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Guest Klothilde

First Solar (FSLR)

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Reuters out with a perfectly timed piece.  Thanks Reuters!  Just pile on why don't you?

https://www.reuters.com/article/us-trump-effect-solar-insight/billions-in-u-s-solar-projects-shelved-after-trump-panel-tariff-idUSKCN1J30CT

 

And another sub $50 PT from Goldman Sachs.

 

Edited by sunnypease

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11 minutes ago, sunnypease said:

Reuters out with a perfectly timed piece.  Thanks Reuters!  Just pile on why don't you?

https://www.reuters.com/article/us-trump-effect-solar-insight/billions-in-u-s-solar-projects-shelved-after-trump-panel-tariff-idUSKCN1J30CT

 

And another sub $50 PT from Goldman Sachs.

 

The press always pile on. People want to see the guy on the ground get kicked further. This is how they make their money.

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Must be a bit frustrating to have a president that is levelling the playing field in the wrong way (and opposite to his campaign narrative). US was on top of the world (not behind). Trump now allows rest of world to catch up with it by undermining the US success factors. Normally a successful country would import cheap basic materials and export expensive advances products. Trump seems determined to make this difficult for US companies.

Edited by explo

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3 hours ago, explo said:

Trump

is complete moron.  Sadly there are about 155M people in the US who are as moronic.  The only leaders we have left are a few & far between.  Mostly they are not US citizens.  Success brings complacency brings laziness.  Our success was never particularly earned.  Europe & the rest of the world killed each other with machines. We arrived later.  Then we had some industry.  That has now faded.  America is particle board & pick up trucks.  The 10 year note should not be trusted.

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Re: FSLR heading back to the 20s...

 

Well.  There is more cash now.  There is more production...

On the last trip to 20s nobody really know if S6 is real. (maybe FS will be unable to compete?)  We still don't know 100%, but given that they are expanding production & signing up long term deals where they get penalized if they cannot deliver, I'm inclined to believe them.

And their bounce back from there was awesome.  They did not miss an ER. Underpromised and over delivered every CC.  Amassed cash & sold out years in advance when the market was favorable.

Also there was this terrible pessimism that Trump wanted to kill solar.  Now we KNOW he wants to kill solar, and all of last year was to prove that solar could live without a pro-solar advocate in the White House.

 

And if these prices come to fruition, I'm sure the tier ones will still do OK. FSLR will do pretty good as well, with their US monopoly on utility solar.  Throw in a couple more drought cycles & even the rednecks will get concerned & start to demand more solar power.  (that last one is a stretch, but.. here is hoping)

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Michael Weinstein @ Credit Suisse's take:

 Bottom line: The impact of global oversupply and lower-than-expected module prices in Asia is not as severe for FSLR compared to Asian manufacture due to FSLR's firm price bookings (covers 73% of shipments through '20), and system business (80-50% of total gross profit in 2018-20).

 Estimate changes: We reduce our EPS estimates to $1.56/$2.07/$2.24 from ($1.88/$2.54/$2.47) as we lower our blended module ASPs by 5% in 2018/19 and by 2% in 2020 due to a decline in module ASPs for unbooked shipments under an oversupplied environment, and to reflect updated project deployment schedule published in the 10-Q. We retain our Underperform rating as Series-6 still needs proving (third party shipments not until November 2018), and due to risk of further downside if the US withdraws solar tariffs prematurely or exempts other manufacturers.

  • Valuation: Our TP methodology remains unchanged and is based on DCF of cash flows which reflects long-term profitability in the core business. However, we lower our TP to $53 (from $59) to reflect lower ASPs, margins, and slower capacity growth amidst near-term oversupply. Key risks include Series 6 ramp, cost reduction, oversupply, and changes in US trade policy.

  • Risk to firm price contracts: FSLR has booked ~10.6 GW of shipments at firm prices. Management has commented that these contracts have to be honored by both the parties, leading us to believe that these are firm take-or- pay contracts with heavy breakup fees. However, enforcing these contracts and recovery under any defaults (if, for e.g., the US withdraws solar tariffs) could be difficult. As we saw in the polysilicon industry, while some solar manufacturers were forced to buy poly at above market costs, some delayed penalty payments, and some negotiated higher volume at lower prices.

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I think he takes the contract risks to lightly.  Sure the customers signed the contracts. But last time the big players were not willing to be customer screwers and allowed reneg for contact feasibility in current market environment even though they had legal claim for penalties. 

