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Guest Klothilde

First Solar (FSLR)

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I was able to listen to the safe harbor statement and I think they are referring to the recent IRS ruling allowing utility solar to qualify for ITC for four years. So it sounds like they are anticipating some great development opportunities after 2020. I say 2020 because it sounds like they are almost out of modules until then.

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How do you feel about FSLR Klothilde? Would appreciate your thoughts. 

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I don't see anything to worry about from a fundamentals point of view though I also got a sense in the con call that Widmar was beating around the bush at times.

Imo the stock currrently trades cheap vis a vis a rough sum of parts valuation:

FSLR value =
1) net cash +
2) project assets on balance sheet +
3) value of contracted pipeline +
4) value of technology beyond 2020

1) net cash is $2.3B

2) project assets are $0.8B

3) 8.8GW of modules sold at $0.35 with 35%GM give $1.1B in GP. 
     2.5GW of systems at $1.30 and 25% give $0.8B in GP
     Total GP is $1.9B.  Deduct ~$0.6B in OPEX for 2019/2020 for a profit contribution of $1.3B

1)+2)+3) = $4.4B or $42/share.  This is the floor set by hard assets and contracts while valuing the technology at 0 (worthless crap as some like to view it).  I consider 4) the most valuable part but we don't need it to set the floor.

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Hmm... something sounds familiar here...

First Solar shares are 'significantly undervlaued,' says JPMorgan
https://thefly.com/landingPageNews.php?id=2813212

"JPMorgan analyst Paul Coster believes First Solar is "significantly undervalued" based on a sum-of-the-parts analysis which factors in the company's current projects and net cash position. Net cash currently represents nearly 60% of market value and the core module business is trading at about 3.9 times 2021 EBIT net of capex and pending project sales, Coster tells investors in a research note. He keeps an Overweight rating on First Solar with a $75 price target. He reminds investors that the company will provide fiscal 2019 guidance on an investor update call to be held in late-Q4, which he believes could serve as a positive catalyst."

 

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If the Dems win the House... maybe we'll see some positive solar stock appreciation (both in nods and in dollars)?

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Sunpower Q3 numbers out you guys.  They are seeing order postponements due to the 531 thing.  Just like FSLR but way more pronounced I guess.  They also admit they have a hard time competing against mono-PERC in the U.S. utility market, which is a good thing for FSLR.  Somebody suggested recently SPWR could eat some of FSLR's cake in the U.S. but it seems they don't have teeth for that.  They did get a 201 exception for their 1.2GW of IBC capacity, however that product is apparently so expensive that they cannot compete against mono-PERC with tariff.

"In terms of Section 201, it's a tale of two markets. In the DG market which the company is restructured and focused on mostly, we actually see pricing in Q3 that is in line with Q2; whereas, if you're focused on the power plant market, which has different attributes, the pricing has been very difficult, and most of mono-PERC is going into the power plant market, and therefore, is facing a very difficult market."
https://seekingalpha.com/article/4216260-sunpower-spwr-q3-2018-results-earnings-call-transcript?part=single

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19 hours ago, Klothilde said:

Hmm... something sounds familiar here...

First Solar shares are 'significantly undervlaued,' says JPMorgan
https://thefly.com/landingPageNews.php?id=2813212

"JPMorgan analyst Paul Coster believes First Solar is "significantly undervalued" based on a sum-of-the-parts analysis which factors in the company's current projects and net cash position. Net cash currently represents nearly 60% of market value and the core module business is trading at about 3.9 times 2021 EBIT net of capex and pending project sales, Coster tells investors in a research note. He keeps an Overweight rating on First Solar with a $75 price target. He reminds investors that the company will provide fiscal 2019 guidance on an investor update call to be held in late-Q4, which he believes could serve as a positive catalyst."

 

The CN business is expected in China after the 531. The comments regarding the ASP bode well though for Poly players in the U.S. market such as Trina JKS and CSIQ.

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3 minutes ago, Klothilde said:

The current market has all the CNs FUBAR

What are you talking about????  The CNs (well, what's left of them--JKS and CSIQ) are actually UP 30-50% off their lows, and holding steady despite the market tanking 400 points/day.  Even DQ never hit your predicted teens (although it came darn close), is up 25% from there, and is also not falling back down.

It looks to me like "the market" has called a bottom on the CN solars.  Barring unexpected bad news, the expected direction is up from here.

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