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explo last won the day on June 14

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About explo

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    Diversified. Balanced. Leveraged.

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  1. explo

    Daqo (DQ)

    Can someone remind me whether non-Chinese polysilicon can be used for exported panels or not? Since most panels will be exported now that domestic installs are curbed and there is a lot of premium polysilicon capacity outside China this is important since it will affect the price of premium Chinese polysilicon a lot..
  2. explo

    Daqo (DQ)

    Beware of asset impairment write down risk. They’ve been aggressive on depreciation time. Sometimes it is good for future EPS to take the write down opportunity during market weakness though.
  3. explo

    Daqo (DQ)

    Second opinion: https://pv.energytrend.com/pricequotes.html To me it looks like international and domestic poly prices have converged.
  4. explo

    Canadian Solar (CSIQ)

    Thanks SC for all details, especially clarifying the Moore's law parallel. Thanks also for clarifying that OPEX (SG&A+R&D) reductions are not lagging COGS reductions as much as I indicated. Anyway one issue might be that both volume expansion and technology progress might have driven recent cost reductions. With a demand saddle point coming we might get a cost progress saddle point too before they both take off again. As disdaniel says there could be demand explosion at some point. I think the panel makers have done their job to make PV competitive. I'm certain that the next decade will be a glorious one for PV. The decade that we will hit peak install.
  5. explo

    Trading Strategy

    Yeah, the data is getting a bit big. Borderline that I need to manage it like that.
  6. explo

    Trading Strategy

    I'm starting to get my sheet together. I think I need to buy a more powerful PC again.
  7. explo

    Canadian Solar (CSIQ)

    Yes, but not losing the photons hitting your single junction cells has been the cheapest way to grow conversion efficiency for now. And that physical limit is way below the mathematical 100% retention (the wave lengths convertible by a doped silicon crystal is only around one third of the wave lengths the sun shower the earth with, increasable, to a limit, with the much more complicated multi junction). Even the mathematical limit of the number of photons normally hitting a surface could be morphed a bit with lenses and mirrors, but I think the point is that before when a lot of photons were lost before conversion (and some electrons "lost" post conversion) there was much growth potential in the conversion efficiency improvement from these loss reductions. It has scaled like Moore's law for semi for now (but with at different factor) due to the similarities (improve tapping of small none moving structures, no mechanical parts). However unlike semi that are designed to convert electrons to calculations there are ceilings for the conversion of photons to electrons. In the former case there is no lack of electrons you just have to cool them down. In the latter case there are only so many photons to capture and therefore your loss reduction grow quickest in the beginning when you lose the great majority of them. Note that the conversion efficiency is only one part of the heavy cost reductions we've seen in panel production cost, but the part that is share with the whole chain, including the freight costs. Much of the PV version of Moore's law is the factory equipment improvement. CVD reactors in polysilicon plants that produce much more poly kg per electricity consumed for each generation. Ingot casting furnace that cast bigger blocks (more kg per electricity) with each generation. Wafering equipment that can slice thinner wafers (more surface per kg) without risking them break in cell processing. Thinner wires to reduce kerf loss (more kg retained). 6 inch cells instead of 5 inch (more surface output per cell line). 72 cell panels instead of 60 cell panels (less panels assembled, shipped, installed). Some of these have reach some limits too. Too big panels (cheap to produce) will have costlier human handling etc. I'm a strong believer that solar PV will dominate electricity generation as it is still going to get cheaper than any other electricity generation source if you calculate all costs (the only eagle couple in the region killed by wind turbine, ecosystem deteriorates, crops fail, etc.), but the panel production cost problem is already solved. No way that I could hope a panel would cost $0.30 already now 8 years ago. It's the cost of getting the panel from the Chinese factory to the rooftop (the rooftop space is basically free as is distribution of the electrical current to the close by consumption place) that will become the challenge now. The rate of these improvements will likely saturate a bit. I think this is the problem for panel producers. They can cover the cost to produce a panel than is sold at $0.30, but they have a harder time covering the expenses (sales, freight, admin, r&d) associated with the massive volumes and research it takes to achieve such low production cost. Example. If ASP goes to $0.25 and if 20% GM is achieved through a $0.20 cost then close to half of $0.05 GP per watt might go just to the freight of that panel (especially if we include trade barrier circumvention expenses), not to mention expenses to get it sold, expenses to handle a supply-chain for a massive scale of production that due to political reasons globally or in China cannot be too centralized. The point is that in 2010 there was 25% GM on $1.60 ASP or $0.40 GP per watt to cover all the expenses not related to production costs. We know the production cost was effectively cut from $1.20 to $0.20, no problem. But to cover OPEX with $0.05 instead of $0.40 when those costs are things you cannot affect (rising salaries of China sales personnel etc.) and reduce with scale in the same way as your production cost, then you are in a more tight spot when a major event disrupts the established cost sharing balance along the chain.
  8. explo

    Canadian Solar (CSIQ)