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http://www.toledoblade.com/Energy/2018/06/08/First-Solar-breaks-ground-on-400-million-plant-in-Wood-County.html

A press release from FSLR this morning on this may have been nice.  Never been a fan of their IR/PR at all.  It’s your chance to control the message.  Put out a release on the trading wires and such that says you’re breaking ground today, include some bit about future expansion and why you’re going ahead with it and confident its the right choice.  Shovel in ground, thumbs up, what, me worry?

But no, just silence from the peanut gallery.

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If I were FSLR I would put U.S. expansion on hold. The time has come to preserve cash and focus on technology. Yet again. 

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13 hours ago, Klothilde said:

If I were FSLR I would put U.S. expansion on hold. The time has come to preserve cash and focus on technology. Yet again. 

Maybe they know they can get $/W down.  Maybe that is part of the reason why they sold out a couple years, knowing that's all they need to get this first version of production going, allowing them shift into whatever they have next.  Just dreaming...

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Whatever it is they know, whatever the plan may be and however China affects it, I'd like to hear an update on it from the horse's mouth.  

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6 hours ago, Mark said:

Whatever it is they know, whatever the plan may be and however China affects it, I'd like to hear an update on it from the horse's mouth.  

Do you think IR would answer us little guys and let us know if they'll be effected?   I hope this selling has chilled out a bit.  The stock got a few bids near the close.

Edited by sunnypease

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7 hours ago, sunnypease said:

Do you think IR would answer us little guys and let us know if they'll be effected?   I hope this selling has chilled out a bit.  The stock got a few bids near the close.

They should, I mean all the other Chinese cos do and always have. CSIQ got back to me within a couple hours.  Jinko, Trina... were always quite responsive. Today was a institutional buying day, tomorrow will be our first up day in a while.  There was big money buying at quite a few times today, far more than selling for a change.

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While trying to find solace in some Seeking Alpha posts, I came across George Wind.  

https://seekingalpha.com/news/3363088-first-solar-defended-baird-citing-comfort-revenue-visibility#comment-78784520

He says that there are two big things that we need to worry about with FSLR.

1. they have not fully pulled of their S6 manufacturing ability.  With power levels around 400W and certification still has not happened. 

and then, longer term 2.:  PERC technology is getting better & better & he believes will be cheaper than CdTe.  

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1 hour ago, sunnypease said:

While trying to find solace in some Seeking Alpha posts, I came across George Wind.  

https://seekingalpha.com/news/3363088-first-solar-defended-baird-citing-comfort-revenue-visibility#comment-78784520

He says that there are two big things that we need to worry about with FSLR.

1. they have not fully pulled of their S6 manufacturing ability.  With power levels around 400W and certification still has not happened. 

and then, longer term 2.:  PERC technology is getting better & better & he believes will be cheaper than CdTe.  

That George guy is a notable FSLR basher on SA. I replied to him with links to Series 6 ' certifications:

http://database.ul.com/cgi-bin/XYV/template/LISEXT/1FRAME/showpage.html?name=QIIA.E355993&ccnshorttitle=Photovoltaic+Modules+and+Panels+with+System+Voltage+Ratings+Over+600+Volts&objid=1082552828&cfgid=1073741824&version=versionless&parent_id=1081808401&sequence=1

https://blog.iec.ch/2018/05/iecre-issues-first-solar-pv-certificate/

  • Thanks 1

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3 hours ago, sunnypease said:

While trying to find solace in some Seeking Alpha posts, I came across George Wind.  

https://seekingalpha.com/news/3363088-first-solar-defended-baird-citing-comfort-revenue-visibility#comment-78784520

He says that there are two big things that we need to worry about with FSLR.

1. they have not fully pulled of their S6 manufacturing ability.  With power levels around 400W and certification still has not happened. 

and then, longer term 2.:  PERC technology is getting better & better & he believes will be cheaper than CdTe.  

Which will be cheaper at the time is up for debate and all depends on how you look at it. I believe they both will be about the same cost per watt to manufacture. I would probably give FSLR the advantage in real life power output due to their thermal characteristics and low light advantages per watt. I would give a cost to install per watt to the cSi due to higher power levels in the newer technologies. In the end on an LCOE perspective they will probably be similar and that LCOE is the bottom line.

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1 hour ago, Klothilde said:

Thank you for clearing up those worries.

Series 6 efficiency is something like 16-17%?  

Do you know if the technology to allow >1V open circuit voltage achieved at the University of Washington back in 2006 has been incorporated (doping with phosphorous?)

FSLR in their own lab managed 22% efficiency, so... we can hope to get there in Series 6 some day?

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