---

Solar Modules

The final month of the year was one of the largest in 2014. Overall, Chinese module exports reached 1.938GW in December, a 56% increase in comparison to 1.242GW in December 2013. With this impressive contribution, the fourth quarter became the largest delivery period in history, at 5.315GW, beating the Q2 record of 5.2GW. Overall, year-over-year quarterly increase reached 43%. Full-year module exports reached over 20GW, an increase of 21.1% from 2013.

Coincidentally, during the same period, market performance of solar companies’ stocks was the worst in the year, possibly creating a condition of surprise for the markets during the reporting period.

The largest country contribution for the quarter was Japan, with a record of 1.9GW. This was 46% over the same quarter in 2013, and a slightly higher figure than Q3. Japan has not shown signs of a slowdown, despite the criticism and recent misperception. Our expectations for 51GW of overall solar capacity in Japan holds approximately 25 to 30GW demand yet to be supplied, which offer at least 3 years of delivery pace similar to 2014. For the year, Japan received 7.360GW of modules, slightly beating our forecast. Japan represented 37% of total exports in 2014. USA came in second with 3.5GW of volume, followed by ports of Holland at 1.5GW and the UK at 1.2GW. Australia and India reached over 700MW each. The other 13 countries on the list of top 20 received 3.3GW of modules. Among those locations were Philippines, Chile, Taiwan and Pakistan, with Algeria and Honduras being completely new for 2014.

• 2014 China Exports - Continental Distribution 2014 China Exports - Continental Distribution
• 2014 China Exports - Top 20 Destinations 2014 China Exports - Top 20 Destinations
• 2014 China Exports- Top 10 Module Exporters 2014 China Exports- Top 10 Module Exporters
•  

From the perspective of market share, US-listed companies had 63.85% of the market, a lower figure than Q3 had, but still very strong if considering the 12% volume increase quarter over quarter.

For the year, CN7 (CN4 plus YGE, HSOL and SOL) had 56% of the market at 11.2GW, while CN4 (TSL, CSIQ, JASO, JKS) had 36% of the market at 7.3GW. The highest exporter for the year was Trina Solar at 2.3GW, followed by Canadian Solar at 2.26GW. Both companies had 11% market share of the exports. Yingli Green delivered 2GW of modules globally. JA Solar exported 1.58GW of modules, adding 53MW OEM from TBEA. The company had 8% of share of exports, while JinkoSolar came in at 6%, a position shared with Hanwha SolarOne.

Based on destinations, during 2014 JA Solar delivered over 966MW to Japan, followed by Canadian Solar with 819MW and Trina Solar with 720MW. The top shipper to the US was Trina Solar with 925MW, followed by Canadian with 730MW. The figure for CSIQ does not include Ontario-made modules. Third place was taken by Yingli at 406MW delivered. In direct deliveries to the UK, Yingli was the number one shipper at 285MW, followed by JA Solar at 234MW. Canadian shipped 113MW directly to the UK. A large portion of volume delivered to Holland was destined for the UK. Canadian delivered to Holland 169MW in 2014, and Trina did 161MW.

Looking forward to 2015, top destinations are Japan, which could be eclipsed by the US. The third highest destination for the first quarter will be the UK, and possibly by the second half of the year, India. The forecast for 2015 foresees around 20% growth for exports, up to 24GW, with CN7 taking on around 2 to 3GW and 1GW to 2GW by the rest of the US-listed companies. More of the volume will be taken away by CN7 in 2015 from “others” category, moving market share closer to 55% or even 60%.

Solar Wafer

There was a lift in wafer deliveries to Taiwan back to October volumes being over 500MW. Overall, 20MW more of wafer was delivered in December than in November. Destinations remain unchanged.

For the quarter, top 10 companies delivered 2GW of wafer. Top shippers were GCL at 530MW, Longi at 351MW and Huantai at 216MW. Among US-listed, ReneSola shipped 120MW. Taiwan headquartered GET, delivered 167MW from China. Taiwan received 1.5GW of wafers, followed by Malaysia at 241MW and South Korea at 241MW.

Solar Cell

Only 149MW of cells were exported in December; this is in comparison to 168MW in November and 160MW in October. In the quarter, 314MW were exported by the top 10 companies; Shunfeng topped the list, delivering 56MW, and Hareon Solar did 50MW. Third place was US-listed JA Solar at 44MW. Taiwanese-based Motech delivered 37MW of cells during the quarter.

