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First Solar (FSLR)

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1 hour ago, Mark said:

Traded it a few times on the way down, then decided to hold some.  Yet another stupid mistake.

Perhaps more of a calculated risk.  If they make that $1/share Klothilde expects, and if they guide for similar or better for next quarter, they should certainly move back up to the mid-60s.  It's only if they don't meet those lofty expectations that trouble may set in.

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14 minutes ago, solarpete said:

Perhaps more of a calculated risk.  If they make that $1/share Klothilde expects, and if they guide for similar or better for next quarter, they should certainly move back up to the mid-60s.  It's only if they don't meet those lofty expectations that trouble may set in.

Yeah, that's why I'm not dumping these... unless we lose 50 or something absurd.  Too much big money involved to let this crash without getting out a bit higher first is how I see it.  Nevertheless, they got me holding this bag of one-trick-pony-poo for a while longer.

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Been there, done that (wry grin)!  I'm concerned with the continued steady drop in DQ.  Has me wondering if Klothilde is right in her pessimism, and if bad news has already leaked somehow.  I'm just a little heavy in it--I bought a couple of extra trading positions on the way down, expecting a rebound that didn't come.  But like you, I'll wait until earnings to reassess.

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13 hours ago, solarpete said:

Been there, done that (wry grin)!  I'm concerned with the continued steady drop in DQ.  Has me wondering if Klothilde is right in her pessimism, and if bad news has already leaked somehow.  I'm just a little heavy in it--I bought a couple of extra trading positions on the way down, expecting a rebound that didn't come.  But like you, I'll wait until earnings to reassess.

Oh she is probably pretty accurate. DQ has indicated a $7.50 Q3 production cost. The Mono is around $8.80-$9/KG. Their blended ASP is probably going to fall in around 8.75  +/-. The Gross will should climb slightly to $11 from $8.6M. With Opex and Interest running at $11M a quarter, the profits will be near zero if not a loss due to added decline in the RMB.

 

The issue is the demand is not picking up in China, thus the ASP is going to be flat  to down through the next several quarters.  As more comes on line, that blended ASP is likely to drop and the higher end Mono Poly should decline.  The poly ASP is already near their costs to manufacture with depreciation. There is no profit there. What you will see is a cost to produce to  ASP spread in the $1 range +/-. 

 

DQ is going to have to write down their legacy capacity in the near future that is producing in the $8 range with depreciation or in the $6.75 range without depreciation.  Once that is done, then their costs will fall below the $6.50 guidance they  gave for ramped production in early next year. That will allow them to get slightly better margins. Even with that I do not see the ASP to production spread breaking the $1.25 +/- range with the glut of new capacity. That spread is going to drag earnings probably well into next year if not 2021,

 

DQ could be looking at $1-$2 a share in earnings  for 2020 with those spreads. That is a far cry from the consensus average of $4.44 for 2019 that is going to be missed as well as the $8.80 a share average in 2020. The market has not yet adjusted down for the future low ASP prices. They are looking at the production costs and not recognizing the impacts of a sustained low and further decline in ASP. You could be looking at the stock testing  the lows of October of 2018  or worse within the next 6 months if earnings point to a  sustained low ASP..

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4 hours ago, solarpete said:

Been there, done that (wry grin)!  I'm concerned with the continued steady drop in DQ.  Has me wondering if Klothilde is right in her pessimism, and if bad news has already leaked somehow.  I'm just a little heavy in it--I bought a couple of extra trading positions on the way down, expecting a rebound that didn't come.  But like you, I'll wait until earnings to reassess.

Wacker slashes profit forecast amid polysilicon price slump

https://www.pv-magazine.com/2019/10/16/wacker-slashes-profit-forecast-amid-polysilicon-price-slump/

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6 hours ago, SCSolar said:

Oh she is probably pretty accurate. DQ has indicated a $7.50 Q3 production cost. The Mono is around $8.80-$9/KG. Their blended ASP is probably going to fall in around 8.75  +/-. The Gross will should climb slightly to $11 from $8.6M. With Opex and Interest running at $11M a quarter, the profits will be near zero if not a loss due to added decline in the RMB.

