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Guest Klothilde

First Solar (FSLR)

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25 minutes ago, Klothilde said:

I think 2016 is the baseline.  I have them at 34 cts at baseline dropping to around 20 cts for S6.

Here is what was said in the con call yesterday

"On the right-hand side, looking at the cost, so, the question you had around cost, we talked in the guidance call around long-term or end of year Series 6 cost being approximately 40% lower than our 2015 benchmark for Series 4 with a roughly penny adder associated with increased cost around the frame. "

 

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First Solar price target lowered to $70 from $75 at JPMorgan. JPMorgan analyst Paul Coster lowered his price target for First Solar to $70 citing the company's "lackluster" Q4 results and Q1 outlook. First Solar's 2019 earnings outlook of $2.25-$2.75 will be heavily back-end loaded in the year owing to the cost of ramping Series 6, Coster tells investors in a post-earnings research note. However, he thinks $3.00-$3.50 of earnings per share is "easily attainable" next year and that the company's revenue visibility stretches out to 2021 and could extend into 2023 by the end of this year. The analyst reiterates an Overweight rating on First Solar, which remains his top Alternative Energy pick.
 

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 Baird analyst Ben Kallo noted First Solar Q4 results missed consensus but he said it was due to higher than expected ramp and EPC costs in the quarter. He noted the company maintained its guidance. He said the company has effectively sold out of capacity through the end of 2020 at what he believes are favorable average selling prices. Kallo reiterated his Outperform rating and $75 price target on First Solar shares.

 

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Ok, so that went the opposite of what I was expecting (as usual?)... indeed I did sell the rest of my trading shares.  And as a result I no longer have a balance on any credit cards or home equity loan... a nice fat profit for me.  Thanks, market manipulators.  Head spinning a bit on this one.  Now run above 60 so I can unload some more shares ok?

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Pipeline continues to build. Shows the series 6 is competitive. Execution on capital plan continues to be a risk as additional costs and headwinds seem to pop up continuously. They clearly have the balance sheet to deal with it, but investors are fickle. 

Like how Goldman upped their price target. Also JPMs comments on the pipeline extending through 2023 is positive. 

Seems as though the industry is showing signs of consolidation with th Longi, Jks and Csiq showing leadership and pulling ahead further. Fslr looks to be among them, especially if their wattage continues to increase.

Overall tough year in 2018, and not too surprising. More important is the future positioning and they look solid from that standpoint. 

 

 

 

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9 hours ago, tupapa said:

Good on you unloading that POS before the close, I would give up the rest today.

FSLR targeting 2.5 EPS for 2019 while CSIQ making 3 EPS for 2018.

FSLR trading at 20 x Forecasted earnings.

CSIQ trading at 7 x current earnings.

Why would anybody in their right mind be buying FSLR over CSIQ?

Why are you calling First Solar a POS? It seems you have transferred your anger at a certain poster onto the company. The outright hostility some folks here have for FSLR is rather comical.

When comparing First Solar and Canadian Solar you really need to go by enterprise value as the debt (and lack of debt) really changes the picture. First Solar has an EV of $3.2B. Canadian Solar is at $2.85B. Redoing forward earnings based on EV leaves FSLR at 13 and CSIQ over 14. Both companies seem to be similarly priced right now.

Then consider that First Solar could have gone all SunPower and considered the ramp and startup costs as a Non-GAAP expense. Doing so would have put EPS at around $4. In addition, EPS won't tell the whole picture because in a year or two cash flow will go up dramatically as the new S6 factories start to depreciate.

Lastly, FSLR has these earnings based on 17% efficiency panels. Considering that 3 years ago the company created a cell with 22.1% efficiency, it doesn't seem like much of a stretch to think the company can get module efficiency over 20% in the next three years. Doing so would have a dramatic impact on cost per watt and earnings.

Solar has gotten to the point where it has gotten cheaper than the operating cost of coal unsubsidized. That means it should really take off soon. Plus, the mad rush to drive prices down should lessen.

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It's been said that it a solar farm of around 100 miles square (10,000 sq. miles) in the southwest US could produce enough electricity to power the non-renewable portion of the US grid. This would be about a 1,000 GW plant. With solar costing under $1/W, this would cost around $1T and could likely pay for itself. It would seem the "green" part of the Green New Deal would be the cheapest part of that absurd document by AOC.

There are a several problems with this hypothetical mega farm. First off, storage and distribution would need to be figured out. Next, total worldwide installations last year were under 100GW so capacity would need to scale up dramatically. Also, the grid is only a part of all the fossil fuels used and the US uses only 1/5 of the world's electricity.

