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SCSolar

Solar Investor
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SCSolar last won the day on November 1

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  1. SCSolar

    Trading Solars

    Rough week on the market. It wiped out my gains from the past 5 weeks. This year has been like that. A slow crawl up, then wham gone in 1 week or so. 2 of my accounts are under water, 3 accounts are up 4-6% for the year. Overall negative for the year. Plays in Tech, Marijuana and Lithium have not done well. The tried and true large cap dividend has fared better.
  2. SCSolar

    Solar News

    Price Trend reversal, everything is going up components to modules with PERC leading the charge http://pvinsights.com/ Item High Low Average AvgChg AvgChg % Multi Cell Price Per Watt 0.135 0.090 0.103 Positive Change Sign 0.002 Positive Change Sign 1.98% Non China Poly Cell Per Watt 0.140 0.090 0.103 Positive Change Sign 0.002 Positive Change Sign 1.98% Poly PERC Cell Per Watt 0.135 0.105 0.111 Positive Change Sign 0.002 Positive Change Sign 1.83% Non China Poly PERC Cell Per Watt 0.135 0.115 0.122 Positive Change Sign 0.002 Positive Change Sign 1.67% Mono PERC Cell Per Watt 0.170 0.145 0.149 Positive Change Sign 0.004 Positive Change Sign 2.76% Non China Mono PERC Cell Per Watt 0.170 0.145 0.149 Positive Change Sign 0.004 Positive Change Sign 2.76% High Eff Mono PERC Cell Per Watt 0.170 0.150 0.155 Positive Change Sign 0.005 Positive Change Sign 3.33% 156 mm Multi Solar Cell 0.630 0.400 0.472 Positive Change Sign 0.01 Positive Change Sign 2.16% 156 mm Mono Solar Cell 0.870 0.530 0.605 Positive Change Sign 0.005 Positive Change Sign 0.83%
  3. SCSolar

    Canadian Solar (CSIQ)

    Good past is prolog argument. https://www.profitconfidential.com/stock/canadian-solar-stock/canadian-solar-stock-worth-double/
  4. SCSolar

    JinkoSolar (JKS)

    I am with you on this near term. They have not been hitting margin guidance as of late. Q3 operationally looks a lot like the prior quarters and Q4 appears to be similar as well. That is they are basically a profitless module manufacturer and are using 1 timers, subsidies and Forex to show profitability. In Q3 They made $27M in net income after an $8.9M tax liablity($35.9M) They had $33M in CVD and Forex gains. They basically made $2.9M before taxes. Of that $2.15M comes from other income Net and subsidy and not core operations. That makes them ~0.8M outside of adjustment or profitless. When projecting forward, Gross might go up slightly but they should have an added $15M for shipment costs offsetting much of that increased gross. To me Q4 looks similar with maybe slightly better income outside of adjustments. As for the bullish response in stock, that is always forward looking 6 to 9 months out. This movement is more market based on bullish comments. for 2019 How that translates into increase shipments and margins is TBD. They made China demand comments suggesting 55GW to 60GW bsically moving back to 2017 levels. When you add 10 to 15GW China demand to the 4GW from India and third world market growths as well as the EU increases, you could be looking at 25-30GW increase in shipments over 2018. This places demand in the 115-120GW range next year with potential upside. The negative that I see on this is that they are not doing much in Capex next year and are relying on suppliers. Those comments do not suggest such a large increase in demand. T The reliance on suppliers instead of capacity growth t would suggest it would keep their margins lower with little upside movement. "2019 we are still budgeting the CapEx next year. It’s going to take very conservative and the prudent approach and we don’t expect significant investment in 2019. Our focus is to work with our strategic supplies to deliver high quality products to our customers."
  5. SCSolar

    JinkoSolar (JKS)

    Yes , while shopping for grocery it dawned on me that my logic was flawed. I was taking inventory/guidance to determine a cost for materials. That works fine for a CSIQ that does not OEM but is flawed when looking at JKS that can spike sales by using OEM. When taking OEM volumes out of the equations, the margins drop significantly for JKS into the low teens.
  6. SCSolar

    JinkoSolar (JKS)

