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Makan

Solar Investor
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Everything posted by Makan

  1. If CSIQ and JKS is right that margin stabilise in 2007 then the insiders and market would start to anticipate sometime now. Also sentiment is good for a nice rebound.
  2. Hi, it has been a long time from my last posting and I lost track a bit of PV. However all looks so low nowadays compared to 1 year ago. I realize solar has been in cyclical downturn with pressured component prices. Question to the legends of the board e.g. odyd and explo, where do you think we are in the cycle, near end of downturn? What I am missing is a perspective on demand growth, countries all seem to rather scale down, US, Japan, China... If there is not such a perspective where is the demand push coming from preventing margins to further deteriorate in a oversupply industry?
  3. I think it is not good to censor negative post to a company. Clearly CSIQ's strategy right now is not very logical now. Japan pipeline was assumed to be postponed due to cash rationalization, but they still have money to buy finished Canadian solar assets even though they stated that the have enough CAFD to start a YieldCo (that was said before the YieldCo crash). Whatfor this transaction? Therefore Broomhilda doubts to Japanese pipeline might not be going according to plan are not totally baseless at least. Or somebody can explain the logic?
  4. As far as I know they are not seen as relevant here anymore. They seem to change their strategy every quarter, now scaling down on module business and concentrating on projects in Romania and Bulgaria (BoS probably includes security people as well, as they have to be careful that the modules don't get stolen there from the racks) and doing wafers. Where is the synergies with that combination? I don't know.
  5. I think right now YieldCo IPO market is dead in US and in China. So planned IPOs will not happen end of 2015 or beginning of 2016. Over time I assume it will go through similar development like ABS, useful vehicle in principle, but abused by some, who put junk in it like GLBL. But this will take time, maybe we start to see now as YieldCo like CAFD, NYLP NEP, HASI and so on have been a bit more stable recently. SUNE's problem is now they have started construction on I think 2 GW but with uncertain finances, that could break their neck similar to SAG Solarstrom (you are German, surely you will know this case). CSIQ similar, they have to finish 1.2 GW in US by end of 2016 and have started half of them and need to get finance for that now or else their 265m investment for Recurrent is in the drain. That cost 2 bln. That is their risk now, however, they can raise some from remaining canadian project sales and have better balance sheet, so they have a chance manage the situation while they postpone Japan and other projects. JKS don't know, maybe IPO next year sometime only when project CF situation has improved by then.
  6. Broomhilda, just to keep things a bit in perspective when you talk of the past. 3 year chart of the majors which reflects nearly the time from cyclical low to high, FSLR in the middle together with TSL and JASO is worst JKS and CSIQ the leaders head to head. JASO last, that was your baby as well for a long time, right. So don't come around now and act like you are the smartest one here when your achievement in the current cycle is just being close to flat on your bets which is quite a lousy outcome. When you talk about stock prices, SOL it is near at the point where it started in spring 2013, so not much worse than JASO and FSLR to my amazement. So you could also talk about a JASO and FSLR fiasco? In general I think the board has done well in exchanging information. Because the longer time members should have been able to make decent profit over that time period. hmm, I attached charts here which don't seem to work and are gone, you can check them out yourself then...
  7. Are you kidding? Check out GLBL chart how the demand for projects in not so high quality countries is... straight line down since IPO. Who in US buys such a project portfolio? In China ASFAIK IPO market is still closed. Have said a few times China project portfolio is not IPOable mid term with cash flow issues. Only when resolved and market wants such stuff again (starting with lower risk assets) there can be a thought for JKS do a IPO.
  8. I think strategies of FSLR and CN4 are not comparable. Clearly CN4 want to go for volume as a mean to cut costs and there was no need to focus on efficiency as much and leave the costly effort to equipment suppliers, seen by relatively low R&D spending in mid single digit millions per quarter and timid capex. Whereas FSLR intends to bring efficiency up and goes less for volumes, understandable as FSLR consumes approx. 1/3 of available Tellurium supply at 2.7 GW capacity that could limit scaleability. They bought this efficiency leap with a run rate of 100 mln R&D per year and high sustaining capex. As FSLR has now caught up or even overtook on efficiency it will be interesting to see if CN4 and other Si manufacturers increase efficiency efforts as well. What came to mind when seeing 6 USD EPS projections for 2016 that equals about 600 mln net income. Will FSLR never pay some taxes? Of 94 mln of Q2 net income 33 mln of it was due to a tax credit. Adjusting for this would have been maybe around 45 mln net income for the quarter or say 180 mln annualized (about 1.80 USD EPS), yearly guidance also assumes only 2-5% tax rate. Considering that FSLR operates at full capacity already making around 3.5 bln revenue a year, there would be a large boost to GM and operating leverage needed. Is this realistic?
  9. I mean TERP always did the trick to have their debt amortization scheduled in later years, like this they can show high CAFD and people equaled that as cash available for dividend etc. But this is rubbish, assets depreciate over time and there is expiry of PPA someday and so debt principal has to be paid back some day. Just because there is no debt payment in any period doesnt mean there is none to pay eventually, even more later but from what cash flows? Funny, before market valued all YieldCos approx. the same based on CAFD without regard how it was calculated! Other YieldCos that I saw at least have more reasonable CAFD calculation, but still valuation was quite high. GLBL is even larger junk than TERP, most of their MW-portfolio was still due to be bought from all kind of low quality countries. By right it is in free fall, I am amazed they were still able to dump this paper into the market, but plan was for around 20, now below 13 already. Abengoa parent today with cap raise and asset sales due to liquidity problems due to assets in too many emerging countries. So YieldCos were seen as savior? They had one. The yieldCo hype had run its course and is over now, now comes the time that will show who has the pants on, liquidity and flexibility in capital allocation will be king. Those drunken sailor companies that don't have enough liquidity or who have lousy projects with bad cash flows situation will enter stress.
  10. What reaction did you expect. Check all the YieldCos, they are all in free fall and finally that bubble is popping. With that, any solar comp that is in project business can only go one direction. Valuation wise the problem is these YieldCos still look like they have a long way to go down until they don't incorporate irrational growth assumptions, especially TERP.
  11. Pops, could you post the email you got from Ed. It is weird, Sarus Solar seems to be existing with the 3 mentioned companies there was a similar story last year. Or was that just a similar maneuver as they talk of being a AAA rated company, which is BS. http://renewableenergyheadlines.com/index.php?option=com_k2&view=item&id=2233:canadian-firms-to-invest-1-billion-in-odisha-in-form-of-fdi-for-solar-power&Itemid=272 It is interesting how lies can make it up to so many major news portals, can be found at quite a number of places. They all seem to just copy from each other, is it so easy to manipulate stock price nowadays?
