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JA Solar (JASO)

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I've attached my figures for JASO for 2015 estimates.  I have corrected them based on CC transcript.  I do find it difficult to see the attraction of investing in them (apart from ongoing low valuation) until the back end of the year and with more project visibility for some earnings momentum then.

 

But, I also intend taking my CSIQ off the table today and leaving only JKS.  The solar table looks a little bare temporarily.

 

Thanks Bus. Great work.

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I can't believe this crap. Can we let TSL and JKS report Q1 before touting how inferior to them JA was in Q1?

 

Everybody writes about the missed expectations, but from what I see on Yahoo the expectations were .06 which they beat.

 

JA explained on the CC that there was no big market in China in Q1. Those 5 GW connect had module deliveries in Q4. Including their own 100 MW plant connected in Q1.

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Gordo: This is why JASO reported a C1Q15 +$50mn EBITDA number, yet saw cash-flow-from-operations fall -$38mn q/q (ask yourself how that’s possible, beyond income statement manipulation?).

 

Here's the answer Gordo: Changes in Working Capital

 

This is a concept in standard cash flow accounting. This part is not included in EBITDA (as are not all other lines expect one in the other part of cash flow statement).

 

OMG. They guy doesn't know (or pretend to) that EBITDA and operating cash flow are completely different metrics. The latter accounts for AR, AP and inventory builds during growth. The former doesn't.

 

In this particular case the explanation was given on CC. AP was reduced a lot as they paid bills for a 100 MW project connected in the quarter. Paying a big bill reduce cash flow without profit impact.

 

Gordo, you need to understand that cash flow and profit flow are different things in accounting.

 

You also need to understand the cash flow of power generation assets. You don't get all investment back at ones if you own a power plant with a 25 year life expectancy. What you do get is however more than enough to serve the project debt.

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Roth Capital downgraded JA Solar Holdings Co., Ltd. (NASDAQ: JASO) from Buy to Neutral with a price target of $9.00 (from $18.00).

Analyst Philip Shen commented, "While the company has successfully transformed itself from a pure cell vendor into a module manufacturer, we believe JASO lags behind peers this cycle in regards to its downstream efforts. This was highlighted by management lowering its annual project development guidance. As a result, we are downgrading to Neutral until management starts to successfully execute on a plan to differentiate itself. The silver lining in all of this, in our opinion, is that the company is not stretching its B/S."

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I think JASO might suffer from this. I'm not sure if a pace where all of BS is tapped at once is better than some at the time. If you want to hold projects it's easier to grow your additions if you don't invest everything at once. This is the main difference between Trina and JA. CSIQ and JKS go about it a bit differently where they don't hold all which helps growing the development scale without tapping BS.

 

There are two limited resources here to how much you can develop and retain:

1. Pipeline

2. Equity

 

I think the latter is much more constrained and that Trina spend much more of it much quicker than JASO and thus will have greater need to raise more of it.

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Anyone see a possible LBO being formed on JA by management? The CEO Baofang Jen is a top 5 major holder of Hualong Securities and this could be the reason why shares have been kept down?

I'm confused why the Blocked bids 2 days ago of around 400,000 shares at $9.45 and again at $9.40 showed up? Is it accumulation with Roth setting the price target lower?

Although $18 I think was ridiculous and so is 9?

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Guest Jocksolar

I agree July. In the past 4 days, we've seen 27% of JASO's equity change hands so they've had ample opportunity to accumulate. Seems they're holding off sales in q2 and building up big inventory at the same time, which they could presumably off load very profitably should they own the whole company in h2 as they're already seeing orders piling up.

I also think Roth's argument is dubious. They were going for 200mw to 300mw and still basically are so not clear what warrants a halving of the fair value. They are waiting for quota confirmation in July for final 70mw in China. They also think there are some non-China projects but were unspecific on those. 200mw in China sounds likely plus some overseas projects so still within the previous guidance.

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I agree July. In the past 4 days, we've seen 27% of JASO's equity change hands so they've had ample opportunity to accumulate. Seems they're holding off sales in q2 and building up big inventory at the same time, which they could presumably off load very profitably should they own the whole company in h2 as they're already seeing orders piling up.

I also think Roth's argument is dubious. They were going for 200mw to 300mw and still basically are so not clear what warrants a halving of the fair value. They are waiting for quota confirmation in July for final 70mw in China. They also think there are some non-China projects but were unspecific on those. 200mw in China sounds likely plus some overseas projects so still within the previous guidance.

