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Everything posted by SCSolar

  1. Canadian Solar (CSIQ)

    Has anyone estimated the true operational cost of running the gobal project business for CSIQ? Where is it actually at now as a whole for all the project development areas around the glob? I know CSIQ indicated that Recurrent was going to add about $7M a quarter to operational expenses when they first acquired it but is that the real number? From the looks of comparing operational expenses to peers (JKS/Jaso), the real project numbers may be between $30-$42M per Quarter in Operation costs for the global project development business. For Q2 CSIQ cost per watt in Operational expenses is $0.057, while JKS was $0.038 and Jaso was $0.035. CSIQ is on average $0.02 higher per watt or $35M higher per quarter( is that the project costs?) CSIQ for sales and general administrative is $0.0529/W while JKS and Jaso are 0.0346 and $0.033 respectively. CSIQ is higher on average by $0.0189. CSIQ Q2 sales/watt is $0.0225 which is lower than JKS at $0.028/Watt. CSIQ shipments of 1745MW would be $32.9M a quarter at $0.0189 difference.(Is that the project costs?) JKS breaks out Sales , general administration and RnD. The general administration is $0.0064/W for JKS while CSIQ is $0.0303. The difference in general administration is $0.0239/Watt. Based on CSIQ Q2 shipments that would be $41.7M per quarter.(Is that the project costs?) JKS General Administration fell from $0.0218 in Q216 to $0.00639 in Q17. That is $0.0154/watt decline. While JKS did not have the global developer foot print CSIQ had that still would be $26.875M per quarter. (Is that the project costs?) I might suggest then given all things relatively equal that CSIQ $53M general administration less JKS $18.44M is the minimum quarterly cost of maintaining their project development arm. This would be $34.5M a quarter or $138M. (Is that the minimum project costs?) As noted above, JKS and Jaso have similar Opex and Sales costs per/W as the breakout from earnings . If you adjust for a greater foreign shipments for JKS, then they are almost exactly the same (100ths of a cent difference). It is reasonable to presume CSIQ should have similar costs if they do not have a project business. It is reasonable to want to extract the project business from the module business for operational expenses. CSIQ is looking to build near 1GW annually in projects. If any of the numbers by themselves they look very delicious but that does not add thehidden operational expenses that are embedded in current earnings. If one can extract reasonable expenses for the project division, then the margins and ASP needed to support the project business would be able to be calculated. For example, the last several transactions of sales looks to have a return on equity invested in the range of 60-80%. That is a nice return. If 1GW is being built for $1/watt and 20% equity is invested, then the company is going to gross between $120-$160M. This would suggest that the project business will have little net income unless the average ASP is higher and margins are above 15%. With the project business extracted and the module business near peers, then one could also estimate profits separately in the module business side more accurately. any comments or feedback is appreciated.
  2. Canadian Solar (CSIQ)

    I also believe there is not way they get $0.11. The company the PPA uses some power arrangement that they do not buy any power over $0.09 and for the most part stays well under that. Regardless, they will no longer own the projects and will not recognize revenues after the transaction. That makes that data irrelevant What is key is what you and I agree on, that they most likely have near 18% GM on the equivalent sale of $1.60/watt.
  3. Canadian Solar (CSIQ)

    I need to research more. I believe I made a mistake using Operating income.. I also am confused on the comment of 2017-1 month used in their numbers. Does that mean 11 months of results or does it mean Jan-August or Jan-Mid september? As for power generation, I use an NREL application for the town of Lemoore which is the same county as the Mustang. This application suggests 270M kWhrs in a year or 2022KWhrs/kW.
  4. Canadian Solar (CSIQ)

    From the asset valuations and net equity and Capacity I get the following Mustang Asset Value per W = $2.31 or what they claimed sales values would initially be year ago Tranquility Asset Value per W = $1.26 Garland Asset Value per W = $1.21 Total Asset Value $631M Net equity $245M equity to asset value is 38.8% The question is what % of equity did they invest? This will skew the results significantly. If they invested 20%, of the project cost then their equity investment is in the range of $150M. CSIQ is making a very nice return of $82M or a return of >50% on equity invested. If they invested 30%, then the net gains are basically zero as they would have put in equity of $231M.
  5. Canadian Solar (CSIQ)

    They are holding companies set up by Recurrent for the projects developed under garland and tranquility. https://www.bizapedia.com/ca/re-mojave-holdings-llc.html https://www.bizapedia.com/ca/re-cantua-holdings-llc.html Cantua is in Fresno County and is 11 miles from the city of Tranquility. This would be the Tranquility project.. The town of Mojave is in Kern County and would be the Garland project. http://recurrentenergy.com/portfolio/
  6. Canadian Solar (CSIQ)

    I would not presume they are at a loss. It all depends on what their cost basis is for the projects since they had sold the Tax equity portions. I might speculate their costs are in the range of $1.30-$1.40/W D.C. after subtracting out the Tax equity that was sold of or acquired. This suggests a mid teens margins on total project sale. The average sale price is $1.60/watt D.C. based on total Assets of $633.4 and MW of 393.7.
  7. Canadian Solar (CSIQ)