  12. It is just a module supply deal into a low ASP country, another none event. PPAs are not signed yet, too.
  13. Yes I agree. My europe stocks are the ones pretty stable now and giving . I am always amazed how mad US exchanges are as there are better analysts over there. In US, companies that tend to have good business (even temporary) tend to be traded up to sky, and those with currently bad business climate tend to be dumped towards 0. In europe good material and junk is valued same, LOL, because most dont know what is a good and bad company here...;-)
  14. Doubt he will get financing from the banks anyways in this environment. But if the money shown on the balance sheet is really there it could be financed by the companies own assets. The problem in China is that 95% of stock holders are gamblers and they always run into same direction making this quick boom and busts possible. Wonder what happened to all these newly opened margin accounts over there. Sad.
  15. But not a bad price. I think they sell 25% for 193 mln. That is about 1 times sales of the company. For a uncompetitive company in a lousy business. SUNE is good at selling crap at golden prices. I checked yesterday again SUNE's reports to find out what is so wonderful about the company. Really, they just talk of future potential of trillions USD and double digit GWs pipeline giving even fancy future possible conversion rates based on past and funny things like unlevered CAFD (what crap measure is this anyway, cash flow before interest for solar projects, that is like talking about profit before all costs). Little about what they done for real value and about the loss that is more than revenue. When I read it, most things sound like with a marketing purpose. But anyway, it is the love of WS and everything is possible. As I say this, I am sure it will double within a few month, now at close to 9 bln market cap already. SEMI, same style as their selling shareholder: Praising their operating cash flow in Q's report, for a company that has permanently high capex requirement just to stay in the game. But they are good at burning equity. In Europe we say, the apple does not fall far away from the trunk.
  16. Uh, what exactly are they doing according to the article? I just read big words. Doesnt matter, market will love it anyways.
  17. Yes, CAFD is after interest, but before debt payback. For the program to not qualify as ponzi scheme the dividend to equity holders should only be paid from the CAFD share that accrues to the equity holder on a NPV basis. You are assuming 50% of current CAFD is fair. I am not sure of it, I think they are pay back a part of CAFD they assume to be growth future (share of equity holders) later. That is what 8point3 do in a more extreme way where not even full CAFD covers todays dividend. But they just assume will rise, which is ok if looking at 2-3 ahead, but what after then? How can there be growth when capital is paid back first that should be needed for replacement of todays CAFD generation 20 years down the road. Only possible with equity raises. It is the same like in real operating business, only cash flow after maintaining capex is there to distribute to stakeholders (debt and equity) and grow the business, while if whole operating cash flow is distributed, debt stays at same level while operating assets deteriorate over time. Just my thoughts.
  18. I totally agree with explo here. Dividend itself says nothing, in fact there is an incentive now to set it high because institutional investors dont look 20 years ahead and there is uncertainty of what happen after PPA. So they use it and its growth as an indicator for what it cannot be i.e. cash flow generation and growth ability and value the companies accordingly. That is where the hype lies. If the yieldco would really be interested in big growth it wouldnt pay any dividend and use all for acquisition of new MWs, quite the same as for normal companies. I dont have a problem with yieldcos and i stated some i find attractive and have shares in the most attractive of them even though they pay little or no dividend. The US ones i find quite overvalued though.
  19. Not sure if this will be a oligopolistic market, it is not so difficult to build projects. Would be interesting to see research if project building has really been trended from fragmented to concentrated over the last years. What I meant for TERP doing it right by issuing equity and soak up all that MWs, that is their only choice executing their business model, now when there are still margins get these MW all, because equity comes with so low cost of capital.
  20. I have quite a different opinion. For me it doesnt make sense to own a YieldCo at only 5% initial CAFD. To my understanding this is cashflow before any repayment of debt. So with 5% it needs roughly 20 years to pay off debt holders first only then comes the equity holders share, for assest that only comes with 20-30 year PPA. I don't consider that CAFD rises over time from saved interest payments due to partial repayment of debt, I didn't do the maths but I don't assume it is a lot because project financing rates are low already. So it is pretty sure that the equity holders share of the foreseable near term discounted cash flow is nowhere near a 5 bln market cap in the case of TERP. So what is the reason for the hype? Majority of the valuation is based on growth assumption. So the market assumes TERP's and 8point3's old legacy projects will be not only be replaced by similar margin projects, but there will be even much more MW with similar economies. I think the only benefit is that it is readily marketable and equity can be issued quickly. But really, these are not huge benefits taken for their own. Benefits arises now only because they can be sold by fancy prices like 1 Watt for close to 4 USD attached with modestly attractive PPA and with these valuations book value per share can be increased for the old owners by issuing equity. This is the business model now. But a operating model based on financial engineering and hype is not sustainable for long term and when it comes with high valuations one could call it bubble. I don't see it popping now and I really hope we can all live long in this dream, I just think it is important not to forget what valuations are based on. For CN4 especially in the case of CSIQ, they are most dependant on the valuation of YieldCos because they have fallen behind in the module business and the only rational for their situation now is that they could get a high priced YieldCo into the market. I think the investment banks were a bit to greedy with the IPO of 8point3 by stretching the valuation to 1.4 bln market cap for an entity that was not yet really ready to be floated, making it not a success as it looks like. Hopefully there is no demystification and the window for new issues still stays open, we have to monitor this. If one want to go for YieldCos, I would suggest not to go with high priced US entities, but rather ones that could be bought out by them being thirsty to sustain "growth" in MWs and keep their "operating model" going. There are asset holding companies with much less multiples around (btw the YieldCo concept is not new...). In older solar markets I know of examples like Germany's 7C Solarparken (formerly Colexon), Capital Stage or to be IPOed Chorus New Energy (all come with higher than 10% CAFD yield and for less than a Euro per watt of existing assets), or for Wind assets Energiekontor is also attractive. Or larger mixed global ones with renewables assets in the mix like Abengoa Yield are still more attractive than pure solar entities.
  21. Basically they are just doing what they are here for. Accumulating MWs through collecting capital. That is called an operating platform. Where is the problem? As long as this gives positive CAFD per share in the end it is not a bad deal. They are doing the right thing, being aggressive while competitors are still in the process of ramping up for similar operating platform, later they will all do the same thing and margins will become non-existent.
  22. Makan

