explo

JinkoSolar (JKS)

2,842 posts in this topic

This is a curious circumstance. We all waited for China to step in as we wanted global market expansion and someone to suck up capacity. I do remember TSL stating that they we going to be careful on what they sell domestically due to lower ASP's but wonder how all of these factors coexist. China wants to install PV and also wants their panel makers to thrive. There is a delicate balance between leading the world in production and installs. On the one hand, the companies supplying product have to make a profit at some point or the whole house comes down. Through rising poly into the mix and you have a further debatable situation. I imagine that there will end up being a balance or who would sell domestically at a loss forever? Very curious IMO. A side note, it took 5 minutes for the first JKS share to be traded outside of pre-market. Not much volume on the news.

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I think you have to go big on China, but you cannot lose sight of global growth. Explo you know that YGE is big globally largest I must say. Jinko and JA are not, yet JA boosted China sales in Q4 huge. This is great news. China is a valid market like any other. I feel better about TSL now seeing JA rock it, but TSL is quiet, so they maybe just meet. I checked with the IR, no comment of course on 1.8GW recently seen, they said it was old reference which tells me they still struggle with the guidance as they have not much business in Mainland.

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No real volume on the news... It actually just jumped $.20 on about 2500 shares. It is so thinly traded, it does not take much to take it either direction. I thought everything was going to turn red but it seems to be going the other way.

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Has anyone ran numbers based on MW shipments and profitability per watt to determine an amount of shipments required to make $1 in EPS and then calculated a growth percentage to reach it and crossed this to current share price to determine a fair valuation to peers? Jinko Solar fundamentals 30M per Q Opex, $15M interest = $45M quarterly @ 350MW Current gross per watt $0.06 expected gross per watt sometime in 2013 of $0.10 Shares outstanding 30M $30+$180=$210M $210/$0.10 = 2100MW Increased shipments of 1GW = $70M in Opex or 1400MW more in shipments. Total Opex and interest + profit = $350M Total shipments 3.5 GW needed at $0.10 gross to make $1 in EPS. Growth required to earn $1 = 2300/1200=191% current estiamted growth 30-50% At $0.15 gross per watt =1400MW or an increase of 200MW from current Increased shipments of 200MW add $14M in Opex or needing 200MW more shipments Total shipments 1600MW at $0.15 gross per watt to reach $1 in earnings. Growth required to earn $1 = 400/1200=33% growth. Profit growth 25% to reach $0.10 gross Profit growth 100% to reach $0.15 gross Target ASP $0.65 for $0.10 gross Target Cost process/Si $0.45+$0.10 = $0.55 Target ASP $0.65 for $0.15 gross Target Cost process/Si $0.40+$0.10 = $0.50 How doe other peers stack up for required growths based on costs and required growth? Is JKS now over valued or undervalued?

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I liked JKS a lot 6 months ago because they had 50m market cap at $2 PPS. Fundamentally they have great operating efficiency and a procurement strategy that allowed them to respond quickest to material market price declines (that benefit of course reverses when prices rise now). Now at 5-fold the stock price you have a totally different price risk scenario. Before if stock went to $3 it would be great, now not so much. Nothing has changed fundamentally in my view, just the price of the stock. In fact the relatively best position for the (bad) scenario at hand that they were in before no longer applies. Other names offer more value per market cap dollar now. In my view Jinko should be a stock that follow the sector wave with a bit less magnitude due to its operative structure. The drop to $2 was unwarranted. The sector outperm with a 400% run since then was also excessive. I rode the first part and then switched to lagging names that offered more value for your dollar. On your $0.10 poly cost assumption. Jinko procure on spot market so price will be great now, but assuming this will last is risky. Jinko is leading on cost now, but I fear ASP might slump in Q4 with a lot of domestic sales.

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Thanks Explo There are 2 laggards that look to offer the best values relative to peers. These would be SOL and Jaso. Both announced good news today and have relative low costs and inventory. Jaso is a bit higher in costs due to the over build and they took out some depreciation in the form of factory write downs in Q3. If they continue to execute on the move to Modules adn projects, they would be in better position than YGE but without the current brand recognition. SOL has very good potential for upside, however they have never performed very well in the margins department vs peers and you do not know the levels of focus on ramping modules and other products vs it being a wafer company.

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Have I missed something? Funny how YGE got put back to the same price and TSL took beating.

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It is amazing what the MMs can do to a stock without any major news. With such a low volume, they can practically put a stock anywhere they want.

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