    I believe they got the margin boost that most were expecting. The benefits from the upstream ASP collapse would be best for Q4 not in Q3 and they should trend to better margins in Q4. You have to look at their inventory at the end of Q2 vs their Q3 guidance as Jinko has traditionally secured inventory plus for the the next quarters productions before the quarter. That Q2 end inventory vs Q3 actual shipments was a $0.3186 cost before depreciation on the RMB. Costs after the quarters depreciation would be $0.30684. Your suggestion of production costs of $0.28 is down $0.02-$0.03 from that level. This suggests that they carry far more inventory than required which historically they show. I believe they carry 20-25% more inventory than production historically. If you remove from that ASP $0.04 for labor depreciation and energy costs which are not inventory related, then the cost is $0.24 for inventory. When you use a cost of $0.24 then you get roughly inventory for the quarter to build guidance plus 23%. Looking at JKS Q3 inventory end, the target inventory to shipment levels is now $0.20 vs Q4 guidance. That is 33% lower input costs for Q4 vs Q3. This would suggest if they carry 20% over that the inventory cost is now around $0.17. When you compare Jinko inventory management to CSIQ, Jinko is not as efficient in inventory turnovers and Just in Time inventory management. This is in part due to larger wafering and cell than CSIQ. CSIQ inventory at the end of Q2 had a cost of $0.21 for the guided shipments for Q3. The fact that CSIQ costs came in at estimated ~$0.25 would suggest that they had exactly enough inventory if you add in $0.04 for labor, depreciation and energy. As of Q3, the inventory costs for CSIQ vs Q4 shipment guidance is now $0.1872. With added non inventory costs, their ASP will be likely around $0.23 or close to a 10% cost decline based on a 10% decline in inventory costs. That is relatively flat with where I expect their ASP decline for Q4 to fall. That is projecting flat margins on modules for CSIQ. For JKS their inventory is suggesting that in Q4 they would have continued benefits of the upstream price drops. It is reasonable to assume that JKS would increase their margins in Q4 even with the price drops of the ASP. This is due to the 33% invnetory cost reduction vs guidance shipments and the ASP price trend decline being favorable for JKS. With JKS contracted volumes from earlier, the ASP should drop less that the spot has dropped. Their costs to ASP spread should continue to increase as input invnetory declines 33% but ASP declines 10-15% in Q4. I am expecting this cost spread to rise from your $0.05 to $0.06 in Q4 as costs come in at ~$0.22-$0.23 and the blended ASP is ~$0.28. That is pushing 21% margins or a 5-6% improvement. Even relying on OEM, the margins would fall in the range of 15-21%. Comment: I have not listened to the con call as of yet.
  7. SCSolar

    JinkoSolar (JKS)

    I had pointed out the spread between upstream cells to downstream module pricing as an increase in margins and profitability. It appears for now that Multi Perc has a good price spread that is good for 20%+ margins. Mon Perc Cells to Mono Perc Modules appears to have only a 10-15% margin. The spread in China for Mono is a profitless endeavor. The mono perc cells cost 40% more than the poly perc cells while the Mono Perc modules command similar price in China as poly and only 10% more in ASP globally. This suggests for now that CSIQ model of pushing poly is advantageous vs the Jinko push into mono Perc.
  8. SCSolar

    Canadian Solar (CSIQ)

    Those would be reasonable if earnings is $2-$3 based on current dynamics.
  9. SCSolar

    Canadian Solar (CSIQ)

    I just went through the con call in details. The data points to current module margins of 25% and an ASP of $0.33+/-. The cost to manufacture is around $0.25+/-. The current market prices for cells and wafers would suggest that their costs could fall another 10%. The ASP is being held up by long term contracts that is around 30% of their shipments. I could see that the spread falls back to $0.04-$0.05 /watt with some of the changes in the EU market ASP and some US manufacturing coming on line. A gradual fall back would generate gross in the $0.05-$0.06 blended range. Module capacity would suggest the ability to produce for revenue 8.5-9GW in 2019 for revenue. 9GW would generate $450M-$540M. Projects at 15% margins are currently higher than expected. This is due to lower costs than expected for modules and other components. These savings for past contracts can add $0.10 in gross per watt and margins coming in at the 20-25% range vs the 10-15% range they were looking at during initial bids. This impact is not going to change as most contracts are a 2 to 3 year projection. $1B in sales would generate $150M+/-. The total gross could fall in the range of $600M to $690M. This would push $2-$3 in EPS with potential upside from projects and potential downside from module pressures. I view the lower end of $0.04/watt gross unlikely to be breached for the full year. Clearly module margins and guidance has the potential to make earnings volatile.
  10. SCSolar