 

The issue is the demand is not picking up in China, thus the ASP is going to be flat  to down through the next several quarters.  As more comes on line, that blended ASP is likely to drop and the higher end Mono Poly should decline.  The poly ASP is already near their costs to manufacture with depreciation. There is no profit there. What you will see is a cost to produce to  ASP spread in the $1 range +/-. 

 

DQ is going to have to write down their legacy capacity in the near future that is producing in the $8 range with depreciation or in the $6.75 range without depreciation.  Once that is done, then their costs will fall below the $6.50 guidance they  gave for ramped production in early next year. That will allow them to get slightly better margins I do. Even with that I do not see the ASP to production spread breaking the $1.25 +/- range with the glut of new capacity. That spread is going to drag earnings probably well into next year if not 2021,

 

DQ could be looking at $1-$2 a share in earnings  for 2020 with those spreads. That is a far cry from the consensus average of $4.44 for 2019 that is going to be missed as well as the $8.80 a share average in 2020. The market has not yet adjusted down for the future low ASP prices. They are looking at the production costs and not recognizing the impacts of a sustained low and further decline in ASP. You could be looking at the stock testing  the lows of October of 2018  or worse within the next 6 months if earnings point to a  sustained low ASP..


 

Scsolar, 

Does low ASP affect companies like FSLR or SPWR? Thanks 
 

 

 

 

 

 

5 hours ago, MVA said:

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3 hours ago, lepv123 said:


 

Scsolar, 

Does low ASP affect companies like FSLR or SPWR? Thanks 
 

 

 

 

 

 

Indirectly yes for FSLR as the average ASP is lower due to Si costs being lower. The Si cost in Silicon being around $8/KG would be around $0.032 in material costs. That is down about 1/2 to 1 cent or 4-5% of the cost to make a panel. 

 

For Spwr, due to higher costs for their manufacturing, the cost savings would be less. Their OEM purchased modules should have an advantage in they buy at lower costs, however I look at OEM modules as that company being a middle man re-seller in which they take a small margin of profits out of the middle.

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10 hours ago, MVA said:

'With this in mind, Wacker also announced plans for a comprehensive program of cost savings and efficiency increases. “We must, and will, effectively counter the increasingly difficult conditions in our business,” said Staudigl.'

Very interesting...!

Means Wacker is getting ready for a lengthy and costly battle for survival.  This will depress ASPs for a while since ASPs can only recover once Wacker and OCI exit the industry and the CN players can find a supply balance among them. 

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1 hour ago, SCSolar said:

Indirectly yes for FSLR as the average ASP is lower due to Si costs being lower. The Si cost in Silicon being around $8/KG would be around $0.032 in material costs. That is down about 1/2 to 1 cent or 4-5% of the cost to make a panel. 

 

For Spwr, due to higher costs for their manufacturing, the cost savings would be less. Their OEM purchased modules should have an advantage in they buy at lower costs, however I look at OEM modules as that company being a middle man re-seller in which they take a small margin of profits out of the middle.

Thanks ScSolar! So it doesn’t affect SPWR as much, but they sure got pounded severely in these past 3-4 weeks! Almost 45%! I thought that might the reason why, beaten down by the ones looking out 6 months from now. Thanks again!

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12 minutes ago, Mark said:

1 week til earnings.  Let's hear some predictions, number crunchers.  

It is impossible to predict. FSLR planned on selling Sun Streams, Sunshine Valley, Seabrook, Ishikawa, and various plants in India this year. Earnings will vary considerably depending on whether these sales close in Q3 or Q4. My hunch is these won't close until Q4 so this quarter will be a miss, at least as far as revenue goes.

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9 hours ago, lepv123 said:

Thanks ScSolar! So it doesn’t affect SPWR as much, but they sure got pounded severely in these past 3-4 weeks! Almost 45%! I thought that might the reason why, beaten down by the ones looking out 6 months from now. Thanks again!

