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Klothilde

Solar Investor
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Klothilde last won the day on November 7

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About Klothilde

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    FSLR 100%

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  1. Looks like I was right on FSLR heading down bankruptcy lane. They started with the first round of layoffs. Hate to say "I told you so" but you guys just wouldn't listen to me. https://www.bizjournals.com/phoenix/news/2019/11/13/first-solar-lays-off-valley-employees-after.html
  2. They have big qoq cash swings because of the project nature of the business, specifically in Q3 they spent a lot of cash on the build out of the SCE projects which they plan to get paid for in Q4. End of year net cash guidance is 1.7-1.9BN: https://s2.q4cdn.com/646275317/files/doc_financials/2019/q3/Q3-2019-Earnings-Call-Presentation-FINAL.pdf But I figure you know all that already 😉 1800M + 350M (2020 earnings) + 250M depreciation = 2400M = $23/share A fair valuation at the end of 2020 imho would require adding the above net cash to whatever valuation you assume from earnings. You may deduct some to account for capex but you would have to raise your valuation of operations by at least the same amount assuming they only expand capacity at positive NPV. Also whatever is left of project assets end of 2020 needs to be added assuming this monetizes 1:1 as cash at 0 margin. As you can see it's not as simple as coming up with an EPS figure and slapping a PE of X on it. This is also the reason why FSLR has been trading at relatively high valuations relative to peers, the market values the net cash on balance sheet.
  3. They will have around $23/share in net cash at the end of 2020 with your numbers. How do we account for that. Or is the company worth only its net cash balance and the rest (technology/ops) is worthless?
  4. OK so for CSIQ you see $2-$4 in EPS next year. What do you see for FSLR with and without bifacial tariff? Greatly appreciated.
  5. My script doesn't apply here because in our CSIQ discussion I was estimating likely numbers for 2020 based on my experience of the industry and what I know of the company and current market condition. Based on that I see margins of 15% or below for their module business in 2020. Your script on the other hand is a purely fictional "what if" exercise to show where GP would fall if FSLR's ASP was 24 cts next year. Fun but fictional. Don't really know what you want to accomplish with that. FSLR would be in serious trouble in this fictional scenario. That's a no brainer and an old hat. It may scare people who know nothing about FSLR and who are not able to realize that an ASP of 24 cts in 2020 is fictional. FSLR will have to compete without tariffs at global market prices one day, but that will be at a different efficiency and cost point relative to where they are right now. I value your opinion a lot, but if you want to pick my brain and influence my opinion you have to go beyond fuzzy fiction and get quantitative. A key question you could help address would be the likely impact of reinstating the bifacial exception on the 2020 / 21 EPS of the company taking into account all moving parts, i.e. a.o. how fast the necessary cell lines in southeast asia will be ramped, how fast shipments to the U.S. will ramp, by when a critical volume of XGW of shipments will be reached to impact pricing significantly, what fraction of customers are likely to renegotiate, what fraction of contracts will be rescinded with penalty payments, how fast production cost will fall to counteract some of the possible ASP decline, etc. etc. I personally think it will take many quarters for the string of prerequisites to materialize to have a significant impact on EPS. For starters current cell capacities in SE asia are very limited and players will be hesitant to invest their scarce money to add new lines and adjust the current lines given the volatility of the tariff decisions.
  6. You guys just don't like it when I smell a rat in some of the companies you invest in. So you post cheap and trashy articles hoping to attack First. Do you think it's working?
  7. They are selling at least two of those plants pre-NTP at low prices tied with an EPC contract. Thus they will earn only a small part of the revenue now and most of it during and after construction. Take the revenue guidance for Q4 and factor out modules, kits, EPC, the U.S. project, and you'll see there's little space left for this deal, my take is less than $75M in revenue in Q4.
  8. Yes but I'm saying you need $390M in additional gross profit (not revenue) to hit $3 in EPS.
  9. 12GW at $0.21 and 17.5% GM will give you $441 in GP. In order to pay for say $600M in OPEX&INT and deliver $3 in EPS you'd need to come up with $390M of additional GP from systems. Looks challenging to me. Please show me the illuminated path to $3.
  10. Cost reductions don't matter unless your ASPs are tied up in the long run. Since we're in the midst of an epic glut any cost savings are passed on to the final customer (module buyer) almost instantly and don't go into margin increases. They had great margins because over the last quarters upstream components collapsed in price while their module ASP didn't fall so fast because they were partly insulated through legacy contract prices (3-6 months old prices). Now with components nearing a price bottom and module ASPs aligning with the spot prices over the next quarters margins are set to shrink. They've guided shrinking margins in Q4 and then shrinking again in 2020 so that's becoming a fact. Question is where we will land.