    The Net equity for the 3 projects is listed and comes to $240M. The paper indicated they are selling the net equity portion for $232M. Shenzen would then own the company and the debts associated with the ownership portions. The projects are DC rated.You can find the details of the projects at the Recurrent Website. They give both AC and DC ratings http://recurrentenergy.com/portfolio/ The link from Klothilde gives first years hours of sunlight for the projects. as well as The Mustang Ranch revenue. You can approximate the PPA from these numbers which suggest a $0.05 PPA.
  8. Canadian Solar (CSIQ)

    Do you know if any debt is being transferred as part of the sale? The total equity to be invested in building the projects by Forsight looks to be $0.88/W USD.
  9. Quarterly Estimates

    I have never liked the sum of the parts analysis. The only time this type of analysis makes sense is when assets are current assets and someone is looking to do a hostile takeover to break apart the company. In those cases the acquiring company is looking to buy the company a a deep discount to the sum of the parts so that they can turn around and sell the assets individually. Thus the sum of the parts never lines up with share value, otherwise all companies would trade at book value plus. The analysis from Downgate Hill, takes a view of values for items to be built over 4-5 years and tries to apply a value that they believe the company should get today instead of a value based on executions over the next 4 to 5 years. In a stable growth industry that is a fair assessment. In a volatile upstart industry where boom bust overcapacity and price wars are prominent, that type of analysis is highly flawed.
  10. Trading Strategy

    When I was talking Garbage, I was talking Waste Management (WM). They are a nationwide trash and recycling company in the US. When I bought them back at 45 the dividend was near 3.5%. The dividend is now 2.14 while the stock is up 77% in 3 years. It is up 4 fold since 2008 which exceeds the DOW. That is a stable income with growth with limited exposure outside of Gas pricing. I used to dabble heavier with a larger percentage in solars but as I approached retirement the volatility was to high for my risk exposure. I loved the home runs but hated the drops in value. I sleep much better now and worry far less. I still trade solars but only in the 5% range of my total portfolio which is down significantly as a percentage and raw dollar value.
  11. Trading Strategy

    I have my investments in 3 different account structures since retirement 4 years ago. These are an IRA in index funds 100% invested. A static brokerage account that is invested in dividend paying giants of their respective industry. A trading account that is 10-40% cash and is distributed in and out dividend investing companies and solars. The IRA is in 4 funds currently, of small mid cap, health and SnP. The returns this year is 11.75% including commissions and fees. In 2016 and 2015 the account was up 9.6 and 1.39%. The average 3 year return is 7.56%. The static account is made up all are dividend investments stocks. I t consists of 2 Tech Giants, 2 Oil/Gas/Specialty fluids, 2 Telco, 1 CPG and 1 Pharma. The returns this year on the portfolio is 9.2% on the total account and 14% on just the invested monies. In 2016 and 2015 the static account was up 11.6% and 3.8%. The average 3 year return in 9.7%. My trading account gets re-balanced periodically with stocks bought and sold weekly to monthly. This portfolio is primarily invested in dividend stocks and solar is traded regularly. The portfolio keeps 10-40% in cash and is broken out to be 2 or 3 Tech Giants, 2-3 Oil/Gas/Specialty fluids, 2 Telco, 1-2 CPG, 1-3 Pharma/Medical suppliers, 1-2 Health Insurance, 1-2 Energy Companies, 1-2 Transportation , 1 Garbage and 1-3 solar companies. The return this year on the portfolio is 11% with a return of 14.5% on the actual average invested. Last year this portfolio lost 3% primarily from the initial crash and going to 50% cash. in 2015 the account grew buy 9.5%. The 3 year average return is just over 6%. It is clear to me that from the 3 types of portfolios I have used for the past 3 years, Index funds, static individual stocks and actively traded, the 3 years of returns suggest that staying in a diversified sector portfolio of industry leaders will yield the most consistent returns with the lowest volatility. The 9.7% 3 year average with partial invested exceeds the S&P 500 3 year average of 8.4% fully invested.
  12. Trading Solars

    Thank you for the report. I was not aware of this major change in policy. This puts the burden of FIT payments on the local provinces for anything built above and beyond the national quota assigned. "In May 2017, the NEA circulated a supplementary notice for provinces to submit their development plan of renewable power for the 13th Five-Year period, and the document specifically spelt out that the individual local government would be liable for the subsidy requirements of any excess installations beyond the national quota;"
  13. Trading Solars

