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SCSolar

Solar Investor
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Everything posted by SCSolar

  1. I do not trust Zacks. When they first started covering solars a decade ago, they had spellings typos and incorrect information. It was not of quality and none of the research I have read from them is of in depth quality.
  2. This is why China articles are not reliable. Jinko themselves and other articles indicated that Q1 installes were at 5.2GW in the first quarter alone. https://seekingalpha.com/article/4272691-jinkosolar-holding-co-ltd-jks-ceo-chen-kangping-q1-2019-results-earnings-call-transcript?part=single Gener Miao " Due to later than expected announcement of this year's policy, total PV installations in China were only 5.2 gigawatts in the first quarter. " I have read articles that suggest Q2 demand is lower than Q1 in China as they awaited policies That would peg CHina build outs around 8-10GW in the first half. I think you need to start looking at market shares.at15GW, Jinko is suggesting 12.5% global market share. You would think they would be more in their own back yard. A 10% share of the 40-45GW is 4-4.5GW from China. A 25% of shipments to China for the year, is 3.75GW. Looking at China demand year to date, a 10% share of the 8-10GW first half demand is 800MW-1GW in the first half. The second half would then suggest they need to ship 2.75GW ro 3.5GW in Q3/4. I believe Jinko indicated that China bookings were 70% for Q3 at the time of the con call. They suggested Q4 bookings was less than Q3 but they expected Q4 to be stronger.. If you take the comments that Jinko expects Q4 to be better than Q3 then model 40/60%. At 3.25GW that is 1.3GW in Q4 and 1.95GW in Q4. At 70% booked for Q3, they had about 900MW booked and needed around 400MW more to reach 100% of expectations for Q3. That is bookings they needed to get in Q3 for Q3. The Q4 bookings would be less than 70%, ets speculate 50%. That leaves them needing 1GW of bookings for Q4. As you can see based on guidance and estimates for demand from China and market share, JKS is suggesting potentially 40% of their module shipments going to China in the second half with around 1.4GW-1.5GW or so needing being booked in the second half. This level of China demand is going to impact their ASP in general significantly compared to Q1/2 as the China ASP is about 3 cents lower than the average ASP. The Q3 module ASP being in decline suggests the demand from the 20-25GW of FIT based modules has not hit for Q3 in part due to the late policy. This should create a generally lower ASP than originally expected. Their Opex will likely beneifit on a lower per watt cost due to the quantity of low cost local shipping and increased volumes. This would suggest that a lower ASP and a lower Gross margin would not have the direct 1 to 1 correlation due to the lower shipping costs offsetting the lower GM. If you read the policy, it is written with timelines that the projects would be built within 6 months or the FIT gets lost. This will create a demand rush with urgency to get them built. The problem with that is the FIT timeline is now pushed into 2020 for completion. This would put a good portion of that 20-25GW as not built in 2019. This might be why GCL was suggesting 35-40GW recently. This would also suggest that the 14GW range is probably more likely than the 15GW as of now. In general, the soft ASP is in part due to lack of demand for modules due to the late policy which was inline wiht the time frames JKS pointed to(late July or August). This gets combined with the typical China issue of ramping now to drive down costs. The mono PERC module ASP spread to Multi has been to steep to justify the Mono purchase over Poly.. It is only natural that the Mono Perc would continue the ASP slide to push the demand. That is the issue with China policies is they are clearly a ramp and push to drive down costs to meet targets. In general the fodder is much to do about nothing as the lower ASP/GM will be compensated for in increased volumes in the second half and regionality of shipments leading to lower average Opex per watt compared to Q1 and Q2.
  3. I am curious which stocks he invested in and how it has performed? The coal index is down nearly 50% from the highs of last September. While it is a big dividend and many companies did 1 time cash distribution that pushed the dividends last year to over 20% for some, the stock price crash would have wiped out that in value and then some. https://www.suredividend.com/best-coal-stocks/ https://www.marketwatch.com/investing/index/djuscl?countrycode=xx
