ravalos
Solar Investor-
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About ravalos
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I received distributions from 8Point3 and Terraform Global in 2016. At the time I received them they were classified as qualified dividends, but towards mid-February 2017, when my broker issued the tax information (1099-DIV) they were reclassified as ROC and adjusted accordingly from my trades (the amount of the dividends reduced the cost basis of my holdings). It was at that time that I knew the dividends were treated as ROC and adjusted the cost basis accordingly.
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Very difficult to gauge investors sentiment in this industry. But you have to attribute the recent surge to the whole Trump optimism which is now trickling down to solar. That coupled with the fact that the solar downturn this time around is not as bloody as the 2012's (solarcos share prices were experiencing significant losses right before this recent surge though), 60% or more, so this could merely be a dead cat bounce. FSLR is still 40%+ below its high. Things seem to have stabilized for the moment, but I don't see better margins being materialized in the short term. It's a wait and see mode still but the overall market just keeps on rising under the premise of further tax cuts and significant infrastructure spending. There's some impact of that in solar.
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There's low probability of this breaking $40 tomorrow. The 200MA is down trending and it will require more than today's ER to break that. That's from a technical perspective. From a fundamental perspective, things have not only changed but worsened a bit. The adjustment to revenue to the upside is the result of a different accounting method required by FASB. It's true that prices have stabilized as of late, but there's ZERO a indication that now things will turn up for the better. This continues to be a demand and supply situation and I don't see supply being reduced significantly (impairments, bankruptcies, consolidations). Granted solarcos are better prepared this time around and more cautious, but price competition continues to be cutthroat. As for the series 6, although they say it's going as planned, there's still not only execution risk (albeit limited) but timing. It'll be at least 2 years for FSLR to start benefiting from series 6 panels, at least on a module-only basis. The First series 6 panels produced will go towards their own plants construction. The book to bill ratio continues to deteriorate and so, I don't see anything for this company to reverse the trend, if anything it MIGHT stabilize in the mid $30s until further notice. I also don't see FSLR going into the low $20s until something materially worse comes out in their progress, or the industry as a whole takes another downturn.
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What explo meant to say is that the yield needs to be lower (hence the share price higher) in order to issue new equity to finance new plant acquisitions that have lower IRRs.
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I agree, there's a lot of execution risk here, and who knows how the industry dynamics will change by then (2018-2019). I would expect FSLR to hit below $20 within the next year as well. I continue to be on the sides during this downturn, this time I was caught on guard and have avoided this downturn almost entirely, unlike 2011-2012 where I was deeply underwater.
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The thing with the CN solars is that China will cut down the subsidies significantly and hence people are pulling forward orders in order to still qualify for the greater subsidy. That'd explain the numbers from JKS similar to how FSLR at one point explained good numbers as a result of people expecting the ITC to expire (before it was extended).
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Perhaps this time we will get TRUE consolidation, unlike the last time where I felt there were not enough bankruptcies and M&A.. that'd be important if this industry is to survive whatever Trump throws at them..
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It has always been cheaper than solar as far as I can remember, the disadvantage is that wind is less predictable/reliable than solar in terms of production. That's the only setback I could see when investing in wind, where the variability is greater than solar (you could have a lot more energy production or a lot less vis-a-vis solar). 8point3 has limited buying capacity besides these already expected acquisitions, and with IR possibly rising in the near future there's some pressure on the yieldcos. I sold 8p3 at $15 and so far I'm not regretting it, but I expect to en back at some point in the future.
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PPAs do have an inflation factor in the contracts.
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I'm in a wait and see mode with the new president regarding renewables. Things could get REALLY slow in the industry if not outright dead during his term.. http://www.businessinsider.com/donald-trump-climate-change-danger-action-2016-11
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I honestly think it's WAY TOO early to make a definite call. This brings a lot of uncertainty because with Trump you don't know what from all the things he said he will actually follow through with, so it's hard to assess the impact. One day's reaction does not define the short, mid and long term outlook of the industry as a whole. As someone just mentioned, this might be uninvestable for a while.. this will bring out opportunities that's for sure, but I'd caution patience to see what to do, and in the meantime I'll be sitting this out.
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This is starting to get scary ...
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The lead is constantly changing .. I get the feeling HC will win Florida, NC AND Ohio..
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While it might seem that they overpaid for the project vis-a-vis current market prices for solar projects, 8Point3 is a buyer of cash flows and as such seeks to obtain reasonable and enticing returns on the money invested, higher than their cost of capital. If they don't do that, their model is not sustainable so it's not in their best interest to overpay for the projects. Having said that, you can assume (and run the numbers for confirmation) that they are getting a decent return for the project and its accretive long term. I did run the numbers at one point in the past but I forgot.
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This is a prelude of what's about to come for the solar industry. Brace yourselves! I'm out of 8Point3 as I did not like what was mentioned during FSLR's CC call..