    China pays a FIT which is the difference between, coal ($0.04) and the FIT rate of $0.14. That is $0.10 USD per KWhr generated. Currently with the rate of installs , Chinas installed capacity will be 140GW by years end. This is going to put the Chinese government on the hook for $15B a year in FIT payments. Currently the FIT catalog updates is only through early 2015. That places 70-80GW of projects only getting market rate of $0.04 and not the subsidy. They have a dilema due to the fact the FIT is paid from a pool of increased energy taxes. These tax rates are not large enough to cover the total FIT from 2 years ago let alone the new capacity add. This inability to pay the FIT may lead to a rapid reduction in FIT qualified projects and the movement to competitive bidding. This could have a negative impact. From a project developer perspective the $0.04 barely covers debt service if they are not in the catalog. At the time of spinoff Jinko solar had around 10% of their capacity in the catalog getting the full fit. Jinko has guaranteed the debt payments of the power plant spinoff. If the spinoff fails to make the debt payments, then Jinko is liable to make them on the spinoffs behalf. Jinko is also floating credit to the spinoff in the form of hundreds of millions of dollars in modules. with very favorable payment terms to the spinoff. Thus while Jinko does not own any projects anymore in China, their exposure to the lack of payments is very significant and is a type of off book accounting. This is not unique to Jinko but to all the Chinese manufacturers where they are basically floating interest free debt among each other. The way China is funding the projects creating leveraged debt and notes payable may set itself up for a big hemorrhage.
  14. Canadian Solar (CSIQ)

    Minimum lending rates between parties is set by the IRS in a monthly published AFR rates schedule. Projects in the construction phase are financed as Short Term with a funding of 0-3 years. The minimum funding in April when CSIQ received their financing was 1.11%. They most likely had to pay a 1-2% premium on that. That is what happens when a Trust I am in borrows money from the Fed. https://apps.irs.gov/app/picklist/list/federalRates.html?indexOfFirstRow=0&sortColumn=number&value=&criteria=&resultsPerPage=25&isDescending=true
  15. Canadian Solar (CSIQ)

    Agreed, the equity returns can be very very good.
  16. Canadian Solar (CSIQ)

    It is not 12.6% GM on the $42M sale. It is $18M gross which equates to 12.6%GM on the estimated $140.8M total project value at $1.53/watt. That would be 42% margins on the $42M sale. If one looks at the equity input at 25%, the the gross drops to $9.7M and the margins on $42M is 23%. Taking this one step further a 30% equity investment would suggest a profitless sale. To me not knowing the actual equity would a tilt towards the $18M gross with the $9.7M as the next most likely gross.
  17. Canadian Solar (CSIQ)

    The $97M debt plus $1.19M of Capitalized debt
  18. Canadian Solar (CSIQ)

    It looks correct if debt is transferred as part of the sale. That looks to be a sale that would generate 12.6% gross margins with the sale price of $1.53/watt. They financed the project with $97M debt per the PR from April 25. If you run some numbers of debt, 20% their own equity, capitalized interest for 5 months at 3% for ST bridge loans, and 15% premium on the cost to build, you would find sale at $140.8M. The cost to build (debt+20%equity+capitalizedDebt) = $122.4M. The $42M received would be their equity investment of $24.25M + Gross profit of $17.75M. That gross profit is $17.75M/$140.8M or 12.6% margins. Coincidentally the $42M is right in the range of the 30% ITC credit the buyer would get for the total purchase price of $140.8M. If the equity they invested was 25%, then the margins look to be 6.5% with gross at $9.7M
  19. Trading Solars

    What 5 to 6 GW pipeline? Their August investor presentation shows 120MW in the U.S in late stage and 3.3GW of early to mid stage(slide 9). It is unknown how much of the 3.3GW they will ultimately win or approve. http://media.corporate-ir.net/media_files/IROL/19/196781/CSIQ-IR-Presentation-August-2017-v-Final1-.pdf The 3.3GW of early to mid stage projects are projects where they have been brought an RFP, have reviewed and approved a competing bid to offer or they believe there is an opportunity to bid on a project but the details have not been brought to the review committee to approve bidding on.(slide 7 note 2) "Early to mid-stage of development: includes only those projects that have been approved by our internal Investment Committee or projects that are expected to be brought to the Investment Committee in the near term."
  20. Trading Solars

    Candadian solar announced Ku branded modules in May that uses half sized cells http://investors.canadiansolar.com/phoenix.zhtml?c=196781&p=irol-newsArticle&ID=2277549 The data sheets are available on their webste. https://www.canadiansolar.com/en/solar-panels/ku-modules.html Jinko Solar announced a similar Half Cell module on Sep 11. branded as the Eagle HC module http://ir.jinkosolar.com/phoenix.zhtml?c=234421&p=irol-newsArticle&ID=2299619 The Data sheets are available on their website for 60 Cell Mono and Poly but not 72 cell. https://www.jinkosolar.com/download_356.html
  21. Trading Solars

    Page 1 and 2 section on SPI 2017 takeaways SOLAR-SEP2017-MercomSolarReport18Sep2017.pdf
  22. JinkoSolar (JKS)

    Didn't they sell the plant business in Q3 and give adjusted numbers?
  23. JinkoSolar (JKS)

    Can anyone explain Jinko Solars general administrations drop of 50%? They were at $35M in Q3 and in Q4. Suddenly in Q117 they were $16M + and in Q217 $18M and change for the general administration item in the operational expenses.
  24. Do you recall any solar companies that have ever vested their convertible options?
  25. Canadian Solar (CSIQ)

    You are suggesting $160M in revenues from the US and Japanese projects. Do you believe these are profitable immediately or would you believe they are GAAP losses like the Yieldcos? It looks like they will generate a nice positive cash flow or CAFD per year.