  11. Travis recommending Canadian: https://www.fool.com/investing/2019/11/13/why-canadian-solars-shares-plunged-156-today.aspx Looks like everyone except me is positive about this company. Am I blind or what?
  12. I don't know where those margins should come from. In fact when I threw in the 15% I was being generous, we may very well dip below that in 2020. Using the PVInsights numbers from the current week, if I... 1) buy mono-PERC cells in China for 11.5 cts/W 2) convert them to mono-PERC cells in China for 9 cts/W 3) sell the modules for 23.3 cts/W in Europe ...I end up with a GP of 2.8/W and a GM of 12.0% If I make the modules in-house in China starting with sourced mono-wafers at 7.0 cts/W ($0.371*60/320W) I will end up with an even higher cpw and lower GM since my in-house cell processing costs cannot compete with 3rd party cells that are selling close to cash cost. If you go back a couple of quarters then, yes, you could come up with GMs of 20-25% doing the calcs above. However economics have changed massively over the last 6 months and nearly all margin has been squeezed out of both the mono and multi value chain since then. There is still some margin left in the mono wafer step, but that one is not for CSIQ to capture. And when mono wafers fall in price due to the foreseeable capacity expansion chances are the savings will be passed on to the module buyers because we got an epic glut both at the cell and module step. Think about it: During this con call they purposely warned investors about falling margins in 2020. If the margin decline they expect for next year was only mild then they would not talk about it. After all these guys are experts at sugarcoating! By mentioning it now they want to get investors accustomed to a new story (lower margin, higher shipments) and prevent greater damage further on when the chit hits the fan. Jmho.
  13. The thing is that if you compete in a growing market and if you have a superior technology that provides you with superior margins then you expand the capacity of this technology. By freezing the capacity of their core technology (black silicon multi cells) and switching to 3rd party cells they show us that their core technology doesn't provide any advantage any longer vs. other products. This however comes as no surprise since with the latest price drop of mono-PERC cells to near cash cost level their black-silicon multi cells have lost their competitiveness. This also means margins are set to take a blow in 2020. They already talked of decreasing margins next year but I suspect it will be juicy. What struck me is the low margin of these sales compared to pre-NTP sales in the past. I remember they had several to the tune of 40-50% GM. One logical explanation would be that with the increased competition in today's bidding projects there is also less leeway for the prices of project rights. You are right that they are tying these pre-NTP sales to module supply or EPC contracts in the future during project execution, so the overall profitability needs to be assessed as a whole. Nevertheless the low pre-NTP ASP coupled with the low 2020 COD volume of their pipeline brings up another question: Whether the project business can make a strong enough GP contribution in 2020 to offset a possibly weaker module business. Let's say they ship 10GW of modules at $0.24 and 15%GM. Brings them up to $360M in GP vs. OPEX&INT that may be running around $600M. Can systems provide $240M+ in GP given the constraints mentioned above? What do you think?
  14. Just went over the transcript and listened to parts of the con call. My overall take is that fundamentals are deteriorating faster than I expected. I sensed that they are trying to mask their challenges with increased BS-talk. Here are some red flags I picked up. Please challenge me on this you guys! - Lower module ASP in Q4 contributing to lower overall GM. I originally thought that they would be able to increase module margin in Q4 due to a combination of cheaper upstream component purchases and stable module contract prices but it looks like module prices are coming down fast as well. Bodes bad for Q1 module ASP and margin. - Guiding lower module gross margin for next year (that they plan to compensate with higher shipments). However higher shipments increase OPEX as well... - No capacity expansion planned for next year in wafers and cells. Suggesting higher 3rd party cells purchases. Signals to me they are concerned about oversupply next year and/or that they don't see value in expanding in-house cell tech and/or that they are shifting to cash conservation mode (!) - Disappointing ASP and GM of pre-NTP project sales this quarter. They sold 266MWp in the U.S. and 80% of 171.5MWp in Brazil, both pre-NTP, for $84M, i.e. $0.21/W and at 21%GM. At that rate their pipeline of 3.4GW will translate to only $150M in GP. MEH! - Only 307MWp of projects listed with 2020 COD. Looks like it will be challenging to achieve significant project revenue in 2020. - Massive issues monetizing CN plants in operation. New resale value can be in the vecinity of $0.5/W if you factor out plants from other regions with higher ASPs from their operating portfolio. I wonder if this will lead to an impairment / write-down at one point...
  15. IHS Markit maintaining 129GW installations forecast for 2019 but warning about worsening oversupply in H1 2020: https://ihsmarkit.com/research-analysis/pv-installation-forecast-in-china-lowered-in-2019.html
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