The point is, though, that thanks to the efforts of the US, Germany, China, and others, the cost of solar has fallen to the point where the ability to significantly lower carbon emissions is now a real possibility. A company that has survived the brutal race to sub $1/W pricing while remaining profitable and cash flow positive likely has a very bright future.

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3 minutes ago, Luz del Norte said:

A company that has survived the brutal race to sub $1/W pricing while remaining profitable and cash flow positive likely has a very bright future.

That is the hope for all of us, no matter what particular solar name(s) we're in.

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28 minutes ago, Luz del Norte said:

It's been said that it a solar farm of around 100 miles square (10,000 sq. miles) in the southwest US could produce enough electricity to power the non-renewable portion of the US grid. This would be about a 1,000 GW plant. With solar costing under $1/W, this would cost around $1T and could likely pay for itself. It would seem the "green" part of the Green New Deal would be the cheapest part of that absurd document by AOC.

 

You clearly have not read the Green New Deal. If you did you would recognize it is uses the  US Science intelligence report that identifies issues with Climate change. It identifies impacts of Global warming and effects on the U.S and globally. It then outlines goals and objectives with time lines in order to curb the impacts of man made  US contributions to Global Warming. 

 

To me this is a reasonable to set goals to try and achieve them. Even if they achieve 50% of the goals and 50% of those targets, it is better than sitting around doing nothing. It is far better sounding to me than the current administration current policies of allowing more ground water pollution, more pollution put into the air, more strip mining and more burning of fossil fuels with less pollution inhibitors.

 

It is only a 12 page outline of things to address and why. Please take the time to read it and do not listen to all the BS hype of banning airplane travel etc.

 

https://www.congress.gov/bill/116th-congress/house-resolution/109/text?fbclid=IwAR0RQdF7V_HtPyYdjvAp-gk0Aq5iehvJ-c7_IU5MBg7M7PvBA2LGqN1R0DA

 

 

 

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27 minutes ago, SCSolar said:

You clearly have not read the Green New Deal.

The Green New Deal is absurd because it never mentions Solar, Wind, Coal, or Natural Gas but it does mention "indigenous peoples" 6 times and "worker" 9 times. It also mentions "affordable, safe, and adequate housing", "high-quality health care" and dozens of other things that are completely unrelated to renewable energy. It is basically a new communist manifesto in the guise of green energy document. Getting to carbon neutral is possible but bogging it down with all sorts of non-related goals is counterproductive.

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1 hour ago, Luz del Norte said:

The Green New Deal is absurd because it never mentions Solar, Wind, Coal, or Natural Gas but it does mention "indigenous peoples" 6 times and "worker" 9 times. It also mentions "affordable, safe, and adequate housing", "high-quality health care" and dozens of other things that are completely unrelated to renewable energy. It is basically a new communist manifesto in the guise of green energy document. Getting to carbon neutral is possible but bogging it down with all sorts of non-related goals is counterproductive.

Ah yes it does mention indigenous people 6 times as well as people of color, rural america and others. The indigenous people  is related to 3 bullets that are describing peoples impacted and who should not be trampled on.

 

From a Historical perspective, It is known that rural areas and crap land is where native Indians and eskimos etc have been pushed. It is in these areas that the U.S. now sees $$$ in the form of mineral rights and needs for energy.  The fossil fuel industry has been using eminent domain to seize lands and are drilling into or next to these native lands risking pollution, destruction of animal lands and migratory patterns of animals etc.

 

So what is wrong with mentioning these impacted people? Do you hate people that are impacted by Climate Change and the Fossil fuel industry and government laws?

 

"Whereas climate change, pollution, and environmental destruction have exacerbated systemic racial, regional, social, environmental, and economic injustices (referred to in this preamble as “systemic injustices”) by disproportionately affecting indigenous peoples, communities of color, migrant communities, deindustrialized communities, depopulated rural communities, the poor, low-income workers, women, the elderly, the unhoused, people with disabilities, and youth (referred to in this preamble as “frontline and vulnerable communities”);"


"(E) to promote justice and equity by stopping current, preventing future, and repairing historic oppression of indigenous peoples, communities of color, migrant communities, deindustrialized communities, depopulated rural communities, the poor, low-income workers, women, the elderly, the unhoused, people with disabilities, and youth (referred to in this resolution as “frontline and vulnerable communities”);"

"(M) obtaining the free, prior, and informed consent of indigenous peoples for all decisions that affect indigenous peoples and their traditional territories, honoring all treaties and agreements with indigenous peoples, and protecting and enforcing the sovereignty and land rights of indigenous peoples;"


"Whereas climate change, pollution, and environmental destruction have exacerbated systemic racial, regional, social, environmental, and economic injustices (referred to in this preamble as “systemic injustices”) by disproportionately affecting indigenous peoples, communities of color, migrant communities, deindustrialized communities, depopulated rural communities, the poor, low-income workers, women, the elderly, the unhoused, people with disabilities, and youth (referred to in this preamble as “frontline and vulnerable communities”);"

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1 hour ago, Luz del Norte said:

The Green New Deal is absurd because it never mentions Solar, Wind, Coal, or Natural Gas but it does mention "indigenous peoples" 6 times and "worker" 9 times. It also mentions "affordable, safe, and adequate housing", "high-quality health care" and dozens of other things that are completely unrelated to renewable energy. It is basically a new communist manifesto in the guise of green energy document. Getting to carbon neutral is possible but bogging it down with all sorts of non-related goals is counterproductive.

