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Luz del Norte

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Everything posted by Luz del Norte

  1. Luz del Norte

    First Solar (FSLR)

    I am not Klothilde but I do have a few predictions for the upcoming earnings. First off, the company should declare a fairly large tax refund. In 2017 First Solar took a $405M hit to repatriate its overseas earnings due to the new tax bill. Considering the one-time rate was 15.5%, this seemed like a massive overpayment. Management has a history of overpaying taxes and then claiming a big refund. Unless I am mistaken this should provide a huge ($1.5-$2) EPS beat. The company has alluded to a potential refund in every earnings call and 10-Q this year. Here is what they said last time. "To relate, the U.S. tax reform enacted last December, we have not recorded any adjustment through Q3 related to our original estimates. We expect to finalize our accounting related to tax reform in Q4 based upon finalization of currently proposed tax regulations and the filing of our federal and state income tax returns." Also, during the guidance call the company hinted at possibly expanding in either Vietnam or Ohio. It wouldn't be to surprising for them to announce construction beginning on a third plant in Vietnam. Also, management mentioned getting started on 5GW of projects to qualify for the ITC Safe Harbor requirements. This should mean that the projects pipeline should grow dramatically in the next few quarters. Lastly, here's an article about a 135GW project getting developed in Cambodia. It would appear the company is still competitive internationally.
  2. Luz del Norte

    First Solar (FSLR)

    Mark, if you look at First Solar's chart, until this latest dive under $50 the company has actually outperformed the S&P over its lifetime. I was shocked to see that. Looking at the spikes its been an insanely bumpy rollercoaster ride. In hindsight it seems the way to have made money was to identify the troughs, load up, and then hold for a while. It really seems like FSLR is currently at a low point. It is hard to imagine a company that is sold out for two years, has a forward PE of around 16, and a large cash pile could fall much farther.
  3. Luz del Norte

    First Solar (FSLR)

    If you assume that the systems business and ASPs are roughly the same between the two years, then your 2020 estimate seems plausible. The only difference would be the shift of the 2GW of S4 to S6. The estimated 2019 margins seem to be around 15% for S4 and 30% for S6 based on around 35 cent ASP. That would mean an increase in profits of around $105M. Considering the 2020 S6 costs should be lower, this seems like a low estimate. In addition, ramp and startup costs are expected to be $65M lower. Combined, these two things would push EPS over $4. It sounds like the company plans on building at least one more factory in the near future. That would increase the 2020 startup costs. On the other hand, I would bet there is a lot of conservative guidance built into the numbers. Once the factories start producing at full capacity I bet the numbers will go up.
  4. Luz del Norte

    First Solar (FSLR)

    It would be interesting to see if management mentions this recent story about LeTID degradation issues with PERC. It seems like that could be a really nice selling point for First Solar. Management said during last earnings call that it would discuss the IRS guidance establishing the ITC Safe Harbor requirements. 2021-23 could see a lot of systems business in the US and hopefully the company will discuss this in more detail. Also, this article from earlier today is interesting. PI Berlin is now an approved testing institute for modules. The article only mentions series 4, however, but does state that PI Berlin has audited the series 6 factories. Not sure what this means.
  5. Luz del Norte

    Solar News

    I am not really sure why you are going down this route. FSLR stated that cancelations were simply not an issue. Even if they somehow became an issue, there are penalties in place that would actually benefit First Solar. And as the company is sold out for the next 2.5 years and booked an additional 1.1GW in the past three months, FSLR doesn't seem to have any problem whatsoever finding buyers for its modules. While there might be increased competition in the US, First Solar is already booked out for 2019 and 2020. By 2021, there will be a boom in utility projects as developers rush to qualify for the ITC as the IRS safe harbored projects. If anything, First Solar might need to build that 3rd factory in Vietnam or 2nd in Ohio to meet the demand.
  6. Luz del Norte

    Solar News

    The backlog 8.4GW for $3.1B. That comes out to 36.9 cents though I am guessing the increase over last quarter is a rounding issue. Incrementally the change was 0.1GW for $0.1B.
  7. Luz del Norte

