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56 minutes ago, pg6solar said:

Explo, are you adding to CSIQ/JKS/JASO (all winners) now since they're all around multiyear lows (JA fresh lows, while CSIQ/JKS not quite at lows of weeks ago)? By your portfolio %, looks like not. My understanding is while they're all very low, lower is anticipated soon (1-3 months).

I can only tactically add to an individual stock by increasing its base allocation within the individual stocks asset class of my portfolio at the expense of the allocation for one of my other stocks. For now I'm not changing the base allocation between my individual stocks which is 40% FSRL and 60% CN3 (equally distributed), since they are all flying low.

I realize that there could despite that fact still be some short-term speculative moves to be done like CSIQ and FSLR having been pressured a bit more than the others or some of them having slightly stronger or longer lasting headwinds and uncertain outcome after, but I think the opportunity is not big enough to match the uncertainty of such a bet so I keep what I consider a well balanced allocation of these names at roughly equal mid- to long-term opportunity.

You can say that I already made the tactical move by move out of the yieldcos which I used at 40-50% allocation for around 7 months starting end of summer last year and lasting until spring this year to utilize their more crash as a hedge for a yet to come crash of the manufacturers. Maybe the tactical timing wasn't optimal but it was at least on the right side (the manufacturers crash further and the yieldcos recovered slightly during that hedge period). I don't really like the yieldcos more than the (downstream investing) manufacturers so I don't see point to regret the early move back (I just risk getting on the wrong side after successfully completed a tactical move on the right side).

Worth noting is also that if my funds, which have 14 times higher allocation than the individual stocks, appreciate they will increase the cash allocation of the portfolio which if it exceed its limit will trigger higher allocation of the whole individual stocks asset class and thus buy orders of all stocks. But it is more luck if that coincides with a trough for the stocks from the return perspective than something expected by the strategy. I do believe the strategy is good the risk-adjusted return perspective (with emphasis on risk), since it doesn't try to catch the falling knife but buys stocks only when funds for that purpose has been generated by uncorrelated parts of the portfolio.

Edited by explo
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4 hours ago, odyd said:


Check the articles here at the site, look at websites top menu- articles hopefully last two will give you what I think.

Sent from my HTC One_M8 using Tapatalk
 

Thanks Odyd! Well, from one article you hit the nail on the head with prediction of FSLR hitting $30 when at the time it was trading at $35. Nice job. I think my plan in the meantime is to wait for CSIQ to drift down to $10 and then buy and write covered calls against my shares. It will be like getting weekly and monthly dividends while waiting for the turnaround. 

Anyone here interested in investing in oil stocks? I've been in WLL, CHK, and recently in SWN. If you do the research that you do for solar stocks, man, you guys will make bucks! Then late next year, switch back to solar. At least this is my plan. Still though, writing calls on theses solar stocks in the next month or so will generate some income as well.

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I'd like to load up a bit while PEGI is "cheap".   However, I'm trying to understand PEGI's valuation.

I see a Dividend Discount Model formula.  However, it requires a "cost of equity capital".  Where can I find that number?

Thank you-

Matt

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Hi, it has been a long time from my last posting and I lost track a bit of PV. However all looks so low nowadays compared to 1 year ago. I realize solar has been in cyclical downturn with pressured component prices. Question to the legends of the board e.g. odyd and explo, where do you think we are in the cycle, near end of downturn? What I am missing is a perspective on demand growth, countries all seem to rather scale down, US, Japan, China... If there is not such a perspective where is the demand push coming from preventing margins to further deteriorate in a oversupply industry? 

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24 minutes ago, Makan said:

Hi, it has been a long time from my last posting and I lost track a bit of PV. However all looks so low nowadays compared to 1 year ago. I realize solar has been in cyclical downturn with pressured component prices. Question to the legends of the board e.g. odyd and explo, where do you think we are in the cycle, near end of downturn? What I am missing is a perspective on demand growth, countries all seem to rather scale down, US, Japan, China... If there is not such a perspective where is the demand push coming from preventing margins to further deteriorate in a oversupply industry? 

