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Canadian Solar (CSIQ)

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Regarding the cost discussion it is in my view better to look at the cost of panels where the company controls most of the cost, i.e. the cost of a panel that contains in-house ingot growth, wafer slicing and cell & module processing is more relevant than a panel with a lot of outsourced parts of the chain, since the margin will move between the panel brand and component / OEM processing service providers depending on demand / capacity balance changes. A cost reduction by margin movement is not a ”real” cost reduction since total cost and margin remains the same along the chain. If the cost and margin changes along the chain those changes are still relevant even if part of the chain is outsourced, i.e. cause of lower price of component and service supply is a result of lower (in-house) cost and not lower margin for the supplier(-chain).

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4 hours ago, explo said:

Regarding the cost discussion it is in my view better to look at the cost of panels where the company controls most of the cost...

I agree, that's why I liked to look at JKS' in-house cost as a benchmark for CN costs.  

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17 hours ago, SCSolar said:

I understand that right now prices are ultra low for cells and wafers. If you track past history after cash cost, prices increase to cover depreciation and maybe opex. This would add $0.02 on costs for wafers and cells from the ultra low costs.

If I crunch GCL's 2017 numbers for wafers I get 9.8 cts/W for GOGS, and 2.5 cts/W for OPEX&Interest for total costs (before taxes) of 12.3 cts/W.  That total may have come down to approx 11 cts currently.   I would consider a wafer ASP bounce-back from 7 to 10 cts within a year or so possible, that would be at full cost level for GCL assuming 10% cost reduction until then.  

17 hours ago, SCSolar said:

...If you re listen to some of the old con calls like Q217, Qu discusses stagnant cost cutting due to upstream price issues through the chain such as Poly and Aluminum. Now all the upstream prices should be pulled back from the artificial inflation allowing a 25% cost savings on materials such as aluminum back sheeting and glass...

I disagree to some extent because I think the materials appreciation last year had to do more with commodities going up globally (aluminum, silver, silicon metal, etc.) and less with PV demand exploding in China.

17 hours ago, SCSolar said:

In prior downturns, cash cost may be reached for an ASP, then when inventory is cleared , the ASP bounces back maybe 10%  +/- and holds steady until other costs drop to make things profitable. This is a slow climb out of the abyss. That cycle typically will last longer than ASP collapse portion which is usually a couple of quarters before stability and rebound. When looking at cost to buy, you may exect wafers to jump to $0.09-10,  cells back to $0.14-$0.15 and then hold steady before  a gradual drop to the low $0.20. This means that module costs are expected by me to be at worst in the $0.25 cost range for the high efficiency PERC type tech with those doing their own sawing such as CSIQ to be lower than that.

Oh I see you consider the possibility of wafers going back to 10 cts as well, means we're not that much apart.

Coming back to FSLR my point was that the current cost level claimed by Qu is not a true depiction of the full cost level along the poly supply chain.  Thus it is not sustainable and likely to increase in the short and mid term.  Thus I would think twice before crowning a winner, you don't wanna FAK up like Steve Harvey:

 

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Right about now CSIQ needs to announce their intention to run a solar pot farm.  Could be worth 10B easily!

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Given the Issuer’s high quality assets as well as the outstanding $18.47 per Share acquisition proposal (the “Privatization Proposal”) made by Shawn (Xiaohua) Qu, the Issuer’s Chairman and Chief Executive Officer (the “Chairman”), Lion Point continues to believe that the Shares are significantly undervalued and trade at a steep discount to their intrinsic value. Lion Point also believes that there are significant opportunities within the control of the Issuer’s management and Board of Directors (the “Board”) to unlock shareholder value, including operational expense reductions, share repurchases, improved communication with public investors and strategic transactions, including a spin-off or separate listing of the Issuer’s energy business or a sale of the Issuer as a whole or in parts.

Following the public announcement of the Privatization Proposal, Lion Point had conversations with several large financial and strategic institutions that expressed an interest in potentially providing financing for the Privatization Proposal, and Lion Point subsequently submitted a preliminary term sheet, subject to due diligence and certain other conditions being met, including the participation of certain third party financing sources, to the Chairman offering to provide a 5-year financing package of up to $250 million to i) backstop the sources of funds arranged by the Chairman for the Privatization Proposal and ii) to make additional funds available to increase the per Share price of the Privatization Proposal, if necessary. Lion Point has also indicated to the Chairman that, based on its discussions with certain financial institutions and strategic investors, it may be able to significantly increase the size of the offered financing subject to governance, diligence and other conditions.