Taiwanese deliveries during November were at 823MW, a 40% increase from October. The top destination was China at 430MW. During the three months between September and November, the top 10 destinations received 1.8GW of cells; the top location, China, received 897MW, followed by Japan at 206MW. Germany took third place with 194MW. Taiwanese cells are selling to demand in China, and they offer the same pricing range as Chinese cells. This condition will pressure down on gross margins, reducing any opportunity for profit for Taiwanese companies.

Polysilicon Imports

US-listed companies imported 2.7KMT of poly at an average price of $22.03 per kg. Overall, 9.2KMT were imported in December. The price paid by the US-listed has spiked in comparison to $21.59 in November and $21.52 in October. We continue to view poly costs as having a low impact on overall costs per watt.

CN7 GADP (Global Average Declaration Price)

In regards to quarterly GADP results, all companies have shown a drop versus the third quarter, with the exception of Canadian Solar. The only reason leading to this outcome is the deliveries to the UK, priced in the last two months at $0.88 per watt. In December, Canadian shipped around 35.4MW to the UK, but this time only showing at $0.68 per watt.

The range of the drop, based on Q4 GADP results in comparison to Q3, is two cents on average. In combination with the flat pricing in China in Q4 versus Q3, we see possible gross margin pressure, which could be neutralized by a significant volume of shipments, improving gross profit figures despite lower margin.

Overall, we have high expectations for fourth quarter results, considering that all companies are expected to ship record volumes. Full utilization should help with cost reduction, in addition to efficiency increases from new equipment and material processing improvements.

Trina Solar Limited (ADR)(NYSE:TSL)

Slightly higher volume is needed from China to meet the guidance, but it is only 1.9% more than we expected in November. Sales of 433.8MW in China should be achievable. Gross margin should see benefit from sale of the plant in the UK, but small volume in comparison to the largest ever shipment expectation suggests margin to be flat at best. We suspect that net income should be improved due to volume. The guided volume is the highest ever in the history of the company.

Canadian Solar Inc. (NASDAQ:CSIQ)

The company reached its best delivery figure ever, and in fact has delivered the most ever out of all companies for one quarter at 654.54MW. Based on the recent update from Canada, the company declared to have 275MW of projects left for Q1. We readjust our volume for total solution to be at 70MW of plants and 43.1MW in EPC. In the US, sold volume should equate to 28.4MW. Thus, the total solution figure seems to gravitate around 126.8MW for Q4. The overall number looks like 781.34MW, including CEDR and total solution. We are no longer certain of volume from Ontario. In theory, 95% utilization would produce 40MW per month. If we assume that volume for EPC is recognized as part of the Ontario production, then we are still left with 80MW this quarter. This is no longer a discussion on meeting the guidance, but whether the company will exceed it. If the assumption for Ontario is true, Canadian would not ship a lot to China (for sale as we exclude delivery to own projects which should be 100MW). If so, there is a potential for volume surprise. CEDR Q4 deliveries are a record for the company.

JA Solar Holdings Co., Ltd. (ADR)(NASDAQ:JASO

In December, JA had a relatively lower figure of deliveries than other months, at only 134MW. At the same time, over 514MW were delivered by the company for the full quarter. We add 53MW from TBEA to this volume, plus 22.5MW in South Africa. Overall expectation with 220MW sold in China is around 811MW. We expect a total of 50WM of cells to be shipped. Overall, we see 861MW with 94.1% of module penetration. There is a potential for reporting a positive volume surprise. We also do not include 60MW for its own project development. Due to module ratio improvement, gross margin should remain at least stable. CEDR Q4 deliveries are a record for the company.

JinkoSolar Holding Co., Ltd.(NYSE:JKS)

The company has added quite a substantial amount of module deliveries in December, at 223MW. The overall figure from Q4 CEDR is 451MW. We add around 32MW from South Africa, and we have total exports at 483MW. An estimate for sales in China currently looks like 287MW, which is 193MW lower than what the company shipped in Q3. This certainly supports delivery to its own projects, but does not explain whether connections have been obtained for them. Lack of connection news remains the biggest concern prior to reporting of the quarter. Theoretically, the company could have an opportunity to beat volume guidance, but perhaps caution should be advised, as the capacity level for Q4 is not fully understood. While dominant export numbers improve margins, the drop in the GADP may not suggest this. Still, gross margin should remain flat versus Q3. Chinese ASP in Q3 seemed unchanged in Q4, but lower volume of shipments domestically should have a lesser impact on overall ASP in the quarter, keeping in line with Q3. CEDR Q4 deliveries are a record for the company.

Thank you

SPVInvestor Research - Robert Dydo, Jason Tsai

 

Download December 2014 CEDR Report