Welcome back Makan. My impression is that CSIQ and JKS expects Q4 to be the GM bottom as they seem fairly confident that cost cuts will out pace ASP drops next year. FSLR and JASO take a more negative stance and expect further heavy ASP pressure next year, which could prolong the bottom to a trough or in worse case delay the bottom further. The different moods might be related to company specific positions regarding ASP capture opportunity (as they are and move differently in different markets) and cost cut cycle.

 

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Stocks will be stocks, without seeing Q4 results and predictions for full year, green days seem tempting but could be very deceiving.

Sent from my HTC One_M8 using Tapatalk

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brexit, BOJ announcement, trump, opec meeting, italian vote.  Every time something big passes - doesn't seem to matter much the outcome, the stock market takes off.  solar was heavily shorted as well. 

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If CSIQ and JKS is right that margin stabilise in 2007 then the insiders and market would start to anticipate sometime now. Also sentiment is good for a nice rebound.

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brexit, BOJ announcement, trump, opec meeting, italian vote.  Every time something big passes - doesn't seem to matter much the outcome, the stock market takes off.  solar was heavily shorted as well. 

SPWR went 8% up, I wonder what will happen on 7th, most likely not good will, so is this really market seeing improved solar conditions or just overall expectations?

Sent from my HTC One_M8 using Tapatalk

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2 hours ago, odyd said:

SPWR went 8% up, I wonder what will happen on 7th, most likely not good will, so is this really market seeing improved solar conditions or just overall expectations?

Sent from my HTC One_M8 using Tapatalk

Think there is some chance SPWR surprises with more cooperation from Total?

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2 hours ago, sunnypease said:

Think there is some chance SPWR surprises with more cooperation from Total?

I do not know, but I really do not care. Total can buy them off. This would be the best.

I wish the lawyers to f...off already with PEGI. Lundin Law posted the same message 6 times now. Nobody cares. To lose 100K on 76 cents move one would have to have 100K shares. How many private investors would consider selling having that much in a stock on this release?

Anyways little guys, who do not know better, they are not buying the stock for it and some are even selling.

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yes the lawyers are vile.  Why not sue to protect people's health or the environment.  There must be good money in that too.

How is this for a surprise?  I guess this is why solar was rocketing to the finish?

http://www.bbc.com/news/world-us-canada-38211695

http://www.nytimes.com/2016/12/05/us/politics/donald-trump-transition.html

(Gore met with Trump!)

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1 hour ago, odyd said:

I wish the lawyers to f...off already with PEGI. 

Anyways little guys, who do not know better, they are not buying the stock for it and some are even selling.

BTW, Robert.  I don't think its really the lawyers taking PEGI down.  

I think it was the bull stampede into equity long solar today.  

Maybe some solar traders like you decided to close out PEGI and move back into solar.

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1 hour ago, sunnypease said:

BTW, Robert.  I don't think its really the lawyers taking PEGI down.  

I think it was the bull stampede into equity long solar today.  

Maybe some solar traders like you decided to close out PEGI and move back into solar.

 PEGI is trading on the premise to be a bond with old yield, while new bonds have a higher yield. The idea makes little sense since PEGI is equity and not a fixed value, it has a growth ahead. Sure the IR will affect projects, but IR will affect all companies.

I think you credit people who own/owned PEGI with objectives similar to mine. I doubt there is hardly anyone having similar logic.

Buyers may be expecting technical bottom, but I will wait for the operational one. I need to stick to my strategy, and this one is below $10 or/and buying Feb-March. If Feb and March price is above $10, then I will not buy. I know this market likes to deceive. The last thing is to see the EPS expectations for 2017, mind you people will pay $32 per share of FSLR for $0.50 EPS.