As for the word affordable. My it is a nasty word if all you care about is massive unfettered capitalism. The word is listed 4 times

 

(D) building or upgrading to energy-efficient, distributed, and “smart” power grids, and ensuring affordable access to electricity

 

Comment:  Affordable sounds so nasty when trying to build something that is useful and futuristic. If they only did that with Nuclear Power plants Georgia and South Carolina would have avoided a $20Billion catastrophe that is no longer able to be built but citisens are paying for.

 

(ii) clean, affordable, and accessible public transit;

Comment: sounds reasonable to want affordable public transit that is clean. That is unless you don't use public transit that might get you from your hotel to your airport, aroud your airport, around densely populated areas etc.  But I guess affordable is a hated  word by unfettered capitalists.

 

(ii) affordable, safe, and adequate housing;

What affordable safe housing in a green new deal? No more tens of thousands of trailers passed out by our government that poisoned and made sick those displaced by Hurricane Katrina? Or maybe we should just let Lumber Liquidators knwoingly have their suppliers make flooring with illegal chemicals and mark them as legal just so they undercut their competitors by 15%. How about try finding materials that are safe and affordable not like lead based products , asbestos based products, products made from Oil etc.

Jeesh what a terrible  idea and the use of the word affordable.

 

 

(iv) clean water, clean air, healthy and affordable food, and access to nature.

 

What healthy and affordable food? Maybe only the rich should be able to buy healthy food. Or maybe food should not be tried to be made affordable. Personally I am getting sick and tired of  buying $20 a pound T-Bone steaks that I used to by for $3 a pound. 

 

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1 hour ago, Luz del Norte said:

The Green New Deal is absurd because it never mentions Solar, Wind, Coal, or Natural Gas 

 

It is basically a new communist manifesto in the guise of green energy document. 

 

Getting to carbon neutral is possible but bogging it down with all sorts of non-related goals is counterproductive.

Ah, I see, you are narrowly looking at the word Green New Deal and suggesting it is strictly power.  

Green means many things.  Like Getting Chemicals our of building materials. Getting harmful chemicals out of the ground and water. Having healthy natural foods that are not processed or altered (GMO) or hormone injected being fed to to us. Medicines that are consumed and then pissed into the water systems polluting the water.

 

Broaden your scope and this New Deal lays out a template of objectives that are good goals to want to achieve.

 

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16 hours ago, Luz del Norte said:

The outright hostility some folks here have for FSLR is rather comical.

Yes I think there's grudge, jealousy, and anger in play here.  Cuz the numbers are just beaauutiful. 😍😍😍

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3 hours ago, Klothilde said:

Yes I think there's grudge, jealousy, and anger in play here.  Cuz the numbers are just beaauutiful. 😍😍😍

This is the shape of jealousy, to be updated as the year unfolds.

image.thumb.png.7d160d6d17800a38bbb75a281388e486.png

The beauty will be seeing AOC elected and the US covered with CSIQ panels 😄

Edited by tupapa

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4 hours ago, Klothilde said:

Yes please do update.  By the way, do you have an EPS estimate for 2019 or are you relying on your gut?

I rely on tehnicaly analysis as I explained in one of my my previous posts.

What are you relying on for your csiq ending the year in the red estimate? Your forecast already seems unlikely and I have a feeling that it will age embarrassingly off target.

 

 

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Ok, then there's no point in arguing with you about fundamentals because you don't look at them.

Regarding CSIQ it's the fundamentals that are telling me they will be struggling to break even in 2019.  More precise it's a combination of ASP decline, module-cell spread shrinking, limited project COD volumes, all coupled with a very high OPEX & NI level.  I've posted the numbers some posts back.

We'll get more color when they give the guidance next month.  I think right then it will become apparent that 2019 will not be rosy.

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Trina solar is in mass production of 415MW modules. They claim this will save 4-8% on the BOS. from compared to 370W systems.

That 15% savings FSLR claimed on BOS was based on their legacy Series 4 modules which had far higher BOS costs due to their sizze and poor efficiency.. So much for that BOS savings meaning anything for FSLR in their sales pitch.

