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Quarterly Estimates

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I took a look at the GADP and ASP trend for Jinko. In Q1 GADP and ASP were equal. In Q4 the ASP was below GADP. All quarters before that the ASP was above the GADP. So their reported ASP is not necessarily in conflict with the GADP on an absolute value basis in full historic context. Looking at GADP trend and ASP trend those were in conflict during Q1 despite continued large domestic shipment in Q1. However if we look at December and March GADP the difference is massive December of $0.70 was pulling up Q4 GADP while March $0.61 GADP was pushing down Q2. If some of those outbound deliveries in December were recognized in Q1 and some of the outbound deliveries in March were recognized in Q2 the time adjusted GADP trend could fit reported ASP trend much better.

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I am trying to organize threads and posts by usage, so this my attempt to create a thread covering all 7 companies from CEDR against our estimates and actual results.

Anyone who is a member of CEDR is welcome to contribute, so please do not hesitate.

Lets start with Q2 estimates here

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I am looking at $374M in revenue for Jinko at 24% GM, income before taxes around $52M, $10M taxes, I am looking at some $15M in CB, $4M in change value of forward contracts. 33M shares or $1.25 per share=$42M income. Could be more as I am selling average at $0.61 average. Energy sales only $8M but it could be more so like $11 to $12M.

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Does no reply mean everyone agrees or opposite, I am smoking crack? I could use some analysis from the group to understand the sentiment.

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I think it's quite reasonable. I had the below estimate for Q2 shortly after the release of Q1 result:

 

Gross Rev (k$):         $409,567

Gross Profit:              $100,877

 

Opex:                         $48,177

Income from oper:     $52,701

 

Assuming similar interest expense to Q1, $5 M FX loss, and 0 (no estimate possible at the time) for derivatives gain/loss, etc. I had 

 

Net Income:               $36,788

 

# of ADRs (k):            33,490

GAAP EPS:                $1.10

 

I will update the model once the June CEDR data is out.

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Looked at CB a bit. Is your $15 M a CB gain? Not sure how you estimated.

 

In Q1, the CB calculations for CSIQ and JKS were just enigmas to me. CSIQ chose not to included it (no issuance cost either). JKS had only $4.3 M gain, which pretty much offset completely by the issuance cost of $4.2 M. In contrast, my estimate of CB gain (both old and new CBs and including capped calls) was a gain of $15 M and an issuance cost of $5.6 M, for a net gain of $9.4 M. That is fairly reasonable when the stock went from $35.43 on the offering closing date to $27.95 on the end date of Q1. 

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Jinko

Revenue $404m

GM 24.0%

OM 12.4%

Net interest expense 2.7%

 

So $404m x 9.7% = $39m before forex, derivatives and taxes.

 

Based on:

350 MW global module shipments (+95 MW) with ASP down 1.5 cents from 67 cents in Q1

235 MW domestic module shipments (+30 MW) with ASP down 2 cents from 60 cents in Q1

Blended module cost reduction with 0.5 cents

75 million kWh electricity sales up 50% from Q1 based on more sunshine in Q2 in north western China

 

Worth noting:

Net margin on electricity sales in Q1 was 52.2% despite high depreciation per kWh due to low irradiance in the quarter. This implies net profit margin on electricity sales could exceed 60% during high yield quarters Q2 and Q3. They'll connect another 140 MW in Q2, which means by Q3 they might report $10m net profit from electricity sales alone.

 

Valuation method change:

After reading SUNE's presentation where they model retained value exactly like I did for Jinko in 2013 I'm going back to this model to compare value of CN4. When everyone said that the market cares only about recognized profits (instant gratification) and not retained value for much higher future profits I aligned my models to this perspective this year to see much more value in CSIQ and have my valuation more aligned with the market on CSIQ. Now as I go back I'll be using a mix as the CN4 is free to choose how much of the developed valye they'll transfer and how much they'll retain and the market might be split on how to recognize retained (and P&L unrecognized) created value vs reported profits. CSIQ is less free though, since their profitability is very dependent on value transfer, i.e. project sales, and might be punished by market if retaining (and not P&L recognizing) too much as this expose a not very profitable module sales segment. After CSIQ Trina is the second most dependent on this of CN4. That's what I like with Jinko and JA, they have the strength to retain the value the create. Just look at the EPS they produce without a single plant sold. CSIQ and Trina have printed nice EPS, but those included project sales (50 MW super yield CN plant by Trina in Q1 for example).

