35,191 posts in this topic

13 minutes ago, odyd said:

I link when I find something at the time. I do not have a lot of time, but one can Google GJ and FSLR and read all links available.  The logic is simple but he made his call questioning expectations of earnings, beyond 2018. I do not remember or frankly care what his number is he came up with.

I included my calculation, capital costs and required profit to average cost the company has and it is unlikely to change. It is enough to start a discussion.

I though you were referring to a specific calculation and observation GJ made but maybe your were looking for comments on your calculation and observation..? You asked for someone holding FSLR to comment on some calculations..?

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1 hour ago, odyd said:

Explo, use the calculation I made. $0.03 gross profit in 2019 will be probably 11 to 12 % on ASP at the time of some 0.28. Use four cents if it looks better. 3GW capacity, 0.04 profit against $387M opex of today, which is very low, producing 3GW of modules today for them. What is your IS estimate for 2019?

Thanks. I think gross profits from pure panel sales will not suffice to offer the return their shareholders expects. And it was a long time since they did that. So I can agree that that (insufficiency of panel sales biz to meet return requirements from investors) will continue to be true. Another thing that is true it that they are taking a step back and preparing for the future now as many segments are sour. Not chasing projects in this fierce bid environment and primarily trying to dispose of legacy S4 inventory and remaining production before full ramp down doesn't mean that they won't continue to focus on the whole value-chain in the future.

JASO emerged from a transformation 3 years ago. DQ is emerging from one now and FSLR will emerge from one 3 years from now. I can see the less risk of buying something that's already emerged successful from a transformation (especially if it is not fully appreciated yet) than to buy something that is yet to emerge. I will if FSLR appreciates from this level again to mid to high 30's likely reduce exposure to it.

My investment in FSLR is not based on single year ROE, but total ROE since inception. If they don't think they got it anymore they should do a one-time dividend of $10 per share or something to improve their ROE, but they continue to sit on the cash. Likely because they remember that it made them king and rich (earning multiple billions for their shareholders) in the years that followed the hit of credit crunch in 2008. The position is strategic for both financial and technology reasons. It is not based on fundamental analysis of ability to produce a profit a single year. What I do think is that there is a high probability that they will emerge with the highest GM on panel sales in the industry once S6 is fully ramped. But, again, I don't think that will make the panel sales business sufficient to satisfy the shareholders' return expectations. If they don't continue to produce returns from the whole value-chain they need to pay that big dividend as the result of the S6 ramp up and remaining cash situation becomes clear.

Quote from their 2016 annual report about their business strategy:

We are vertically integrated across substantially the entire solar value chain. Many of the efficiencies, cost reductions, and capabilities that we deliver to our customers are not easily replicable for other industry participants that are not similarly vertically integrated. Accordingly, our operational model offers PV solar energy solutions that benefit from our capabilities, including: advanced PV modules; project development; engineering and plant optimization; grid integration and plant control systems; procurement and construction consulting; and O&M services.

And one example:

O&M is a key driver for power plants to deliver on their projected revenues. By leveraging our extensive experience in plant optimization and advanced diagnostics, we have developed one of the largest and most advanced O&M programs in the industry. With more than 7.1 GW DC of utility-scale PV plants under the O&M program, we maintain a fleet average system effective availability greater than 99% . Our experienced O&M staff enhances the probability that our customers’ power plants produce the energy predicted in their energy model. Our products and services are engineered to maximize energy output and revenue for our customers while significantly reducing their unplanned maintenance costs. Plant owners benefit from predictable expenses over the life of the contract and reduced risk of energy loss. Our goal is to optimize our customers’ power plants to generate the maximum amount of energy and revenue under their respective power purchase agreements (“PPA”) throughout the operational life of the plants. We have made significant investments in O&M technologies in order to develop and create a scalable and sustainable O&M platform. Our O&M program is compliant with the North American Electric Reliability Corporation (“NERC”) standards and is designed to be scalable to accommodate the growing O&M needs of customers worldwide. We believe our O&M expertise and scale are significant differentiators, as it is difficult for many competitors to replicate this experience.

2016 annual report: http://files.shareholder.com/downloads/FSLR/3942108867x0x936441/FF229006-19D1-4DC5-B7F3-AE92F8153C15/First_Solar_Annual_Report_Web_Posting.pdf

 

Edited by explo
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Solar stocks don't want to participate with the general market rally today.

JKS seems to be pressured (hoping no bad news is in the work).  If pressured further, it might be good time to move some CSIQ to JKS.  A couple of weeks ago the spread was $5, now it is close to $3.  Historically, the spread was around $2 to $6.