 

http://guangfu.bjx.com.cn/news/20190321/970398.shtml

 

According to estimates, the component power is increased from 370 watts to 415 watts, which can reduce the Balance of System (BOS) by 4.5% to 8.5%, and reduce the cost of electricity by 2.5% to 4.6%. Taking China's 100MW project as an example, the use of 415-watt components can reduce the cost of BOS by about 0.12 yuan per watt compared to 370-watt components, and reduce the cost of electricity by about 2.7%

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3 hours ago, Klothilde said:

How will this prevent FSLR from earning $5+ per share in 2020?

Because they won't be able to charge a premium price for their no-longer-premium S6 product?

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They are sold out into 2021 at fixed prices.  Nothing can change their top line in 2020, not even the meteorite that killed the dinosaurs. 

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At least for the next few quarters, they won't have pricing pressures the CNs will... contracts are locked in.  And assuming no cancellations/re-negotiated prices, as Klothilde said, into 2020 too. I added on the dip today, but just looking for a short trade... still holding plenty in long term.

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5 minutes ago, Mark said:

At least for the next few quarters, they won't have pricing pressures the CNs will... contracts are locked in.  And assuming no cancellations/re-negotiated prices, as Klothilde said, into 2020 too. I added on the dip today, but just looking for a short trade... still holding plenty in long term.

And the CNs DON'T have contracts locked in?  I find that hard to believe.  CSIQ gets a lot of revenue from selling projects, with correspondingly lumpy profits, so they're an outlier.  Guess we'll find out tomorrow with JKS.  If they also guide for lousy profits going forward, you're right.

But OK.  Say they make that $5.  That's a P/E of 11 at TODAY's stock price.

I think they need to make more than $5 to get any significant price increase.  Of course, there will be volatility between now and a year from now, so anything is possible.  But fundamentals say unless they increase their earnings, they're fully valued right now.

Nothing wrong with trading the dips and rips in the meantime, though.

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I think JKS has contracts locked in, but CSIQ didn't make it sound like things would be promising.  I don't specifically remember on the call if he was asked how far out they're locked in, but got the feeling they're largely doing the low volume sales to keep decent pricing power.  With Jinko being volume, guessing they're booked farther into 2019.  Did I read somewhere they were booked for through 2019?  Or 1H19?  Certainly not sold out until 2021 or whatever.  But I do agree with you, for me, its all about trading this year... I can see $60 for FSLR in the near term, but not much more until this time next year, assuming things stay on track.

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46 minutes ago, Mark said:

got the feeling they're largely doing the low volume sales to keep decent pricing power.

Yes, I seem to remember their Chairman being quoted as being focused on profitability--meaning they'd rather sell less, but at a decent price.

Trading has worked out well for me for the past several years, including so far this year.  DQ has greater volatility, so I prefer it over FSLR for trading.  But DQ probably has a bit more risk, too--which is why I keep individual trading lots small.

Good luck on your trades!

Solarpete

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1 hour ago, solarpete said:

And the CNs DON'T have contracts locked in?  I find that hard to believe.  CSIQ gets a lot of revenue from selling projects, with correspondingly lumpy profits, so they're an outlier.  Guess we'll find out tomorrow with JKS.  If they also guide for lousy profits going forward, you're right.

I believe CSIQ addressed some of the issues in a round about way. If they are locked in contract prices in USD purchase price and the Rmb rises, then their costs increase and their margins will decrease. This I believe is what lead them to mention a big Forex loss coming as the Rmb appreciated in value unexpectedly. If they were hedging contracts based on an expected  Rmb drop due to climate in China and it goes up, that is a double whammy.

 

FSLR will not have that issue. In fact the  condition of an increasing RMB is good for FSLR as it forces the CN manufactures to sell at a higher ASP for new sales.

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15 hours ago, Klothilde said:

They are sold out into 2021 at fixed prices.

Did we learn nothing from 2011? All talk about "don't worry we are sold out at fixed contract prices for 2012" were worth nothing after market prices changed a lot. PV goods sell at their market value by companies that care about their future market share. Customers will stop buying from suppliers that are killing their competitiveness them by forcing them to take goods at prices far above current market value. Sure you can enforce contracts but it affect your place in the future of the industry.

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I would agree if we had the risk of a big discrepancy between market values and contract values (meaning 20% or more like in 2011), but unless the tariffs are dropped I don't see this happening. Currently mono-PERC sells for around 38 Cts in the States.  Let it drop 10% to 34-35 Cts in 2020 with the tariff step-down, that would be roughly at par with the prices that FSLR has locked in for its backlog. Also I don't think the CNs have the leeway to go down with prices much further given that they are already writing losses or are barely break-even.  Some companies like GCL even expect a price rebound.

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