of a stronger world market for Chinese solar products, a stronger Chinese domestic market, and the continuation of the import restrictions on poly into China which were implemented prior to the tariff issues and most likely will survive post tariff resolutions. A wild card that you point out are the new low cost capacities that would be on line in 2019 but again, DQ is the low cost manufacturer so in a price war, they can drag everyone in to un-profitability, take market share if they have the inventory and still make money. Then the better future is just moved out to the right, and if some of these poly competitors go belly up, the future may even look brighter. Regarding JKS, Shen has the 4Q at 0.40 EPS and 1,285 million for revenue. Last year JKS made a stealth move like this nearly doubling if my memory is correct so I took a trading position in it to along with the other stuff I posted above. (edit: Looking at the charts I think the stealth move was in 2017)
  12. MVA

    Canadian Solar (CSIQ)

    China unveils an ambitious new push on grid parity solar https://www.pv-magazine.com/2019/01/10/china-unveils-an-ambitious-new-push-on-grid-parity-solar/
  13. SolarRoof

    Canadian Solar (CSIQ)

    Making 52 week highs daily, releasing a lot of news, nearly at the old go-private number. Any thoughts?
  14. Klothilde

    Daqo (DQ)

    Is your DQ a trading position or do you intend to hold for a long while? Because then I don't understand why to enter now when polysilicon prices are still falling. As written above I also intend to enter but first I'm waiting for the market to bottom out when the new low-cost capacities are online. I think analysts and the market as a whole are still overestimating 2019 EPS big time (current consensus $4.23 😳) and they need to adjust expectations first.
  15. dydo

    Genomic Index

    Jan 9, 2019
  16. Arrowhd

    Daqo (DQ)

    Hi all, I have lurked here for a while but since the demise of the Contrarian Investor this seems to be the place where thoughtful comments are found so I joined but not posted yet. Currently I own DQ and JKS buying them last week. (also own, HUYA, MOMO, ACRGF, ROKU, KSHB. Had MU and CGC but got stopped out). Regarding DQ: --The Phase 3 ramp exceeded expectations. Originally DQ felt they would reach full capacity at the end of Q1 2019. They performed much better than their guidance. --The current ASP for poly is still challenging due to China domestic market. The expectation is for the market to start to recover in late Q1 or early Q2 as China markets start to recover. --Global markets will grow very fast in 2019 due to the significant cost reduction achieved in 2018. --Phase 4 will double capacity over Phase 3. Short term I think China will rebound some once they get the tariff issues smoothed out. Stabilization will be good. Solar should start to look attractive again. So I am mildly optimistic at this point but not expecting the participation that we saw last year when it was up in the 60s. First stop may be in the 30s but constructive buying will be important. I think both DQ and JKS can do well this year. JMHO of course, lots of good opinions on this.
  17. Earlier
  18. solarpete

    Solar News

    It's a question of what Qu values more: his reputation or his wallet. I'm sure the JA Solar company officers made a killing with their move. Now I sincerely hope Qu does NOT try the same thing (I'd lose a chunk of change on the shares I still hold from higher prices), but I'm actually surprised he didn't follow through on his rather weak effort last year. The temptation is certainly there. Let's hope Qu's pride continues to overrule his greed. But I've learned most of the time, in situations like this, greed eventually wins.
  19. MVA

    Solar News

    I was never JA Solar investor, and I don't care about any settlements. I see in this a great signal to Dr.Qu, that image of his company can be damaged, in case of such class actions. And those, like me, who follow CSIQ for 5 years or more knows very well that Qu cherishes very much his personal and his company's reputation...
  20. Mark

    Solar News

    Yep, the only people that make money on these are the lawyers.
  21. solarpete

    Solar News

    And you'll probably see still more. I've seen up to half a dozen in one day. But never any follow-up that anyone was actually held accountable. I HAVE received small settlement checks from class action lawsuits in the past, but not from any that were splashed across the headlines like this. The amounts were tiny (a few cents per share), and the settlements explicitly said the company did not admit any wrongdoing, which meant no company officers faced any retribution.
  22. MVA

