[sunnysky 905]

I don't see JA taking a bad deal to raise 24m equity they did not really need.

 

Not bad at all if the restrictions are true, IMHO.

[explo 648]

there might be hidden benefit or not. one explanation is they are conservative management and they felt unsafe after paying out that cb and wanted to get back to similar cash level.

 

Yes, but what additional comfort does 24m extra equity and cash give you when you have 750m equity and 400m cash already? Especially when you gave away tons warrants for free causing a 50m liability resulting in a net loss of 30m equity end of Q3 on the deal. Short-term it look senseless. By the construct of it these losses will reverse to accounting positives going forward, but I still don't understand why that much for free was given away.

 

If I take away the past hit and look at the factual raise of 24m @ $7.88 + 24m @ $9.43 plus that they will report derivative gains going forward it suddenly looks good when buying the stock now compared to just raising 48m @ $7.88 without derivative gain bonuses coming. So the win-win might be possible depending on your perspective of it, but the deal still looks a bit weird and as a big win for the investor.

[explo 648]

Not bad at all if the restrictions are true, IMHO.

 

By bad I mean that they sold the warrants below fair value. Maybe that fair value diff corresponded to the lack of typical discount on the stocks issued though and then it makes more sense to me.

 

In a way they've secured increasing equity each quarter regardless of whether the warrants are exercised or not. Just by expiration a liability goes away boosting equity (before exercise and liability going away it can increase if stock price increases though pumping up future profits even more). If exercised then shares are issued bringing in equity and cash on top of that equity gain from expiration if my understand of how they account for the liability and equity issue is correct. Could this be something bringing them strength in negotiations with banks?

 

For us investors I think a lot of clarity on the end value of all this be given after February exercise when new investor plan will become more clear and in 20-F filing in April when accounting effects will be detailed.

[Guest Rommel]

Rommel, please don't confuse stuff. Warrants being bad or not has nothing to do with whether JASO turns a profit in Q4 or not. The latter is obviously good.

 

Explo, I'm not sure how JASO accounts for warrants in their BS. If they are consistent in reporting, then I see the warrants together was worth about $30 M altogether at the end of Q3: $11 M for Series A and $19 M for Series B. I guess you combined current and non-current?

 

Sunny - Not trying to confuse :-(

 

I am hoping that we focus on what is more important right now for JASO and that is Q4. I am certain we will have a profit, not sure how much though. 

 

As for the 200M dollar offering consider this - JASO had reverse split the stock (5 ADRS to 1) and reduced the number to 40M shares. Now they are adding the count (max for raising $200M) to 60M shares.

 

So, all things considered we are just having trading headwinds because of arbitrage and not because of fundamentals.  On OE the stock went over $10 that was a clear indication that stock is heavily manipulated at the moment. This all will clear once Q4 ER is out (or a  pre-announcement in Feb) and then we start running towards $15-$20 range. Hold them tight :-)

 

 

[sunnysky 905]

but the deal still looks a bit weird and as a big win for the investor

It was a big win for the investor without a doubt and sometimes I wonder who that is...

[explo 648]

Rommel, it is a separate discussion. I expect an operationally great Q4 and we all assumed worst case dilution of 60m fully diluted.

 

What I'm arriving at now is that great operations aside dilution might be less than we think and another effect of the deal was that Q3 looked very bad from bad financial performance based on accounting method for the deal and that that will reverse to good financial performance together with good operational performance going forward. So JASO might go from looking bad on all fronts on a cursory investor look at Q3 report to look great on all fronts in coming quarters. It's a good setup if I've understood it correct, but all I really care about is that stock price is low before a quarter where they'll report very nice operational improvements under a healthy financial structure. That it will become evident that financials are better than they looked in Q3 (still best in class there though) will just be a bonus.

[sunnysky 905]

one explanation is they are conservative management and they felt unsafe after paying out that cb and wanted to get back to similar cash level.

 

Yeah, I agree.

[Guest Rommel]

Rommel, it is a separate discussion. I expect an operationally great Q4 and we all assumed worst case dilution of 60m fully diluted.

 

What I'm arriving at now is that great operations aside dilution might be less than we think and another effect of the deal was that Q3 looked very bad from bad financial performance based on accounting method for the deal and that that will reverse to good financial performance together with good operational performance going forward. So JASO might go from looking bad on all fronts on a cursory investor look at Q3 report to look great on all fronts in coming quarters. It's a good setup if I've understood it correct, but all I really care about is that stock price is low before a quarter where they'll report very nice operational improvements under a healthy financial structure. That it will become evident that financials are better than they looked in Q3 (still best in class there though) will just be a bonus.

 

I see the same for sure. TSL ran the most and so did others before the first profitable ER. We are entering a very interesting period for JASO. 

[Guest JulyWebb]

Yeah, I agree.

 

Well & they said that to a certain degree after they reported er in Q1 

[explo 648]

Yeah, I agree.

But CB was much more than 24m. Are you guys thinking that they wanted to raise 100-200m in multiple steps to spread buys to "average up" in an assumed PPS up trend like Jinko did and under this assumption JASO management thought that only way (or best chance) they would be able to sell 100-200m of equity in steps averaging up was through this warrant exercise deal instead of multiple separate offerings like Jinko?