    Solar News

    This is the thing I really wonder about. Companies got through the 2016 downturn by doubling capacity. This time, however, not only will the market shrink rather than experience huge growth, but bigger fish like Longi are crowding the market and will shrink the available pool even more. It wouldn't be too surprising if in 5 years all the currently heavily indebted solar companies are distant memories, replaced by Longi, LG and other large corporations.
  8. Luz del Norte

    Solar News

    While it might make sense for a developer to cancel a contract, I really don't understand how this could be considered bad for First Solar. Making 7.2 cents for doing nothing is a lot more profitable than making 5 cents by having to do something.
  9. Luz del Norte

    First Solar (FSLR)

    What are the certifications that the series 6 is supposedly lacking? If you look at the datasheet the series 6 seems to have about the same certifications as the series 4. http://www.firstsolar.com/-/media/First-Solar/Technical-Documents/Series-6-Datasheets/Series-6-Datasheet.ashx http://www.firstsolar.com/-/media/First-Solar/Technical-Documents/Series-4-Datasheets/Series-4V3-Module-Datasheet.ashx Are canceled contracts a bad thing? It seems like pocketing the 20% deposit is an even better deal than selling an S4 module for a mid-teens gross profit.
  10. Luz del Norte

    Solar News

    The numbers you are coming up with are for modules that will ship in 2020 and 2021. As for 2019, from the last 10Q FSLR stated it had contracts to sell 8.3GW at $3.0B which is around 36 cents. Now that we have learned the cancelation penalty is 20% can this fear of cancelations be put to rest? Any canceled contracts appear to be great for FSLR. It makes a nice profit for doing nothing and then the company can sell the modules to someone else for more profit.
  11. Luz del Norte

    Solar News

    I agree. The idea that during a price war the company with a large nest egg operating in a protected market is going to fare worse than highly indebted companies selling at below in-house cost to a suddenly smaller market doesn't make much sense. Jinko's in-house cost has been remarkably consistent over the past year and a half at 31 cents. Even if it were to be given silicon ingots for free (a 7 cent savings) I don't see how it could profitably sell at 20 cents in the near future. And if poly is dead, what does that say about Canadian Solar?
  12. Luz del Norte

    Solar News

    SCSolar, I am not sure why you are concerned about the S4 selling at the global ASP when those modules will be sold at the price listed on signed contracts. I really doubt the company would have signed those contracts if it was losing money on them. Besides, the two S4 factories will be converted to S6 in the near future. One will be shut down at the end of 2019 and the other I am guessing will be converted once the S6 factories are operating at nameplate capacity and the company is sure it can cover existing orders with S6 production. Regarding Opex, has it occurred to you that the systems business pretty much covers that? While 2019 will be a tough year for the solar industry as a whole, First Solar seems well protected in its tariff bubble. Things could get tough when the tariffs wind down but by then the S4 will be long gone and FSLR will have 6.5 factories churning out S6 modules. In the meantime, you are looking at a company with 2/3rds of its market cap in cash and a forward PE of 12 all while going through a major transition. If you want to be a concern troll about a stock have you considered SunPower? That is a stinky pile soon to have a negative book value.
  13. Luz del Norte

    Solar News

    SCSolar, why are you so negative about First Solar's 2019 earnings? That doesn't make much sense considering the company is booked out for the year. And to question where gross profit will come from outside of S6 module sales completely ignores the project business that the company does. FSLR is expected to make around $1.70 this year. Next year the company will sell the same amount of S4 as this year and do a little more project business. In addition to that, First Solar will sell 3GW of S6 modules and save around $120M on startup and ramp expenses. The $3 analysts are expecting seems very achievable. That said, one thing completely ignored by folks is that earnings this year should be considerably higher than expected. Last year the company took a $400M tax hit to repatriate its overseas cash. Doesn't this seem excessive to people? At a 15.5% rate that would mean the company had $2.58B stashed away. That doesn't make any sense at all. The company had accumulated earnings of $2.3B at the end of 2017, already repatriated over $600M in 2016, and presumably has made a lot of profit in the US that didn't need to be repatriated. What seems likely is that the company budgeted repatriating the cash at the full 35% rate and will thus claim a huge, $200M+ refund either this quarter or next when it files it taxes for the year. If you read the 10Q and listen to the conference call you will see several hints about this potential refund.
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