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dydo

Canadian Solar (CSIQ)

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1 hour ago, sunnypease said:

Just to verify, you think that 17.5c / Watt is the minimum price you see prices going to in about 10 years?

 

I would view a worst case scenario of companies being profitable with an  ASP above of $0.175+$0.035=$0.21
I would view a better case scenario of companies being profitable with an ASP above $0.15+$0.03 = $0.18  
I would view a best case scenarion of companies being profitable with an ASP above $0.13+$0.025 = $0.0155

 

1 hour ago, sunnypease said:

Also.. because the supply chain is in China, these expenses are not really 17.5c / Watt, but are the equiv. RMB, correct?  

 

I am using USD as a reference. Currency fluctuations would change the results.
In my example I use a cost savings in areas that detail a  drop in manufacturing of modules to atleast $0.175/watt.
If you use a slower Mores Law adjusted 25% cost reduction per doubling of capacity for the next decade,
Then a $0.24-$0.28 cost to manufacture today drops to $0.15 to $0.175 cost to manufacture.

1 hour ago, sunnypease said:

Then you say Opex, including shipping will be 0.04 / Watt more?

 

I am saying the ASP to be profitable is Cost to manufacture + Opex + Interest + Profit

I am saying today Opex is at $0.04/watt including shipping look at the JKS and JASO ERS.


I expect it to drop 25% or more per doubling of capacity.
A 10% shipment growth per year places shipments aproaching 300GW.
A 25% lower Sales cost(including shipping) on efficiency gains of 25%(aka 23-25% efficient modules) is $0.007 savings from todays costs of $0.027(JKS Q4).
A 25% lower Admin cost per watt per doubling of shipments places General Admin around $0.0045 from todays $0.007/watt.
A 25% lower RnD  cost per watt per doubling of shipments places RnD at $0.00329 from todays $0.0516/watt

Based on the market growth forcast at 10%+ per year for the next 10 years and savings at 25% per doubling of shipments
Opex=$0.02+$0.0045+$0.00329 = ~$0.0278 or $0.03 or less.

 

1 hour ago, sunnypease said:

And then you mention interest.  Do you mean interest expense from LT debt? 
 

Yes. Depending on module manufacturer and volumes Interest Net Income runs $0.0035-$0.01/watt.
This drops to $0.0027 to $0.0068/watt with a 2.5 times increase in shipments at a 25% reduction per doubling.

I expect then in 10 years that the Opex and+ Interest will be under $0.04/watt and in the range of $0.03-$0.035.
down from todays $0.045-$0.05. It could be lower.

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Thank you SCSolar for the further detail & clarifications.  

It seems that these days the BOS costs are greater than the module cost & so I would hope that could be reduced.  Perhaps by automating installation, especially in the US and Europe (higher cost of labor).

 

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$15.69 print immediately after the close. Tried selling bunch just under - no takers. Looks like 2K shares went @15.69 after 4PM. WTF was that? Can not say I've seen a "mistake" like that before.

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On ‎6‎/‎29‎/‎2018 at 2:28 PM, pg6solar said:

$15.69 print immediately after the close. Tried selling bunch just under - no takers. Looks like 2K shares went @15.69 after 4PM. WTF was that? Can not say I've seen a "mistake" like that before.

Could have been an after-hours "at the market" buy.  Bid and ask spreads can be huge after hours, which is why we all know to strictly use limit orders then.  The small volume indicates it was probably a retail investor making that mistake.

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5 hours ago, solarpete said:

Could have been an after-hours "at the market" buy.  Bid and ask spreads can be huge after hours, which is why we all know to strictly use limit orders then.  The small volume indicates it was probably a retail investor making that mistake.

Very good theory. It has one small problem with it though. One can not put a market order after (or before) hours. All extended hours trading require limit price only. Market price can be placed only during market's normal business hours 9:30-4.  

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17 hours ago, pg6solar said:

Very good theory. It has one small problem with it though. One can not put a market order after (or before) hours. All extended hours trading require limit price only. Market price can be placed only during market's normal business hours 9:30-4.  

I didn't know that (I only trade during market hours).  But I've seen this theory floated elsewhere.

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Canadian Solar has secured 200 MW project in India with a tariff of Rs 2.70 per unit... Not a small volume, but there is no Press Release from the company... Canadian solar is very quiet lately in terms of PR...                    https://www.moneycontrol.com/news/business/economy/solar-tariffs-dip-to-a-low-of-rs-2-44unit-for-a-3rd-time-2709961.html

Edited by MVA

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On 7/13/2018 at 9:35 PM, MVA said:

Canadian Solar has secured 200 MW project in India with a tariff of Rs 2.70 per unit... Not a small volume, but there is no Press Release from the company... Canadian solar is very quiet lately in terms of PR...                    https://www.moneycontrol.com/news/business/economy/solar-tariffs-dip-to-a-low-of-rs-2-44unit-for-a-3rd-time-2709961.html

Thanks for the links.

Hopefully Qu is accumulating as he finds money?  That way he can buy the rest with less money than before and still meet his 18.35 offer.

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August 14th CSIQ reports Q2, JKS day before

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13 hours ago, dydo said:

August 14th CSIQ reports Q2, JKS day before

I double downed on CSIQ 2 days ago. I also took an entry position for JKS then as well for an earnings run up.

 

I believe the potential for cost reduction is great when compared to the ASP drop. Buy a Poly PERC cell and slap it into a module for <$0.24 and sell for $0.30 is a gross of $0.06/watt. That is an increase in margins.

