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SCSolar last won the day on May 31

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  1. I expect gross coming in around $130M+/- at 15% margins. I have Opex and interest at $130M +/- Thus I have them breakeven to slight loss or profit from operations. It really depends on margins and other impacts. I am not certain about their hedging on forex. CSIQ had a big Forex loss from appreciation of the RMB. The 15% margins presumes some CVD reversal again as they and CSIQ have been claiming to pad earnings. If you believe margins is closer to 14% then that is $8-$9M lower gross which could push them to a loss that you are looking at. They are cryptic in guidance as they suggested that they need 30-40% of their product outsourced and the rising costs of those outsourced parts of upstream and modules. This will offset some of the believed ASP increases from more Mono Perc production. Thus the flat margin guidance they gave These solars are not predictable anymore due to many adjustments. At current price levels they are to rich for the risk reward levels.
  2. Total renewable energy capacity passes that of coal in the U.S. FERC projections that Renewables will supply 1/3 of the capacity in a few years. https://solarindustrymag.com/renewables-finally-beat-coal-for-u-s-electrical-generating-capacity For the first time, U.S. electrical generating capacity by renewable energy sources – biomass, geothermal, hydropower, solar and wind – has surpassed that of coal, according to a SUN DAY Campaign analysis of new data from the Federal Energy Regulatory Commission (FERC).
  3. By the time their first debt payment comes due. I would expect like most CN offerings a 10-15% dilution or appx 1.5- 2 million shares. That would generate cash for about 15-20% of the debt. The added capacity should be good for around $40M in added gross profit anually. Just some rough numbers off the top of my head, I would speculate that would be good for about $2 a share in added earnings with the debt service payments. That would look to be a second half 2020 boon in earnings in which they could be looking at $6+ a share($1.5/Q) in earnings if the cost to ASP spread maintains around $1.75.
  4. Debt and secondary offerings will be needed to finish off the ~$450M phase 4A. From the Q4 con call the way I read it is that Phase 4A is 2.9Billion RMB or roughly $450M. There is no way cash flows pay for this or a secondary. If they do debt on say $400M, then they have upwards of $20M in interest initially. Earnings would be impacted significantly with that level of debt payments. Thus they need a combination of a secondary, operational cash flow and debt. just my opinion. Then there is the 4B expansion that was not discussed in details in the Q4 call. https://seekingalpha.com/article/4248446-daqo-new-energy-corp-dq-ceo-longgen-zhang-q4-2018-results-earnings-call-transcript?part=single Longgen Zhang Well, for Phase A, I think it basically right now because Chongqing right now is in battle with that. So, our construction right now almost finished 18% and for the old design approval all finished. I think for the equipment, I think procurement, the contracts that we have signed, total today, we have signed around RMB2.6 billion. The total project cost – total cost is around below RMB2.9 billion. So basically our schedule starting to trial production is October 15. Up to to-date we are still thinking we are on the schedule and ramping production in the Q1 2020. And for the 4B we need to tell on the market see what’s going on and also to see our future cash flow. So basically we are not determining when or whether we will go to starting 4B.
  5. EPS is tough to estimate. The one thing that can be counted on is the module sales into the project. Since theyse projects are bid a year ago for many, then I can see them being higher ASP. The fact is they do not do the construction and I am not certain what the construction cost is. Many of these projects are being built for $0.80 these days. If you presume $0.30-$0.35 for the module ASP from a year ago, then there is $0.45-$0.50 in other costs. I do not know how much would be cost in rack mounts buildings, inverters wiring road developent and land cost. The rest would be third party construction and the Engineering. I can't see the Engineering and Procurement being anymore than say 3-5% of the cost to build as this is just paper pushing. If there are 900MW of EPC @ $0.80, then I see $720M potential revenue. Of this $270-$300M is from module sales(slightly more if all in the U.S.) The EPC costs billable would be $36M @5% The other materials and labor permits etc would be around $400M. If they skim 2.5% commissions from the sub work, then they get another $10-$11M. Total revenue to them would be around $315M from 900MW of EPC work. The rest of the monies goes to third parties. If you presume 20% margins on modules they generate $55-$60M gross The cash generation from EPC would be around $45M. The EPC services I presume is built into the Opex. This would suggest a cash generation of $100M from the 900MW. These are my thoughts on where I am leaning about EPC As for the module margins, I think you are giving to much to low cost dumping of upstream product. I believe that they have moved to more full vertical manufacturing in which with Si under $10/kg they have moved their costs towards or below $0.20 for 60% of their builds. This will aid them in cost management incase of rising upstream costs on wafers and cell rising. My take is that JKS should be pushing 20% plus module margins as well if it was just upstream supply. I understand that JKS had been buying 25-30% modules at estimated 5% margins This would put JKS internal blend at around 18% margins to attain their 14-15% margins.
