[explo 648]

is a possibility of SOL going BK? Are they going to be financially ok until they start making money or a strong recovery in the solar industry takes place? Thanks.

No I don't think there's a chance SOL will go BK. In Q4 of the 6 solar 11s that have reported so far I rank them in first place on profitability. On balance they are in 4th place. The combination of great profitability (relatively speaking) and decent balance and no maturity issues with long-term loans and bonds should make them one of the safest bets. Also from the perspective of the political risk exposure to their income they should be safe, almost benefit opportunity instead. They'll be able to keep most markets open to them and be able control poly cost. Their revenue might rise more than their costs due to the trade war. This is quite unique to SOL. I'm attaching my breakdown of the state of Q4 for the 6 reported solar11s. One-time charges have been removed. SOL was the only one who had none - yet a health sign. EBT shows profitability EBTDA shows operative cash flow excluding working capital changes ROE shows the so-called equity melt rate Decay rate show the rate at which leverage is ballooning (due to the melting equity) For SOL and for some other names the thing is that they have now arrived at the destination 55 cents production cost and blending this into COGS will take SOL COGS from 60 cents in Q4 to the 55 cents level (possibly lower) in Q2. In Q1 it might be close to 56 cents, but ASP will hit the low point in Q1, so full gross margin potiental is not reached until Q2. So for SOL and some other strong names, we are looking at a scenario of COGS 55 cents and ASP 65 cents post Q1. That's 15% GM. For SOL wafers they will have 21 cents COGS and 25 ASP after Q1, which is also around 15% GM. So 15% GM is a conservative hope for some of the strong names who manage to keep their capacity fully utilized. The thing with SOL is that they'll be profitable at this GM and get 25m cash each quarter available to use for working capital (reduce payables), investment (capex) or finance changes (reduce debt). So for SOL and others the decay rate has already bottomed and for SOL I see it turn into a repair rate already in Q2. The GM required for profitability can be estimated as Q4 GM - Q4 EBT. For SOL this is 3.3% - (-11.5%) = 14.8%. That's why their path to profitability is clear even if ASP hovers around mid to high 60 cents for a longer period. So even if we get a very prolonged period where SOL is just breaking even or doing small profits, they'll still benefit long-term from this. A prolonged period where they are in repair mode (due to good cash flow) and most of their competitors are still in decay mode will improve their future business outlook. I'm almost ecstatic to see the current PPS opportunity after having seen these clear signs of stability and very visible path to profitablity in Q2 at very little blood loss for SOL in Q1 (no where near transfusion requirement).

[explo 648]

Better late than never. Here's the Q1 financial overview for reported China10. REC, GCL, FSLR and SPWR are now also covered, but GCL only report 2 times a year, so no Q1 for them. Previously provided Q4 is attached here too for easy comparison. Note that the cash line formula is now changed to exclude restricted cash and include short-term investments. This change has for example made SOL and CSIQ balance look worse and JKS balance look better. The cash line should now better reflect what is considered "cash" in an enterprice value.

Income observations:

[*]One time charges went down a lot from Q4 and Q1. An initial health recovery sign.

[*]JKS took over the China10 lead on profitability (before one time charges) from SOL.

[*]CSIQ remain solid 2nd. JASO jumped to 3rd. SOL dropped to 5th.

[*]CSUN was second China10 to blow it (all equity lost) after LDK.

[*]All China10 are very stretched now except JASO and TSL (I see DQ and HSOL books as inflated).

[*]Improving income should ease this stretch soon for the profitability leaders.

[*]TSL, JASO, REC, FSLR and SPWR have the balance to be aggressive without equity issue.

[*]Others should focus on recover balance before aggressive investments.

[*]SOL Q1 should be a blip and should be on the recovery track of top China6. YGE decay seems more chronic.

[*]FSLR dominates share holder value creation since inception and past 3 years. GCL second.

[*]TSL and DQ ok since inception but mediocre past 3 years.

[*]REC, SPWR, LDK and YGE have burned a lot of share holder capital.

[*]The rest still has a chance to rise to glory. Maybe the panel market challengers SOL, JASO and JKS.

[*]Long-term share holder value creation of CSIQ's transformation to biggest EPC of China10 and HSOL being a Korean conglomerate subsidiary is yet to be seen. They could be the winners, or not.

[explo 648]

I'm giving up on CSUN reporting their Q2. Here's the reported Q2 Income & Balance of CN11. I'm including Q4 and Q1 too for easy tracking reference.

 

I'm skipping REC, GCL, FSLR and SPWR that I tracked during some quarters, since their different accounting policies require a lot of work to align with how CN11 report.

 

Two new lines are added since last time. PPE (Property, Plant and Equipment) and PA (Project Assets) to track investments in production and generation assets.

 

The cash line reflects non-restricted cash, i.e. cash free to use to pay down debt. In the CSIQ case I made an exception, since they have a lot of cash collerateral for their short term debt and added that part of the restricted cash to the cash line. YGE don't disclose restricted portion on quarterly basis so I estimated it based on annual report.

 

Negative decay rate means repair mode has been entered (leverage is going down).

 

I changed some names on the unsellable (inventory write-down) and uncollectable (AR provions for bad debt/doubtful receivables) breakout lines of Q4 and Q1. Previously I included things reported in cash flow statements here, but only some of the names report that on quarterly basis, while the rest only on annual basis or as now with all the offerings on latest quarter in a prospectus. Now I only include explicitly stated provisions on the breakout lines. Quick explanation on these lines: the unsellable is deducted from COGS and the uncollectable from SG&A and get a separate ineptness metric for the quarter to not distort the other COGS and SG&A metrics with non-recurrents.