    Solar News

    Another NY legal firm files class action against JA Solar https://www.pv-magazine.com/2019/01/08/another-ny-legal-firm-files-class-action-against-ja-solar/
  23. explo

    Daqo (DQ)

    Ok. Good luck with the insightful gamble.
  24. Klothilde

    Daqo (DQ)

    I feel like gambling a little bit with DQ, ideally I want to pick it up in the single digits and then dump it some months later in the 30s or so. I think the poly glut will peak in Q2 when all new capa is online and in the second half of the year the increased demand should lift up prices somehow. DQ has proven to be quite resilient, so I would expect a solid rebound once poly prices improve a little bit. That is my thinking at least. As far as FSLR is concerned it is obviously poly price exposed but the exposure is limited. I expect poly to bottom at $7.5 or so from the current $9. That would decrease module prices by 0.6 cts/W roughly. That downside is relatively small compared to the cost cutting potential and is not immediate since they got prices largely fixed for the next two years.
  25. dydo

    Beyond Solar

    A 30% return based on the date of the post and today's closing. The stock is at just above $1.3B market. Two M&A actions, BMY, and CELG mentioned by explo and LLY buying LEXO are putting a bit of fire on the buyout candidates. BMY and Pfizer is a maker of Eliquis and JNJ and Bayer make Xarelto. Andexxa made by Portola is an antidote for the two drugs. Eliquis is more dominant in sales, between overall markets some $12 or $13B in sales in 2019 and more with an available antidote. Now JNJ and Beyer wanted to use Xarelto in the area where Bevyxxa another Portola drug is already approved. Since BMY bought Celgene, JNJ purchase of Portola seems very logical. There is a sense that Portola can help JNJ and the perception that Xarelto has more bleeds with Andexxa. Bottom line Portola is a candidate for a buyout and JNJ seems like a potential buyer. At 4 times of Andexxa $1B sales and perhaps $500M for Bevyxxa when fully running, $6B looks like $96 per share. This will not happen tomorrow, but there is a good potential that stock could be $70 by Q3 of this year. Good Luck.
  26. dydo

    Genomic Index

    Jan 7, 2019
  27. solarpete

    Solar News

    While I understand (and, as a former [albeit small] JASO stockholder, share) the sentiment, I wouldn't put too much stock into this announcement (pun intended). First, since the guilty parties are all in China, I don't know if a US court has any jurisdiction over them. Second, Pomerantz are ambulance chasers. I've seen their name in dozens of headlines. A company will announce bad news one day, and the next half a dozen of these guys all announce lawsuits, including Pomerantz. I have never once heard of such a suit actually being successful. So this may be a Pyrrhic victory at best....
  28. MVA

    Solar News

    A New York-based legal practice is preparing a class-action lawsuit on behalf of shareholders in the formerly Nasdaq-listed Chinese solar company JA Solar. https://www.pv-magazine.com/2019/01/07/law-firm-says-ja-solars-nasdaq-stockholders-were-left-out-of-pocket-by-backdoor-listing-in-shenzhen/ Let it be a good lesson for you - Mr. Qu (CSIQ)!!!!!!!!!!!!!!!!!!!!!!
  29. solarpete

    Solar News

    Fair enough. DQ's numbers ARE rosy compared to the energytrend ones (the energytrend article predicts 111 GW in 2019). But as has previously been noted on this forum, past forecasts have been overly negative. It's not that large a spread from 111 to 120 (the lower end of the DQ range). I would not be at all surprised to see 2019 turn in a performance around 120 GW. (140--now that's a stretch.) Finally, the overall outlook painted by the energytrend article is quite positive. I especially liked this bit (from Trend #3 in the article): "Although the whole PV supply chain suffered from low margin and oversupply in 2018, the Tier 1 companies still reported strong operating results driven by their advanced technology, competitive cost structure, and wide coverage. Most of their capacity expansion plans can still be put into practice." Sounds good to me!
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