  6. They see the same upsides I mentioned. There is another dime or 2 that could be had on top of the current guidance. I am not certain about the 2020 numbers.
  7. I think you need to take with a grain of salt their stated costs. Typically costs are quarters end stated for internal production with current quarterly claimed margins. They have a large deferred revenue recognition with respect to their project builds and module acceptance periods of customers. This means that a large portion 30% or more could be from earlier builds as much as 6 months earlier when their costs were much higher than Q4 stated. For example it takes 1 to 2 months to freight ship. It could take another 1 to 2 months to get them installed. The contracts may also have acceptance clauses that require 6 months of running for baseline output. This suggests that a good portion of the quarterly recognized modules for revenues could be deffered from quarters back. Just look at Q1 where there revenue recognized modules were 1423MW and shipped is about 150MW more. As they mentioned they have over 900MW of EPC projects going on. That is the potential of 250MW a quarter in deferred sales until completed and acceptance. As they roll into more and more NTP this will be worse as will some of their major customer contracts like the recent 1.8GW contract. You also need to understand that not only is the deffered sales hitting their cost structure but it also props up the ASP. They are also being selective and selling to high margin markets and have built a direct sales team. These all lead to the higher ASP as well. The ASP was covered in a reply to Colin Rush.
  8. I have a hard time confirming the $0.30 ASP. I do have theories after looking at revenue segments from the PR. The theory is that revenues of module sales is included in some of the other areas of revenues such as Kits OAM and ESS Projects. They shipped for Revenue 1423MW $371M for MSS solar modules and other products = $0.26 ASP If you add in $25M for kits , the ASP is $0.278 if you add in OAM you get $0.306 if you take MSS $431M you get $0.318 If you take MSS Kits OAM and Energy Projects you get $0.323 Clearly in MSS numbers some of the products is inverters rails etc as part of the kits. Lets presume Kits are 1/3 other costs $0.10 for inverters maybe $0.05 mounts connectors etc. This would reduce 8.3M from the revenue side and $0.006 in lowe ASP If OAM includes upgrades to modules, then there could be some module sales embedded inthose numbers. If say 20% of that is modules, then you lose about $0.022/W I presume that some of the Energy section could have embedded in it the module ASP for the NTP projects as sales. This could be as much as 70-80% of the services. That would lose about $0.01 on the above numbers. Very odd but my best guess is they took MSS numbers, at $453.1. This is $0.318. They subtracted out kits other costs and OAM non module costs(total of around $40M) or $0.028 And added in some NTP revenue say 50% or $0.008. That would get you around $0.298 ASP. This is just looking at the numbers and trying to figure where some of the module revenue would be recognized as a whole.