Sunpower should get pounded every day until they are a penny stock. The company is horrible. It has negative shareholder equity and is continuing  lose money as they have for the past several years. Their core manufactured products are way to expensive to compete except for a niche rooftop and even then I believe homeowners are wisening  up.  Their OEM products if built in Mexico will get an exemption on tariffs but the panels built in China are not exempt from my understanding. They are a 1 trick market similar to FSLR but with poor cash and poor operational metrics. 

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On 10/17/2019 at 4:53 PM, SCSolar said:

Sunpower should get pounded every day until they are a penny stock. The company is horrible. It has negative shareholder equity and is continuing  lose money as they have for the past several years. Their core manufactured products are way to expensive to compete except for a niche rooftop and even then I believe homeowners are wisening  up.  Their OEM products if built in Mexico will get an exemption on tariffs but the panels built in China are not exempt from my understanding. They are a 1 trick market similar to FSLR but with poor cash and poor operational metrics. 

They have had several massive runs into the $15s and even touched $16. Maybe they are making a turnaround on their fundamentals. However, the shorts are definitely still jacking it around. I’m playing for an ER run. Do you own JKS or ENPH? Thanks 

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On 10/17/2019 at 4:53 PM, SCSolar said:

Sunpower should get pounded every day until they are a penny stock. The company is horrible. It has negative shareholder equity and is continuing  lose money as they have for the past several years. Their core manufactured products are way to expensive to compete except for a niche rooftop and even then I believe homeowners are wisening  up.  Their OEM products if built in Mexico will get an exemption on tariffs but the panels built in China are not exempt from my understanding. They are a 1 trick market similar to FSLR but with poor cash and poor operational metrics. 


They’re projected to earn 0.02 this earnings on the 30th. 

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1 hour ago, lepv123 said:


They’re projected to earn 0.02 this earnings on the 30th. 

If you use Sunpowers earnings forecast for Q3, they expect to lose $35-$55M.

 

https://newsroom.sunpower.com/2019-07-31-SunPower-Reports-Second-Quarter-2019-Results

The company's third quarter 2019 GAAP and non-GAAP guidance is as follows: on a GAAP basis, revenue of $430 million to $470 million, gross margin of 8 percent to 12 percent and net loss of $55 million to $35 million. 

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1 hour ago, lepv123 said:

They have had several massive runs into the $15s and even touched $16. Maybe they are making a turnaround on their fundamentals. However, the shorts are definitely still jacking it around. I’m playing for an ER run. Do you own JKS or ENPH? Thanks 

I currently own no Solar and for the most part except for a few trades when JKS dropped below 9 and CSIQ about $14, have not been in solar for most of the past 2+ years.

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I understand the reluctance to invest in solar (the buy-and-hold model), but you really should check out ENPH.  Even with their rise from $4 earlier this year, they are still a possible double, or more, from here.  Their situation is nothing like a poly or panel maker.  Their inverters are NOT a commodity (at least not yet)--they're a genuine tech company in the solar sector.

Don't take my word for it, of course--but don't ignore them, either.  Take the time to do a little research.  I think you'll like what you find.

Solarpete

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48 minutes ago, SCSolar said:

I currently own no Solar and for the most part except for a few trades when JKS dropped below 9 and CSIQ about $14, have not been in solar for most of the past 2+ years.

Not sure why my post didn’t post. Anyway, thanks for the reply ScSolar! I’m thinking of owning ENPH long term. I think it can hit $50 when everything unfolds. 
 

concerning SPWR, if the story turns around, the move can be ferocious. Although if it Hut’s $15 again, I will probably go short until $10-$12. 

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1 hour ago, lepv123 said:

I’m thinking of owning ENPH long term.

Don't wait too long.  They report earnings in a week (Oct 29).  They're already on a pre-earnings run up.  I look for them to climb back above $30 before earnings, and to $35+ afterwards.

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5 hours ago, solarpete said:

I understand the reluctance to invest in solar (the buy-and-hold model), but you really should check out ENPH.  Even with their rise from $4 earlier this year, they are still a possible double, or more, from here.  Their situation is nothing like a poly or panel maker.  Their inverters are NOT a commodity (at least not yet)--they're a genuine tech company in the solar sector.

Don't take my word for it, of course--but don't ignore them, either.  Take the time to do a little research.  I think you'll like what you find.