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Looked at CB a bit. Is your $15 M a CB gain? Not sure how you estimated.

 

This is the gain. My theory is that newly issued CB did not have any adjustments in Q1. JKS opted use costs for it in Q1, but in the US GAAP they can only report an actual value of CB. CSIQ not having expenses for the issuance is a surprise to me, but they must have found a loophole to report following period and this is where I expect it to see it. Going back to JKS , the gain seen in Q1 was for "other" devalued CBs , there are two. My $15M covers them all in Q2.

 

Revenue of $366M, based on 600MW of modules sold at average of $0.61, no additional sales as they are holding in my view to own cell for the US. I flatlined energy sales at 8M, there is possible gain due to add-ons to grid and full execution for Q1 add-ons.

 

Gross profit $89.7M, gm 24% (all levels of profit average)

 

Opex $47M

Operating profit $42.7M

Interest $10M

Forex 500K gain

forward contract is $4M gain (loss of $18M last quarter)

Change in fair value of convertibles $15M gain ( lumped together now)

Income before taxes $52M

Taxes (catch all for value of CBs) $10M so we are back to net income of $42M on 33.4M shares, some $1.25 EPS.

The range could be 1.20 to 1.50 here.

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This is my CSIQ model for Q2,

I do not count for the lawsuits etc or any other potential one times but CB only

Revenue $590M

GM 18.6%

gross profit $109M

Opex $46M

Net interest expense 10M (13-3M of interest income)

Foreign derivatives and forex around 2M gain

Add 10M CB net ( 5M in costs) see the same or very similar CB performance here as JKS

12M in taxes (this is very high but I expect high taxation on strong performance quarters including GAAP gains like CB)

Net income $53M

controlling interest around 7M

net income 46.7M

or around $0.85 per share.

 

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Explo could you provide review of Q2 for JA and Sunny are you ok to do TSL?

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JA

Revenue $403m

GM 16.3%

OM 7.1%

Net interest expense 2.3%

 

So $403m x 4.8% = $19m before forex, derivatives and taxes.

 

Based on:

350 MW global module shipments (+43 MW) with ASP down 1 cent from 69 cents in Q1

100 MW domestic module shipments (+19 MW) with ASP down 1 cent from 62 cents in Q1

230 MW global cell shipments (+65 MW) with ASP down 0.5 cent from 40.5 cents in Q1

20 MW domestic cell shipments (-65 MW) with ASP down 1 cent from 36 cents in Q1

Blended module and cell costs flat

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For TSL, I had the below estimate following their Q1 release. Similar to JKS, I'll need to update it with newer infor, especially with June CEDR data.

 

 

Gross Rev (k$):         $546,000

Gross Profit:              $  92,400

GM:                             16.92%

 

Opex:                         $56,382

Income from oper:     $36,018

 

Assuming similar interest expense and other adjustments, 

 

Net Income:               $26,093

 

This gives $0.36 EPS, before factoring the increased share count from the latest equity offering. No estimates for the cost of the offering and gain/loss form the CBs are included.

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I also did JASO back then. The result was very similar to explo's. But in the end,

 

Net Income:    $18,205   (Tax charge: $3.1 M, no estimate for warrants was done)

EPS:               0.31

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Looks like both of you see a steady EPS for JA and TSL. Explo that is fairly high GM if including China's segment. I am also wondering Sunny if the GM is achievable on the global and domestic split, which seems to need a lot of domestic numbers to meet the guidance.

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Yes there's a risk they'll ship more domestically as guided. I base my large global shipment estimate on CEDR. Product mix also impacts a lot now that cell prices are going down.

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