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There's also this:

Canadian Solar Inc. (the "Company" or "Canadian Solar") CSIQ, -0.42% one of the world's largest solar power companies, announced that it has completed the sale of three additional solar power plants totaling 30.4 MWp for JPY11.5 billion (US$103.1 million) to the Canadian Solar Infrastructure Fund, Inc. ("CSIF", Tokyo Stock Exchange ticker 9284) in Japan.  This expands CSIF's current capacity to 105.6 MWp from 75.2 MWp.

I suspect there's no reaction because there are 250 of us in the world that invest in solar stocks and we're all holding a bag already.

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An update was issued by the company on the offer. DD to be completed by the Qu consortium. Could be a price change.

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How do you see the price changing if you see one, Robert?  I emailed Lion Point for clarity on their position.  I don't expect a response, but hey, no harm in asking!  

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JP Morgan filed an amended 13G showing 2.6% ownership now.  But I thought that was already known?

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Back of the envelope, looks like 9 big fish own 50% of the company. 

Qu with about 23%
Lion Point 6.1%
Blackrock 4.27%
Invesco 3.02%
Park West 3.01%
JP Morgan 2.66%
Barclays 2.6%
Morgan Stanley 2.37%
DNB Asset 2.35%

And it looks like Qu added 351K shares last quarter?  I'd missed that but suspected he was buying on the dip.  Asked IR about and they said there was nothing prohibiting him from doing so.

 

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18 minutes ago, Mark said:

 

And it looks like Qu added 351K shares last quarter?  I'd missed that but suspected he was buying on the dip.  Asked IR about and they said there was nothing prohibiting him from doing so.

 

Does this site help?

https://fintel.io/so/us/csiq

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2 hours ago, Mark said:

Back of the envelope, looks like 9 big fish own 50% of the company. 

Qu with about 23%
Lion Point 6.1%
Blackrock 4.27%
Invesco 3.02%
Park West 3.01%
JP Morgan 2.66%
Barclays 2.6%
Morgan Stanley 2.37%
DNB Asset 2.35%

And it looks like Qu added 351K shares last quarter?  I'd missed that but suspected he was buying on the dip.  Asked IR about and they said there was nothing prohibiting him from doing so.

 

You can add my 0.02% holding :)

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21 hours ago, Mark said:

How do you see the price changing if you see one, Robert?  I emailed Lion Point for clarity on their position.  I don't expect a response, but hey, no harm in asking!  

Nothing specific, more speculative to review the value of the company, which could lead to price change potentially to lower one based on the market conditions etc. There is a possibility of it, but Qu is a pretty good guy, so an offer could be made at the same or a fractional adjustment. 

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A few days old but interesting piece by Finlay saying that multi PERC has no future and that CSIQ will soon say that they are betting on mono instead.

https://www.pv-tech.org/editors-blog/china-531-to-accelerate-demise-of-multi-polysilicon-consumption-decline-to

The first to embrace mono was JA Solar, followed by JinkoSolar, and now Trina Solar. LONGi is already fully-mono at the cell/module side, GCL-Poly is painstakingly moving off its parent legacy-multi advocacy, and Canadian Solar is almost certainly start being vocal about mono-PERC during the next few months.

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On 9/11/2018 at 3:38 AM, explo said:

A few days old but interesting piece by Finlay saying that multi PERC has no future and that CSIQ will soon say that they are betting on mono instead.

https://www.pv-tech.org/editors-blog/china-531-to-accelerate-demise-of-multi-polysilicon-consumption-decline-to

The first to embrace mono was JA Solar, followed by JinkoSolar, and now Trina Solar. LONGi is already fully-mono at the cell/module side, GCL-Poly is painstakingly moving off its parent legacy-multi advocacy, and Canadian Solar is almost certainly start being vocal about mono-PERC during the next few months.

Thanks for the information. That article  seems to confirm the pv-magazine article I posted on Monday. That article suggested that Multi would virtually vanish by 2022. It indicates Mono Perc would be 158GW+ of production with capacity being higher.

Your article presents a nice data point on grams per watt falling to 3 grams. That is inline with where I have speculated it would fall for some years based on 20% efficiency gains, thinner wafers and diamond wire resulting in lower costs.