  4. Good read, I agree with much of the theories. He must have read my post from Friday. Especially bullet 1 and 10.
  5. True grid parity without subsidies with storage around 2023 in the cheapest labor countries with moderately good insolation. Target $0.60/watt installed. If $0.10 for storage, then that becomes $0.50 without storage. At 35% module cost and 65% BOS, you have a module cost in projects at of $0.175 and a BOS of $0.325. The production costs will need to be around $0.13-$0.14 to achieve profits with Opex and shipping globally. By the way those production costs are in the mid to upper range of Perovskite prices suggested by GCL($0.10-$0.15). These are my rough numbers. but this article suggests 2020-2023 in China for the first subsidy free projects though they do get reduced land fees to free land use. https://www.pv-magazine.com/2019/05/22/china-reveals-details-of-first-15-gw-of-grid-parity-solar/
  6. Here are 11 points I have from the con call gudiance and market dynamics as of now. 1: The ASP will drop significantly in the second half due to some 3-4GW or 40-45% of their guided second half shipments being to China where high efficiency mono PERC is running 10% lower than average high efficiency mono PERC prices. 2: The CN demand is going to cause around a 1.5-2.5% lower GM due to the lower ASP even with cost reductions due to production ramps and increased high efficiency modules as a percentage. 3: The U.S. tariff ruling making double sided modules as exempt is going to create a problem for single sided modules and the ASP. It will cause the price to drop on those modules. The market is about 4GW for these double sided modules when you take away the tariff free quantity and the FSLR quantity and the SPWR exemptions. This is going to make the modules ASP drop in the US from $0.40 to low $0.30 or even upper $0.20's effectively killing and single sided module sales that are not tariff free. This is going to create issues with cost to manufacture in the new 400MW facility in the U.S as well. 4: Any swapping of single sided for double sided modules will most likely impact the ASP in renegotiated lower prices to entice the swap out of dissimilar modules. 5: The drop in the ASP from what appears to be a blended $0.28 will likely fall to mid $0.25 to $0.26 in the second half due to these dynamics above. 6: The margins should be falling from mid 16% to mid 14% due to the dynamics mentioned above will imapct earnins by some $60-$70M in gross income. It will fall from estimated $380M down to an estimated $320M+/-. 7: Opex is going to jump to some $130M+ per quarter with the 1-1.25GW of increased modules per quarter 8: Interest is going to increase by some $5-7M in the second half over the first half due to the increased debts. 9: Income before taxes is likely to drop from nearly $70M down to around $20M in the second half. 10: Q2 should flip the hedging numbers impacting earnings from Q1. That would suggest upwards increase of $0.50 per share increase in Q2 earnings over Q1. 11: the target of 40GW is down from earlier suggestions of 45GW to possiby 50GW. A 10-15% market share by JKS built into guidance would have suggested 4GW-6GW of guidance was to be from China. Right now they are probably looking at 600MW-1GW of that in the first half of 2019. The second half would have 3-5GW from the initial guidance. This new 40GW China target would suggest that the lower end of shipments being 14GW is more likely than the upside. If GCL 35GW suggestion of demand in China for 2019 is realized, then there is minor downside r
  7. Earnings tomorrow AM? Any ideas on outlook? My guess is things may not be as bright as hoped which is why they pushed to get the secondary before earnings. The way I read it is if earnings and outlook was to be very good, then why the rush? We shall see.
  8. Tongwie drops mono Perc cell prices by 4-5% for July price quotes. If there was a pickup in demand it is not showing in the ASP for now. http://guangfu.bjx.com.cn/news/20190626/988714.shtml The price of single crystal PERC battery 156.75 is 1.16 yuan / watt, compared with 1.21 ~ 1.22 yuan / watt down 0.05 ~ 0.06 yuan / watt.
  9. It looks to be that many of India's large scale solar plant operators are getting crushed by debt. They are looking to unload projects to reduce the debts. That is never a good sign, when the projects are not generating the cash flows needed for self sustainment and business operations. https://cleantechnica.com/2019/06/25/companies-line-up-for-685-megawatt-stressed-solar-assets-sale-in-india/ https://cleantechnica.com/2019/06/25/engie-joins-list-of-developers-looking-to-sell-its-indian-solar-assets/
  10. Buffet's NV Energy building a 300MW AC plant with 540MWH storage for $35/MWhr cost to produce. https://cleantechnica.com/2019/06/25/8minute-solar-nv-energy-plan-new-solar-power-plant-with-540-mwh-battery-storage/
  11. SEIA Q@ 2019 Solar Segment report. Good details on segments bookings and growth prospects. https://www.seia.org/research-resources/solar-market-insight-report-2019-q2
  12. 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.
  13. 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).
  14. 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.
  15. 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.
  16. 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.
  17. 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.
  18. 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.
  19. 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.
  20. 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.
  21. 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.
  22. 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.
  23. 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.
  24. 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.
  25. Yeah you were overy bullish at $0.56. Q2 will be worse.
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