 

Mono PERC cells bought and slapped into modules for <$0.25 and sold for $0.32 is a $0.07 gross and margins of almost 22%. 

 

Both of these potentials are an increase in both margins and gross for companies that have a good sales chanell. The Downside is risk to volumes for JKS. I believe CSIQ has already set their volume guidance reasonably.

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SCSolar, you are right that GM on outsourced panels improve a lot in a trough. For highly integrated players the outsourcing might go down a lot when order book starts to contract. In the end it is the EPS that matters and there are many stronger forces pushing down that in a trough than the expaned GM on panels with outsourced cells can compensate for. Outsourcers are relative winners though. They stay at different levels of mediocre profitability in all environments while in-housers and upstream flip between superior and inferior. Over time the best in class in-housers accumulate the most earnings.

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1 hour ago, explo said:

SCSolar, you are right that GM on outsourced panels improve a lot in a trough. For highly integrated players the outsourcing might go down a lot when order book starts to contract. In the end it is the EPS that matters and there are many stronger forces pushing down that in a trough than the expaned GM on panels with outsourced cells can compensate for. Outsourcers are relative winners though. They stay at different levels of mediocre profitability in all environments while in-housers and upstream flip between superior and inferior. Over time the best in class in-housers accumulate the most earnings.

TI agree there are  several factors in play here in a declining market. The less vertical integrated with inventory management has the ability to gain by buying the wafers and cells. Those that require more inventory such as Si will take a little longer for the cost curve to blend down if not outright 1 time adjustments like SPWR did for its Poly.

Generally in an ASP declining environment, the cost savings lags the current market by 30 to 90 days for input costs. This happens over time as they turn their purchased inventory and buy new inventory.

 

The average ASP also lags the current generally by a similar 30-60 days as the contracts are generally a fixed price prior to the quarter or the shipment.

JKS was looking at 15% OEM in the second half to cover the 3.3GW per Q required. This means that they have 500MW or OEM that was low 3-5% margins. This is only $5-$7M in gross profits and was a primary driver of their 11% margins of the past. This lost business and gross will not impact earnings much.

If you monitor the upstream prices and the downstream ASP you can get a feel for the gross per watt and the ASP. I expect a Q3 cost in the $0.24-$0.25  and an ASP in the $0.29-$30 range due to Mono and PERC blends. 

For JKS manufacturing  that places gross profit at around $0.05/watt or $120M. That is up from Q1 2018 though possibly slightly down from Q2. If you add in OEM to meet the shipment requirements for current full year guidance, then add the $5-$7M into the equation. This suggests from an operation point of view profits for JKS.

 

For CSIQ, project revenues impacts the Q to Q results to much. With  similar price spreads between cost and ASP from above,  with the 1.6GW they only gross around $90M. They add however $45 to $75M per Q in other income from the project pipelines. They are marginally profitable as well depending on project sales which has been their driver for quite some time.

 

I just believe that Q3 or Q4 will be the bottoming of price spread between costs and ASP. From there, volume ramps and slight margin improvement drive gross profit and net income up through 2019.

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SC, from a short-term (ER season) trading perspective I speculatively think you are right on. Investors are GM sensitive and when they see stable GM they trust NM will come back in force when demand cycles up again. They might not all expect that lower sales should result in higher GM up to the point where either cell makers start to sell at negative GM or the panel producer no longer needs to outsource at which point GM deterioration accelerates with underutilized in-house capacity.

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https://www.nytimes.com/reuters/2018/08/08/business/08reuters-usa-trade-china-energy.html

 

BEIJING — Shenzhen Energy Group Co Ltd said on Wednesday it has ditched a plan to buy three U.S. solar power stations after failing to get approval from a U.S. government panel amid growing trade tensions between the world's top two economies.

The decision comes after the Committee on Foreign Investment in the United States (CFIUS), a government panel that reviews foreign investments for potential national security risks, has not ruled on its deal which was announced last October, it said.

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17 minutes ago, SCSolar said:

https://www.nytimes.com/reuters/2018/08/08/business/08reuters-usa-trade-china-energy.html

 

BEIJING — Shenzhen Energy Group Co Ltd said on Wednesday it has ditched a plan to buy three U.S. solar power stations after failing to get approval from a U.S. government panel amid growing trade tensions between the world's top two economies.

The decision comes after the Committee on Foreign Investment in the United States (CFIUS), a government panel that reviews foreign investments for potential national security risks, has not ruled on its deal which was announced last October, it said.

Those are the plants that CSIQ planned to sell.  

So that is bad?  Those plants cannot be resold at that price now?  Were there some breakup fees?

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1 hour ago, sunnypease said:

Those are the plants that CSIQ planned to sell.  

So that is bad?  Those plants cannot be resold at that price now?  Were there some breakup fees?

They will likely sell them to someone else, but it is not helping.

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Who knows the 5% gain could be a reaction to this news. Perhaps they have another buyer lined up. Did prices of solar plants increase in value under Trump politics?

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2 hours ago, dydo said:

Who knows the 5% gain could be a reaction to this news. Perhaps they have another buyer lined up. Did prices of solar plants increase in value under Trump politics?

I guess the move is just a continuation of yesterday's DQ confirmation that the china slowdown will not kill these companies.

  Dang I sold off everything at the open.  Weak hands.  

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Blah.  Well, at least the margins are still good.  🙄 Buy up shares, Qu, buy up shares.

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