The total costs of modules could be under $0.18. This would be attributeable to  the move to poly costs in the  $5/Kg and an ASP in the $8-$9 range you have Si costs of $0.015-$0.027. Cost reductions on processing and materials of 8% a year would have costs fall from current $0.22 down to $0.157. That places production costs in the $0.172 to $0.194. I might speculate that the lower end range could be lower come 2022 from cost reductions due to mass of scale as the market size rises by 50%.

 

If any of those numbers fall in line, then FSLR will have problems competing with current S6 lines.

 

 

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4 hours ago, SCSolar said:

The total costs of modules could be under $0.18. This would be attributeable to  the move to poly costs in the  $5/Kg and an ASP in the $8-$9 range you have Si costs of $0.015-$0.027. Cost reductions on processing and materials of 8% a year would have costs fall from current $0.22 down to $0.157. That places production costs in the $0.172 to $0.194. I might speculate that the lower end range could be lower come 2022 from cost reductions due to mass of scale as the market size rises by 50%.

 

If any of those numbers fall in line, then FSLR will have problems competing with current S6 lines.

Why don't you do the crunchies for FSLR as well? You sound like you're in Cape Fear and a hurricane is approaching.

S6 was supposed to be 40% lower than S4 when ramped (aka 2019) and from there on take 10% cost reduction per year. 😝

And your 8% yoy cost savings in non-poly costs are in HUMONGOUS contrast to Junkosolar's progress over the last year or so which essentially was NIL.  And don't blame the plateauing entirely on the multi-mono migration please.  And now that I think about it, if conventional wisdom now says that mono processes are cheaper than multi, wouldn't a multi to mono migration rather speed up cost reduction instead of slowing it down?

Sorry for the nasty question.

I'm out for drinks.

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Canadian Solar Unveils BiHiKu, New 400+ Watt Poly Bifacial Solar Module, and HiDM, High Efficiency Black Shingled Module, at Solar Power International

GUELPH, Ontario, Sept. 24, 2018 /PRNewswire/ -- Canadian Solar Inc. (the "Company", or "Canadian Solar") (CSIQ), one of the world's largest solar power companies, today unveiled our proprietary P4-based BiHiKu module, combining three industry leading solar PV technologies in one new 400+ Watt module: the latest black silicon, poly PERC, and bifacial cell technologies. Merging these technologies enables Canadian Solar to produce the BiHiKu module, a HiKumodule with bifaciality up to 75 percent.

This new poly solar module generates 400 Watts or more on the front, plus up to 30 percent additional power generation from the back side, dramatically increasing system yield and reducing the Levelized Cost of Electricity (LCOE). The Company believes that BiHiKu is the first poly bifacial module exceeding 400+ Watt nominal front side power.

BiHiKu is perfect for large commercial or utility-scale solar installations, particularly where a high reflection ground or surface under the module creates high albedo, contributing to high back side yield. The product will be available in 2019 and pre-production orders are being accepted now.

In addition, Canadian Solar is introducing to the North America market the HiDM high density module, a shingled solar module with unique IP-granted design features and up to 19.9% module efficiency. The 60-cell sized mono PERC HiDM, up to 330 Watt, is an aesthetically pleasing all-black module perfect for residential rooftops. The 72-cell sized mono PERC HiDM, up to 410 Watt, is a highly efficient black module for commercial applications.

"As Canadian Solar continues on the forefront of solar module innovation, we are proud to introduce BiHiKu and HiDM as the next steps in maximizing the lifetime value of your solar assets," said Dr. Shawn Qu, chairman and chief executive officer of Canadian Solar. "Solar systems using BiHiKu will be able to break away from the pack and score high on low LCOE, making many seemingly impossible low PPA solar projects possible."

Canadian Solar's booth #1604 at Solar Power International (Anaheim, CA USA) honors the fact that Canada is the birthplace of hockey. Donning hockey jerseys, Canadian Solar staff will be talking about BiHiKu and HiDM as Canadian Solar's breakaway products, and showcasing the firm's solar hat trick of modules, inverters, and services.

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For anyone interested, I had emailed IR asking why the due diligence period was on Qu right now, since it seemed to me like the Board was on the hook to consider his offer and we were waiting on their opinion.  Response:

That is a reasonable question. My understanding is that since it was a non-binding offer, the Board needs confirmed financing commitments for Dr. Qu before it can move forward with its process.