[explo 648]

I've updated my income and balance sheet for reporting CN11 companies (I don't want to hold my breath on that LDK keep releasing earnings).

 

Some notes and observations:

• Slight change of leverage forumla (deduct restricted cash too for net liabilities). Including updated Q3 for comparison.
• As usual COGS and SG&A are modified for non-recurrents, including but not limited to unsellable and uncollectable.
• JASO became the fourth company to reach positive EBT margin in 13Q4 after JKS and CSIQ in 13Q2 and TSL in 13Q3.
• Except YGE fundmental laggards made major improvements to EBT margin (double digit jumps by DQ, CSUN and HSOL).
• All but CSIQ (significantly down) and YGE (flat) made nice EBT margin improvements in the quarter.
• SOL and HSOL joined CN4 in positive operating margin group.
• HSOL and DQ became cash flow (EBTDA) positive and SOL made a nice jump.
• DQ has worst EBT margin, but best EBITDA margin. Their GM is still worst but turned positive in Q4.
• CN4 remained as the only companies in repair mode (13Q2 entry by JKS and CSIQ, 13Q3 entry by TSL and JASO).
• SOL, HSOL and DQ came close to enter repair mode.
• YGE decay accelerated in Q4 after slowing in Q2 and stabilizing in Q3. CSUN remain dead and decaying further.
• JKS joined TSL as only companies with more equity attributable to shareholders remaining than paid-in.
• YGE has lost more than 1 billion USD of its shareholders capital now.

 

Edit: Added 14Q1

Edit2: Added 14Q2 attachment. 13Q3 attachment deleted to not exceed attachment limit. I will keep 3 latest quarter for easy back and forth browsing to see quarterly development. They don't seem to display in the order I attached them though, which makes it less convenient as slide show. I'm not holding my breath on CSUN. Will update when/if they report.

Note: Bullet point comments above apply to the 13Q4 attachment. Trend of CN4 health remains in 2014.

[explo 648]

Thanks Pop and Josh.

Josh, I actually have valuation as my next couple of lines in the sheets. Note that they change daily with stock prices. I've attached the 14Q2 sheet including these lines based on the stock closing prices of August 29. I included the historical greatest - FSLR - subject to debate on whether its greatness is just that, history, or if its rise to previous glory is imminent.

Note that restricted cash is not included in cash since it is usually restricted to paying down bloated payables. CSIQ is the exception where I've included a portion that is debt related. Note also that neither shares nor equity from possible future exercise of warrants and convertibles are included.

As the lines are named:

EV = Market cap + Debt - Cash + Other

Where Other line under (equity) History section is the non-controlling interest share in the equity (see it as price to buy out the non-controlling interest). Project assets are consider as business risk investment though, with risk somewhere between inventory and PPE. I know on CSIQ sheet it might have a sales agreement (but completion and final approval remains) and on Jinko sheet it has maybe a 20 year hold plan subject to China policy change risk, but I try to keep it simple.

To not only reflect debt and cash (in addition to market cap) in price, but also other liabilities and non-business investment assets, I sometimes look at an adjusted EV:

EV* = Market cap + PPE + PA + Inventory - Equity + Other

The

Net Liability = PPE + PA + Inventory - Equity

is the most simple way to show the true stretch of capital in business investments. Besides the Net Debt = Debt - Cash it includes operational credit imbalances like Payables - Receivables. It also doesn't have to worry about which liabilities are restricting the restricted cash. I updated the attached sheet with EV* and EV*/EBITDA added.

 

Edit: TTM view added

[explo 648]

Thanks for restoring this topic odyd. I'm attaching the 14Q3 ER Income, balance and valuation sheets for the quarter and TTM.

 

Some highlights:

 

• CSIQ rocks
• CSIQ and DQ became third and fouth companies (after TSL and JKS) to reach black since inception (ROE line)
• JKS became first company to reach black in the period starting 2010 until now (ROE 2010- line)

[explo 648]

I'm attaching the 14Q4 ER Income, balance and valuation sheets for the quarter and TTM (i.e. full year 2014).

 

• CSIQ became second company (after JKS) to reach black for the period starting 2010 until now (ROE 2010- line)

 

HQCL and DQ haven't announced ER dates yet, so I'm not waiting for them. I will update as they come in.

[Jetmoney 28]

I'm attaching the 14Q4 ER Income, balance and valuation sheets for the quarter and TTM (i.e. full year 2014).

 

• CSIQ became second company (after JKS) to reach black for the period starting 2010 until now (ROE 2010- line)

 

HQCL and DQ haven't announced ER dates yet, so I'm not waiting for them. I will update as they come in.

Explo, thank you for your hard work.  There are a lot of good information here to compare and choose to invest in companies the most fit a person's risk posture.  CN4 are clear winners.  JKS has the best GM but CSIQ has the best EBT.  TSL has lowest interest but highest Amo among the CN4.  Are they paying the most toward their debt?  That should be a good thing, no?  Also, most of CSIQ's equity is in cash.  Is this a good thing?

[explo 648]

Explo, thank you for your hard work.  There are a lot of good information here to compare and choose to invest in companies the most fit a person's risk posture.  CN4 are clear winners.  JKS has the best GM but CSIQ has the best EBT.  TSL has lowest interest but highest Amo among the CN4.  Are they paying the most toward their debt?  That should be a good thing, no?  Also, most of CSIQ's equity is in cash.  Is this a good thing?

Thanks Jet. Amo is depreciation. Sloppy formulation to keep it short. I think I will change it. Yes CSIQ has done a fantastic job generating cash and stand very strong now.

[Jetmoney 28]

Thank you for the clarification.  There is a lot of useful information there in one place for CN4 to compare.