I need to do what I posted to do. I did not in a past and I got disappointed.

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10 minutes ago, odyd said:

The presentation shows the cost of $0.25 per watt only in 2020, about two years later than I stipulated. That alone now can change GM to a bad one. Three years for 4 cents sounds like a major block.

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20 hours ago, odyd said:

The presentation shows the cost of $0.25 per watt only in 2020, about two years later than I stipulated. That alone now can change GM to a bad one. Three years for 4 cents sounds like a major block.

And that's in-house manufacturing cost in China. Sounds like blended China is running around 3 cents higher than that and that company wide manufacturing cost is another 2 cents higher. From Q3 CC:

---

Dr. Shawn Qu

Let me correct myself. The $0.25 is for 2020 and $0.29 is for the Q4 2017. We might be able to do better than $0.29. Therefore, let’s say if $0.29 of fully integrated China cost, then our total blended cost will be in the low 30s.

 

[...]

Dr. Huifeng Chang

Okay. For Q3, it decreased by $0.04 to $0.35 for the blended manufacturing cost in China. So, on the Companywide, the comprehensive blended manufacturing cost was $0.37, $0.02 higher than blended cost in China,

 

---

 

However looking at the reported numbers with only 10.4% revenue from total solutions it looks like the cost of goods sold (COGS) per watt was $0.425 at an ASP of around $0.515, i.e. a GM of around 17.5% on panel sales in Q3. These estimates seem quite solid with JKS and JASO reporting $0.50 and $0.49 ASP and CSIQ's total GM at 17.8% with the low total solutions revenue portion.

 

From the CC comments above it seems like their actual COGS, i.e. what determines the panel GM, is running at around 10 cents higher than reported in-house manufacturing cost in China. So now the in-house manufacturing cost in China is 32 cents and will be cut 7 cent by 2020 to 25 cent resulting in a COGS per watt at 35 cents and the warranty and freight of 2-3 cent above that, giving them a non-fixed costs break-even ASP requirement of 37 cents in 2020.

 

Hopefully they can narrow the in-house manufacturing cost in China and the total COGS per watt gap a bit too with tariff cost reduction being the biggest potential, while the outsourcing penalty seem to be at a low point already. So let's say they can get the break-even ASP down to mid 30's, maybe low 30's if stretching. The cash break-even ASP is usually a few cents below that depending on how much in-house capacity is used.

 

Meanwhile FSLR reported this on their Q3 CC:

 

---

The gross margin of our component segment was 32% in Q3 compared to 24% in Q2.

 

---

 

This combined with them saying that S4 right now have a 2 cents ASP penalty to c-Si (which will turn to a 4 cents premium with S6) would suggest that they had an ASP similar to c-Si, say $0.50 and thus a COGS per watt of $0.34 or if we stretch it a bit an ASP of $0.53 with a COGS per watt of $0.36. The guided 40% cut to that cost achieved after the S6 ramp in 2019 would have them at a COGS per watt around $0.21 entering 2020 combined with a guided $0.04 ASP premium over c-Si.

 

To me the guidance (which is just guidance) suggests that FSLR will come back to a big GM lead on panel sales over c-Si by 2020. Long wait though and a lot of uncertainty about guidance so far out.

 

Edited by explo

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The FSLR ASP in my view is a lot more than $0.50, more in the line of $0.55. Also, their component number reports on modules sold in plants, and those have higher GM when it comes to some of the projects.

The price of $0.25 for my article came from the CTO, I noticed $0.21 is being used around for 2019 number, but this is made by one of the analysts. 40% drop would bring the price cost to $0.40 on S4, and that is what used.

For the time being, I thought it was a bit of CC rumbling to say $0.25 for 2020 with CSIQ, but now with the pdf confirmation, dropping just 4 cents regardless with what type of cost allocation it is going to match FSLR perhaps just at best case. JKS seem like it will have overall cost at $0.31 in Q4 2017, this is probably in China versus blend, but if they can offer 6 cents in three years than it is just not enough. Of course, FSLR getting there on a three-year long objective is a big stretch. So the situation is far from clear.