    Canadian Solar (CSIQ)

    Excellent ER with great 26% gross margins propped up by Japanese project sales. Forward guidance for Q4 implies more Japanese projects being sold and another good solid ER coming. The 1 major negative is another reduction in Revenue for the year dropping some $500M from the downward revised guidance of Q2. That makes downward revenue cut by $1Billion for the year. This suggests they are having difficulties clearing low margin projects. https://finance.yahoo.com/news/canadian-solar-reports-third-quarter-100000909.html
  11. SCSolar

    Canadian Solar (CSIQ)

    All the solar companies are making bifacial modules(Trina, Jaso, JKS, GCL Longi, Jollywood, Hanwha etc. It is just a matter of acceptance and price per Watt. https://www.greentechmedia.com/articles/read/bifacial-solar-modules-inch-toward-the-mainstream#gs.RxgpfR0 The company recently installed two rows of bifacial modules — from manufacturers Longi, JA Solar, Trina, Jolywood, Hanwha Q Cells and Canadian Solar — at a New Mexico national laboratory to test the modules with its trackers and create simulation models from the test rows.
  12. SCSolar

    Daqo (DQ)

    It looks pretty good to me. DQ had almost a $2 spread per KG. They are expecting 6800-7000MT for shipments and production of 7000-7100MT. That puts the new capacity on line at around 40% utilization in the first full quarter of production as the ramp to 100% for Q219. Production was down in Q3 by nearly 15% which is inline with most poly doing upgrades and maintenance. As a result of lower production, the depreciation had increased 15%/KG or $0.20/KG. Ramped production should lower the cost in Q4 by $0.20 or more as the run full capacity. The new capacity ramp should likely lower it another $0.20-$0.40/KG. Overall production should be lowered by a minimum of $0.40 to mid $8.50 or lower in Q4. The production cost declines should keep the $2 spread for Q4 and depending on ASP delcines may increase that spread. The increased volume would suggest $12-$16M in gross for Q4 and likely profitable at $0.15 to $0.50 depending on adjustments and 1 timers https://finance.yahoo.com/news/daqo-energy-announces-unaudited-third-110000067.html
  13. SCSolar

    Daqo (DQ)

    I expect the Q3 numbers to be fairly solid as the ASP should be higher than current. I am expecting ASP declines to $10 or less over the next few quarters.
  14. SCSolar

    Daqo (DQ)

    I am looking at Q3 as a loss with their adjustments and write downs they announced. Q4 guidance should be interesting as I am expecting the production cost to ASP spread to be $2-$2.50/KG. That $2 spread is around $0.30 in EPS. The $250 spread would be around $0.50 in EPS. With 2019 production looking to be around 30-35KMT and a $2-$3 ASP to cost spread. the earnings looks to be between $2 to $4 for 2019. I see downside risk to those earnings with little upside. That puts a target in the $15-$32 range. That is far below Shens $55. Since the share price is mid $20's today, I would not be a buyer unless the fundamentals on production level, ASP to cost spread shows more bullish.. I might however be interested under $20.
  15. SCSolar

    Canadian Solar (CSIQ)

    https://m.energytrend.com/research/view/12545.html 5. As there are no new subsidy quotas released, developers should be very cautious with the execution of new projects. Under the existing framework, EnergyTrend predicts that the accumulated grid-connected PV capacities by the end of the 13th Five-Year Plan will surpass 250 GW, with the new grid-connected capacities expected to exceed 35 GW in both 2019 and 2020. The new installations will be headed by projects related to the "Top Runner Program," followed by the poverty-alleviation and non-residential distributed generation systems.
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