Solarpete

The company bled red ink for the prior 4 years. This year they are finally turning a profit. They have good margins and it looks like they have grown their volumes and revenues. They are projected to be in the Low $1 in earnings for 2020. I have a hard time betting on a company with a forward PE of 40-50.

 

Sedge has over twice the revenues and a PE just over 20. if you are looking at comps, SEDGE would be suggest at $160 with a similar PE.

 

Based on Peers, it would suggest ENPH may be near full value

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9 hours ago, solarpete said:

Don't wait too long.  They report earnings in a week (Oct 29).  They're already on a pre-earnings run up.  I look for them to climb back above $30 before earnings, and to $35+ afterwards.

I’ve got my money on SPWR right now. The better ENPH does, the more it will help SPWR. I think SPWR will have a great run up as well, possibly more. However, I do believe ENPH is a better stock and is one I would buy after this run up. 

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18 hours ago, SCSolar said:

The company bled red ink for the prior 4 years. This year they are finally turning a profit. They have good margins and it looks like they have grown their volumes and revenues. They are projected to be in the Low $1 in earnings for 2020. I have a hard time betting on a company with a forward PE of 40-50.

 

Sedge has over twice the revenues and a PE just over 20. if you are looking at comps, SEDGE would be suggest at $160 with a similar PE.

 

Based on Peers, it would suggest ENPH may be near full value

Look a little deeper.  The previous issues were due to prior management overpromising and underdelivering while they were still developing their technology.  Those issues appear to be fixed now.  The technology works, and is in demand, while a new management team has stopped the overpromising.  If anything, they're reticent now to give rosy forecasts.  And the earnings forecasts you mention are too low by at least half.  They're expected to make $0.25 THIS quarter.  That already puts them at $1/yr looking forward.  But they're just getting started growing their business.  By this time next year, I fully expect them to be earning $1/qtr, not $1/yr.  With a 20 PE, that makes them an $80 stock at that point.

Read some of the discussions on their Yahoo message board.  Yes, it's Yahoo, so you have some of the usual antics, but it's not bad.  And a few posters appear to be industry insiders, who provide detailed technical discussions of what's to come.  Those discussions are why I'm so optimistic.  I don't think the market, or analysts, have a clue yet as to the ultimate potential of this technology.

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The return of Gordon Johnson with a bearish note today... 

"Johnson also highlighted recent comments on weakness in space from First Solar."

Have they made some comments about weakness that I missed?

 

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52 minutes ago, Klothilde said:

Do they have anything that Huawei or any other Chinese inverter company cannot replicate?

Given time, as far as I know, no.  The concept of an inverter in general cannot be patented.  Having said that, I'm sure they have patents on their specific ASICs.  And as usual, the devil is in the details.  It took them years to get their tech tweaked just right.  So anyone else wanting to do the same thing would presumably have the same learning curve.  I would expect a competitor to eventually emerge.  But right now, no one is on the horizon.

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6 hours ago, lepv123 said:

Solarpete, anything you see to justify the weakness in ENPH today? 

Not a clue.  Been wondering the same thing all day.  SPWR was also hit hard, but there's no news that I'm aware of.  And volume was above average, which coupled with a big drop is never a good sign.  Can't imagine a leak of bad earnings, though, because they were sold out for the quarter.

If we bounce right back up tomorrow, it was some sort of algorithm-driven selloff.  If we don't, something's up--and I have no idea what that might be.

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12 hours ago, lepv123 said:

Klothilde, since you’re a FSLR follower/owner, are you expecting a favorable ER from them? Thanks 

I originally thought they would be around $1 but on second thought I think Luz is right in that they'll probably miss because of low power plant sales in Q3.  I think $0.5-$0.75 could be it.  However I expect good news on the bookings and S6 metrics front so not sure how the market will react.

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16 hours ago, solarpete said:

Look a little deeper...

...By this time next year, I fully expect them to be earning $1/qtr, not $1/yr.  With a 20 PE, that makes them an $80 stock at that point.

Analyst consensus for 2020 EPS is $0.96, the high is $1.18

Looks like your estimate is 3 to 4 times higher than theirs.

What are they missing?

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