I doubt that ASP is going to stop dropping, which is the biggest issue here. I am concerned about GM in 2017, and so much more in 2018 if the pace comes to crawl with cost reductions. The ASP rapidly dropped now, but the cost did not, if they do not balance the ASP could continue and destroy GM in 2017, 2018, 2019.

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One more thing to muddy the waters: if Trump can be convinced to continue solar subsidies, will he allow chinese solar panels without tariffs?  If not, then tack on a few more p in the US & shift a little more to FSLR's favor.

I bet the big solar winner is going to be some new tech that comes out of left field & surprises everyone.  Maybe perovskite? Too bad it's Trina solar researching that.

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Pattern Energy, NRG Yield analyst commentary at Morgan Stanley Pattern Energy, NRG Yield selloffs overdone, says Morgan Stanley. Morgan Stanley analyst Stephen Byrd said the recent selloffs in Pattern Energy (PEGI) and NRG Yield (NYLD) are unwarranted and both continue to offer a favorable balance of growth and yield, with solid visibility and limited capital needs.

This was posted yesterday and PEGI dropped in last two days. I agree with Byrd, on both counts. Mind you PEGI dividend is 60% more.

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4 hours ago, odyd said:

Pattern Energy, NRG Yield analyst commentary at Morgan Stanley Pattern Energy, NRG Yield selloffs overdone, says Morgan Stanley. Morgan Stanley analyst Stephen Byrd said the recent selloffs in Pattern Energy (PEGI) and NRG Yield (NYLD) are unwarranted and both continue to offer a favorable balance of growth and yield, with solid visibility and limited capital needs.

This was posted yesterday and PEGI dropped in last two days. I agree with Byrd, on both counts. Mind you PEGI dividend is 60% more.

Thats too bad, I was hoping to pick up more at a discount.  Licking my wounds now after some reckless shorting of FSLR at the wrong time.  Maybe PEGI is selling off in anticipation of market instability after a fed rate rise.

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8 hours ago, odyd said:

The FSLR ASP in my view is a lot more than $0.50, more in the line of $0.55. Also, their component number reports on modules sold in plants, and those have higher GM when it comes to some of the projects.

The price of $0.25 for my article came from the CTO, I noticed $0.21 is being used around for 2019 number, but this is made by one of the analysts. 40% drop would bring the price cost to $0.40 on S4, and that is what used.

For the time being, I thought it was a bit of CC rumbling to say $0.25 for 2020 with CSIQ, but now with the pdf confirmation, dropping just 4 cents regardless with what type of cost allocation it is going to match FSLR perhaps just at best case. JKS seem like it will have overall cost at $0.31 in Q4 2017, this is probably in China versus blend, but if they can offer 6 cents in three years than it is just not enough. Of course, FSLR getting there on a three-year long objective is a big stretch. So the situation is far from clear.

I doubt that ASP is going to stop dropping, which is the biggest issue here. I am concerned about GM in 2017, and so much more in 2018 if the pace comes to crawl with cost reductions. The ASP rapidly dropped now, but the cost did not, if they do not balance the ASP could continue and destroy GM in 2017, 2018, 2019.

$0.21 COGS per watt for S6 might be a stretch, so let's say $0.25 down 40% from $0.415 today then. I think the simpler way to view it is that they all had ASP roughly around the low $0.50's in Q3 and all had COGS per watt around low $0.40's. The difference for 2020 is that FSLR expects a 40% cut on the cost side while c-Si may just be looking at a roughly 25% cost cut (still uncertain of course and they could do better than this) based on CSIQ's guidance to cut in-house manufacturing cost in China $0.03 from now until end of 2017 and another $0.04 until 2020. In total FSLR might achieve $0.05 more cost cut than c-Si by 2020 from today. And then S6 will have a $0.06 ASP advantage over S4, so in total FSLR could roughly have a $0.10 better development of the gross profit per watt from today's level than c-Si.