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28 minutes ago, Mark said:

For anyone interested, I had emailed IR asking why the due diligence period was on Qu right now, since it seemed to me like the Board was on the hook to consider his offer and we were waiting on their opinion.  Response:

That is a reasonable question. My understanding is that since it was a non-binding offer, the Board needs confirmed financing commitments for Dr. Qu before it can move forward with its process.

Sounds logical, especially after TESLA's go private twits with "funding secured" joke... Nobody wants SEC investigation...

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Japan considering canceling FITs on unrealized projects:
http://www.asahi.com/ajw/articles/AJ201810040048.html

"...The Ministry of Economy, Trade and Industry will consider revoking certification given to solar power generation facilities that received it soon after the FIT system started but have yet to begin operations..."

This could hit CSIQ hard since a large chunk of the company's value stems from the Japanese pipeline.

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1 hour ago, Klothilde said:

Japan considering canceling FITs on unrealized projects:
http://www.asahi.com/ajw/articles/AJ201810040048.html

"...The Ministry of Economy, Trade and Industry will consider revoking certification given to solar power generation facilities that received it soon after the FIT system started but have yet to begin operations..."

This could hit CSIQ hard since a large chunk of the company's value stems from the Japanese pipeline. 

The article specifically references projects awarded within 3 years of the FIT system start in 2012, so that would be for projects awarded in 2012-2015.

Do we know when the CSIQ not-yet-built Japanese projects were awarded?  (I admit it--I'm too lazy to try to look it up on the CSIQ website.)

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1 hour ago, Klothilde said:

Japan considering canceling FITs on unrealized projects:
http://www.asahi.com/ajw/articles/AJ201810040048.html

"...The Ministry of Economy, Trade and Industry will consider revoking certification given to solar power generation facilities that received it soon after the FIT system started but have yet to begin operations..."

This could hit CSIQ hard since a large chunk of the company's value stems from the Japanese pipeline.

I do not think  the total exposure is as bad as you might suggest. They initially had 600MW back in 2015. The lost around 150MW shortly there after. They have built about 300MW to date of that remaining 450MW. They have 144MW that are target to be 2019/2020 . Of the 11MW due to be completed by the end of 2019, 67MW of that is under construction as of Q218 ER. I presume all these are  from the earlt FIT.

They also have signed more contracts that are pushed  out. In themiddle of 2016 they started showing build schedules that pushed into 2021 and beyond. I am under the presumption the 140MW that is target 2021 is lower FITS as most of this was added in the Q417 earnings presentations.

 

 

csiq japan Q218 update.xlsx

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6 minutes ago, solarpete said:

The article specifically references projects awarded within 3 years of the FIT system start in 2012, so that would be for projects awarded in 2012-2015.

Do we know when the CSIQ not-yet-built Japanese projects were awarded?  (I admit it--I'm too lazy to try to look it up on the CSIQ website.)

I estimate around 140-150MW of the initial eary FIT out of the initial 600MW. is left. Half of this is in construction as of Q2.

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Dr. Qu updating on PV manufacturing cost:

"I also gave a cost outlook in 2016. I was pretty accurate through Q4 2017. I was also accurate to predict that the manufacturing cost will go down to 25 cents per Watt, but I did not predict the timing right. Module manufacturing cost is reaching 25 cents per Watt in Q4 2018 for leading manufacturers, literally as we speak, rather than in Q4 of 2020 as I originally predicted."

https://www.linkedin.com/pulse/breakaway-hat-trick-solar-dr-shawn-qu/

 

 

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1 hour ago, MVA said:

Dr. Qu updating on PV manufacturing cost:

"I also gave a cost outlook in 2016. I was pretty accurate through Q4 2017. I was also accurate to predict that the manufacturing cost will go down to 25 cents per Watt, but I did not predict the timing right. Module manufacturing cost is reaching 25 cents per Watt in Q4 2018 for leading manufacturers, literally as we speak, rather than in Q4 of 2020 as I originally predicted."

https://www.linkedin.com/pulse/breakaway-hat-trick-solar-dr-shawn-qu/

 

 

Interesting that he is suggesting  installs at 104GW in 2018. That is not the 85-95 that most have suggested as revisions. He is  counting China as an emerging market in those values..

 

"Two years later, much to our surprise, the developing country market is expected to reach 70GW and 67% of the total market share in 2018. The mature developed country market is more or less the same 34GW as two years ago, but now only represents 33% of the total market share.

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