    Spain was the first boom/bust market. The bust was so severe it died. Add to it a shortly following general construction boom/bust in the country. I think Germany and Italy are healthier examples of life after bust. UK as you mentioned picked up some slack within EU after German and Italy. They were hit quite bad by the tariffs. Maybe Brexit will make them a PV haven.
  9. explo

    Canadian Solar (CSIQ)

    I agree. If I recall correctly a panel not assembled in China can use 29 Chinese cells and 31 Taiwanese or Korean cells to be tariff free in EU at any price. This is what Chinese companies decided to exploit and to "simplify" that they cancelled their MIP deals. EU is already open to them. EU is however past peak installation growth.
  10. explo

    First Solar (FSLR)

    Think of it as a global pile up of panels in the distribution channels (including production sites, market central warehouses, close to consumer small stocks, in week long transit on ocean to maybe no longer optimal destination). The non-movement of products will cost money. Products will be moved at a loss if it prevents a higher loss of not moving them. Markets that can move products to US at low cost will move products there and the products those market need will be moved from piled up markets that have higher cost of moving their products to US. The sum of it all is that movement costs have gone up (US are blocking the existing highways) and demand has gone down (China is feeling satisfied and want to digest for a while). All will suffer from it, some more than others.
  11. explo

    Canadian Solar (CSIQ)

    MVA, yes I see the difference. Now they are an experienced developer, but boy was it easier to build high IRR plants with all the Ontario FiT 1.0 they had the foresight to have secured back then. Panel was going to be the place to reap profits now as downstream market got tighter. FSLR and JKS moved back to the panel commodity business. Now it flipped again. Re-sow. The reap will likely be deferred.
  12. explo

    Canadian Solar (CSIQ)

    Really? To buy a few shares or all of them like Qu has proposed without commitment? Sure. How many votes do they need? That's why I mean that a low market price of CSIQ shares will increase Qu's chance to have his offer accepted by shareholders at a lower cost. The lower the market price the higher the bid premium he can offer for a given cost. It will, but in a week or three?? We might be in a cycle of solar stock hope and despair that risk being more drawn out than the horrible one we experienced around 2012 even though we all hope it won't cycle down as deep before the ultimate capitulation. Last time US and China were with some delay able to pick up the slack after Germany and Italy's demand impairing FiT revenue reductions. Who can pick up the demand impairment slack left by US (added tariff costs) and China (removed FiT revenues)? Sure, ROW as a collective has stepped up too, but how much more can it step up? Don't end up on the wrong side of the hope and despair cycle. If one stays completely cynical to pair market despair with own greed and market hope with own fear money can still be made in this industry phase for those interested in continuously making money on this industry (I was for 8 years and I sure felt alive by the proximity of financial death), but it will not be easiest money to make at low risk in this environment. Don't forget, annual installs has always grown at a salivating rate in this industry. Even 2011 had crazy high installation growth. The first problem is that this does not translate to as salivating revenue growth and even less so profit growth. Much higher volumes need to be deployed for the same revenue. Even if the cost of production of those higher volumes can match revenue declines. The cost of deployment of the much higher volumes have a harder time keeping up. How do you reduce the cost of shipping a container etc.? When panel conversion efficiencies were 14% in 2011 there was a chance to cut such costs with 30% by increasing panel efficiency to 20%. For the next 30% cut panel efficiencies would have to rise to 28%. Innovative creativity has no limit but nature has. A silicon atom does not change. Companies have put such non-fixed deployment costs on the OPEX line to make it seem like GM is ok and with the volume growth comes profit growth. Well, I wished. And this delusion is going to get worse. Sorry for the half empty perspective. But multiple perspectives can help earnings. And at this time it might be the neggie one that earns for a period even though we know that neggies always lose long-term on the stock market.
  13. explo

    Canadian Solar (CSIQ)

    If Qu tried to buy some of the shares he wants on the market he would inflate the share price and the perceived value of the thing he intends to make an offer to buy. That would not be in his interest unless he thinks this drop in market value of his acquisition target will reverse before he makes his definite offer.
  14. explo

    Canadian Solar (CSIQ)

    I exited the sector around a year ago due to a change to a more diversified strategy, so I'm not tracking current opportunities in it well. Generally I would say that we retail investors have a lot more fact to go on to make arbitrage decisions when a definite offer is in place. Until then we are just guessing that there is arbitrage to reap by some pattern observed. This seems much more risky to me (and the arbitrage will be bigger if realized), so a strategy to reap that would required diversifying such guesses in smaller chunks among several similar opportunities (not necessarily occurring at the same time). Hedge funds will likely use their force to deceive retail investors to sub-optimal trading once the offer is definite. A savvy retail investor can exploit that action instead of being a victim of it. Some people did it here with TSL. This should be a safer arbitrage bet (and surprisingly large) that allows commitment of more capital than the more guess like bets.
  15. explo

    Canadian Solar (CSIQ)

    Or deals between large clients that are brokered directly without use of the exchange?