So to me this all spells like inverted pyramid integrated c-Si with trade barrier into high ASP markets for some of its capacity will likely be looking at a total COGS per watt of no less than $0.30 in 2020 compared to $0.25 for FSLR. Say that c-Si ASP is $0.32 then c-Si GM would be 6% and FSLR ASP would with the $0.04 S6 premium be $0.36 and its GM 30%. No matter how I twist and turn what is guided it looks like (based on guidance by FSLR and CSIQ and how CSIQ's COGS per watt is related to their in-house manufacturing cost in China) FSLR has a much better chance to achieve a 20%+ panel sales gross margin than c-Si.

I still think it is too uncertain to fully bet on either side and if I had to it would still be c-Si for reasons you talk about in your article, so I think the 60/40 split on the CN3/FSLR (were c-Si vs S6 is one part) bets remains the best balance for now.

Edited by explo

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6 hours ago, odyd said:

long gone are the days of wafer differentiation,

Depends on what you mean. It seems it is possible to get big in the wafer segment (GCL, LONGi). More difficult so in the cell segment.

It seems unlikely that the panel segment can get big by differentiation based on use of in-house wafers or cells though. This is simply a supply cost hedge against above oligopoly.

I still believe much of the cell performance is due to wafer quality. SPWR simply buys super mono wafers from specialized Chinese wafer maker Comtec to achieve their high conversion efficiency.

Edited by explo

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3 hours ago, explo said:

Depends on what you mean. It seems it is possible to get big in the wafer segment (GCL, LONGi). More difficult so in the cell segment.

It seems unlikely that the panel segment can get big by differentiation based on use of in-house wafers or cells though. This is simply a supply cost hedge against above oligopoly.

I still believe much of the cell performance is due to wafer quality. SPWR simply buys super mono wafers from specialized Chinese wafer maker Comtec to achieve their high conversion efficiency.

I mean that wafer does not play a role in the technological advantage. You cannot buy a p-type p wafer and make your cell more efficient by its virtue; standard wafer 95% used today. However, you can make the cell more efficient by the cell technology using any wafer belong to p-type p class.

SPWR wafers are n-type, which produce higher efficiency with cell technology offered by IBC structure. Both are distinctively connected.

The story of Renesola was about specialized wafer. That story is no longer creating any merit. The story of Daqo has wafer and has absolutely no dynamic of unique creativity.

Cell technology is propelling the industry forward. There is a certain quality of water out there, but it is the same wafer nevertheless, made at Trina, and GCL.

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I think FSLR is overly aggressive and I think the c-Si side is too conservative. First, because it is technology driven, having the ability to move to a certain point by design, rather than the cost of material. Second because of material contribution to the lower cost.

The impression of control versus impression of not controlling every piece playing to be a factor. The technology can fail, where the material impact can be neutralized. I believe that neutralization is easier to obtain with the help of technology, but the entire contribution of technology is hazardous to bet on it.

Spreading your investment makes sense as a result. On price targets, I think they will end up in the same place, unfortunately. Chinese can invest a lot more than they have to make things cheaper. FSLR must remain on the path and has to believe it can beat everyone. If they did not, what would be the point to run the company? Of course, I (investor) do not need to be so desperate in this belief, and the future of the c-Si is less dramatic but also too slow to unveil. Stock prices are also easier to absorb slow by buying less priced equity (JKS, CSIQ), where failure can cost a lot  more (FSLR).

 

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1 hour ago, pg6solar said:

woo hoo!   I'm above cost!  (total luck)

I'm happy I didn't short FSLR & SPWR this morning.  2500 layoffs and the stock is up.  huh?  I guess the bad news is priced in and it's a story of who will be best positioned once ASPs are back up.

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