    JA Solar (JASO)

    One thing must be said. The market was pretty right about JASO's valuation all these years. On paper JASO was always cheap, but what is a company worth with management that doesnt partner with their fellow shareholders? Instead trying to rip them off, and mocking them with the takeover letter saying that will create great value for the selling shareholders, after such along time of dismal performance and far below IPO value. Right now it will be a fight shareholder against management, so it is not about growth or sales of solar anymore. It is just a legal battle of who will win, and the management is clearly ahead of this game.
  23. Makan

    Solar News

    From what I understood from the prospectus is that there will be 70 mln shares outstanding (not 50 mln altogether), 20 mln A-shares to the public plus 50 mln B-shares that they keep back (22 FSLR and 28 SPWR). So market cap will be around 1.4 bln. Quite a high price it seems to me and a lot of growth assumptions in it. Did you consider this in your calculation odyd? The prospectus is here http://www.sec.gov/Archives/edgar/data/1635581/000119312515218889/d876955ds1a.htm#rom876955_35
  24. Makan

    Solar News

    I think they will have 50 Mln shares altogether, so about 1 bln market cap and 4.2% dividend yield.
  25. Yes, agree. "Only" YieldCo is probably the wrong expression. Considering how much problems the other of the CNs have to launch something remotely similar by only talking from it for years, I think that would be quite an success. That puts SUNEs accomplishments into another light also. Just wanted to express, that hopefully they do not fall too much behind on modules, because now they have to plug every penny on progressing projects.
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