  9. Looking at the numbers I find reasonable module margins 22% other MSS 25% project COD/NTP 10%(Q2 COD 5%) Rev Q / Total / (Module) / (OtherMSS) / (Project) 2 / 1001 / 580 / 80 /341 3 / 1157.5 / 598.125 /80 /479.375 4 / 1157.5 / 598.125 /80 /479.375 Gross Q /Total /Module /OtherMSS / Project / Margin 2 / 164.65 / 20 / 17.05 / 16.5% 3 / 199.525 / 131.588 / 20 / 47.94 / 17.24 4 / 199.525 / 131.588 / 20 / 47.94 / 17.24 Opex and Interest Q2 = 140 Q3 = 142 Q4 = 155 Q / Net after Taxes /EPS 2 / $21M / $0.35 3 / $48.9M / $0.83 4 / $37.85 / $0.64 Upside for Q3 and 4 with JPN projects sold is $16M/Q or $0.27/share EPS Upside for added module sales $11MNet or $0.1874 Upside EPS Q3/4 = $0.45/share Upside EPS Q3 = $1.28 Upside EPS Q4 = $1.09 That upside with Q3 EPS pushes 2019 estimates plus a dime or 2. Moving into 2020 I expect projects sales revenue to drop significantly as a whole of revenue as the move to predominately NTPrevenue vs predominately COD revenue of 2019. 2020 Module margins are likely to maintain in the 20% +/- range.
  10. Interesting quote in the ER regarding guidance. I do not recall them ever making this claim in an ER. They have discussed in the past bookings for the year. " Separately, in our MSS business, we are currently running with about 50% to 60% of our long-term capacity booked. We have historically left some capacity to meet the needs of higher margin near-term sales. This has been a very successful strategy and remains an important element of our planning, execution and track record of success." From the reading of it. their long term capacity for the second half looks to have about 5GW of module capacity. 50 to 60% of that is 2.5-3GW is on the books. The second half guidance is suggested at around 4.3GW. This suggests they need to book 1.3-1.8GW still to meet full year guidance. That would be an 86% target capacity rate presuming capacity being added in the second half comes online for a 50% utilization. . There would be upside of around 350MW a quarter for Q3 and Q4 based on target module capacity between June and End of year getting 50% utilization. That is an upside potential of >$200M in earnings upside for the full year.
  11. Q1 was proped up by a 16.1M CVD reversal and a 7.5M tax credit. Else the loss would be pushing pushing $0.68 Q2 guidance is suggesting breakeven to slightly profitable based on top end revenues and margins. The guidance is suggesting $151M in gross profits. The Opex should climb ased on about $12M based on 500MW of added shipment costs.
  12. I expect a good loss from CSIQ in Q1. I expect a profit for the full year based on current guidance. I expect 2020 will be les sprofitable than 2019 and once the Japan projects are history, for them to stay in the $1-$2 EPS in most years. To me that is a $10-$18 price range for the next 2 + years.
  13. India is cutting solar install targets for 2019 and 2020 by 23%. They are lowering the targets to 8.5GW. Primary issues is land acquisition. https://cleantechnica.com/2019/05/27/india-cuts-solar-capacity-addition-target-by-23-for-2019-20/ The Ministry of New and Renewable Energy (MNRE) recently announced the capacity addition target for solar power in the financial year 2019-20. India aims to add 8.5 gigawatts of solar power capacity between April 2019 and March 2020, including 1 gigawatt of rooftop solar power capacity. The target is 23% lower than that set for the previous financial year, 2018-19.
  14. Yeah you were overy bullish at $0.56. Q2 will be worse.
  15. Hobo was opportunistic. He weaves a nice compelling story. He totally blew his credibility on his pumping of LDK. He used to bash CSIQ because they were not vertically integrated and vertical integration was the way forward according to him. That is why he shifted to LDK and their Poly to module story line. He trashed CSIQ because they were just buying cells and slapping them into modules. Anyone could do that he claimed and the real module makers were doing the full production line. Then the markets shifted to mass producers to lower costs and the CSIQ non vertical integration became the way to go. They carried less inventory and had less exposure during the down cycles. CSIQ did not take the massive write downs that others did in part because they did not have the inventory buildups and they did not spend heavily on Capital expenditures like others including Trina. Their worst write down was what $20 or $40M payment to LDK unlike Trina and others that wrote down hundreds of millions to Billions in contracts and PPnE.
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