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2 hours ago, Jetmoney said:

Solar stocks don't want to participate with the general market rally today.

JKS seems to be pressured (hoping no bad news is in the work).  If pressured further, it might be good time to move some CSIQ to JKS.  A couple of weeks ago the spread was $5, now it is close to $3.  Historically, the spread was around $2 to $6.

Yes, but that was in CSIQ's favor.

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26 minutes ago, pg6solar said:

Yes, but that was in CSIQ's favor.

You are right.  However, for the past year or so, the spread was in JKS favor.  Now with Explo's PT, and even Odyd's PT (JKS at 20 and CSIQ at 17), if the spread is less than $2, it might be good to make a switch, provided that nothing bad is brewing in JKS.

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10 hours ago, Jetmoney said:

Solar stocks don't want to participate with the general market rally today.

JKS seems to be pressured (hoping no bad news is in the work).  If pressured further, it might be good time to move some CSIQ to JKS.  A couple of weeks ago the spread was $5, now it is close to $3.  Historically, the spread was around $2 to $6.

This year will be a test. Some have already lowered expectations and some have been more positive. For some reason I "feel" more comfortable holding JKS than JASO or CSIQ over the coming ER season.

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Looks like NEP got some needed attention.

Sent from my HTC One_M8 using Tapatalk

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1 hour ago, odyd said:

Looks like NEP got some needed attention.

Sent from my HTC One_M8 using Tapatalk
 

Good action. Up 3.33% to $33.33. Why use too many different digits? :)

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On 2017-04-20 at 4:12 AM, odyd said:

I may be completely clueless about the FSLR, but those numbers tell me that FSLR is shaping to become $1 EPS company, and that is a lot of optimism to see $1 earned in this dynamic. Will market pay, as the few believe, $50 per share for it?

I hope that some who own it can take a look at it. Fluctuation could be your friend here, but FSLR is going down, and I think it will be hard to get out. I am aware that members hold FLSR, but I hope to see income statement analysis for 2019 when modules are coming off the line.

I've crunched their numbers now. I think their Components segment (internal and external panel sales) will contribute $1 more to EPS in 2019 than it did in 2016. 2016 non-GAAP EPS was a bit over $5. The question then becomes how much the Systems segment (everything else) contributes in 2019 compared to 2016. I don't have a good view of this.

Assumptions about the Components business is that internal and external panels sales will be at fully ramped capacity (if this happens in 2019 or two months later is of less interest since the fully ramped capacity metrics is what is interesting going forward) which is assumed to be 3.3 GW based on guided gains over today's 3.0 GW from e.g. increased power per panel produced. Then the cost per watt is quite clearly guided as 0.23 $/W and the S6 ASP entitlement in the 2016 market as 0.58 $/W (6 cent higher than their S4 ASP in 2016 which was 0.52 $/W). I'm then assuming ASP will fall 40% from 2016 to 2019 to end up at 0.35 $/W (I know this seems high compared to today's spot price on standard multi c-Si panels, but there is a severe supply/demand imbalance for standard multi c-Si panels). 40% decline in 3 years is an average decline of more than 15% per year, which is not a very conservative assumption on the PV cost reduction pace in the march towards grid parity. Anyway this $0.12 GP on $0.35 ASP translates to a panel sales GM north of 30%. Already in 2015 and 2016 major S4 cost reduction were achieved to reach panel sales GM of 20.0% and 25.5% respectively after 3 years of single digit GM on panel sales. In that light 30% GM is not stretching it given the ASP entitlement and cost advantages S6 is expected to have over S4. If FSLR can't make decent money on their S6 panel sales, assuming the guided cost and ASP advantage over S4, I have a hard time seeing how their competitors can make money on their panel sales at all.

So FSLR is a hedge based on likely better profitability than competitors on panel sales once S6 is launched, especially in markets with climate where their technology has an energy yield advantage over c-Si. This will be a position of strength in the market to motivate growth investments. It's not based on FSLR making a lot of money in 2019. It is a hedge based on the fact that if FSLR have problems its compentitors could have even worse problems (BS strength, revenue stream diversification considered) and I don't want to risk being concentrated in deep problems.

That said I know that panel profits won't suffice as return for FSLR. They need to continue to add Systems profits to that. At least the Components profits are growing now and will likely continue to grow after S6 launch and FSLR shareholders are a bit starved for clear signs of a growth segment.

I still have a 50% higher bet on c-Si than FSLR, but I think there are good risk/reward reasons to spread my bets like this.

 

Edited by explo
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