Something's up I've been saying this for a while Its a calculated suspicion. Good to see you back,

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Guest Jocksolar

Thanks - story's looking good. Still playing the same flee-ridden dog though

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Also in earlier Quarters CC they mentioned Projects although small outside of China. They have a larger pipeline but they only talk about current year on what projects they plan to complete.

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Q4 sounds quite Bullish in what the Company says when asked about Project Development. http://seekingalpha.com/article/2998276-ja-solar-holdings-jaso-q4-2014-results-earnings-call-transcript?page=4&p=qanda&l=last Besides this 1/3 of the Projects they have will be completed outside of China said by Herman Zhao in the CC. They may of held back in Q1 so they could buy back.

WORLD of DIFFERENCE, in how they approached this Question in Q1 with a simple reply we plan to complete 200 MW.

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Q4 sounds quite Bullish in what the Company says when asked about Project Development. http://seekingalpha.com/article/2998276-ja-solar-holdings-jaso-q4-2014-results-earnings-call-transcript?page=4&p=qanda&l=last Besides this 1/3 of the Projects they have will be completed outside of China said by Herman Zhao in the CC. They may of held back in Q1 so they could buy back.

WORLD of DIFFERENCE, in how they approached this Question in Q1 with a simple reply we plan to complete 200 MW.

Yeah management is getting another chance to buy back shares here. They better do it in my view to not look too investment averse. They are really financially strong here. JASO jumped to 400m in working capital, while TSL slid into negative territory.

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Has anyone tried to contact JASO IR to address concerns?

I just reviewed it today so a little shocked with a simple answer on Project development in Q1.

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Has anyone tried to contact JASO IR to address concerns?

 

No I haven't contacted them. I don't care too much about most things (like that they can't put a powerpoint together more than once every other year) as I like buying on the cheap too, but if they don't buy back shares at good opportunity that annoys me a bit. I don't think they would care about my opinion about that though. I own less than 1% of the company.

 

One thing has changed since last opportunity (where it dipped to high 6's). Now they got a 96m project loan (usually a 15-year term). The stock they sold is exactly 96m and most of it at $9.43. Now they can buy that back lower.

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Thanks. That's the official PR on the news of India-China PV contracts signed some time ago.

JA is the 1'st CN Solar to acknowledge it.

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And they have the Quietest PR department.

So how do you explain they were the 1st CN to announce India correlation?

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This is typical behavior towards CN's during this time same ol same , so just how long does this same continue with CN Solar's, just looks so easy here

.

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I'll hath to admit the Q1 CC sucked where Q4 was upbeat,a major difference between the two CC. I'm not buying that all of a sudden the Co.turned to a piece of crap but I'm buying they purposely held back in Q1 for reason that the Company knows they are on a road map to do even better and wants to buy back first or they are on the roadmap of forming an LBO, so maybe both.

You got to ask or wonder why such a performance and explanation on Project development in Q4 from Herman Zhao and zip locked tongue ShoRt answers when asked in Q1 on company's Projects. They could of sold the 600 MW they retained in the Quarter. And increased revenue but held it bac instead.

JA solar never set a price where they were willing to buy shares back? Well exactly why would any Company do that? They have the leading edge on higher efficient production in China and the best balance sheet to go along with that.

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This could be a sign that they will go private then listed in HK, we will wait and see. Also CSIQ or JKS YieldCo could be listed in HK too. There are something will be happened soon.

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This could be a sign that they will go private then listed in HK, we will wait and see. Also CSIQ or JKS YieldCo could be listed in HK too. There are something will be happened soon.

I hath to review the transcript with JKS I believe I heard them say they are always being approached by Private Equity Investors.

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I hath to review the transcript with JKS I believe I heard them say they are always being approached by Private Equity Investors.

There are at least four us-listed Chinese company go private and listed in HK. Their market cap doubled if not tripled easily. I see JASO could be a target too.

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There are at least four us-listed Chinese company go private and listed in HK. Their market cap doubled if not tripled easily. I see JASO could be a target too.

Sorry, but this is a pipe dream...

None of the US listed solar companies will pay current shareholders large premiums so they can delist from the best stock exchanges in the world.  Your theory is great, it will just never happen.  What will happen is what CSIQ is doing by STARTING a spinoff on another exchange.  That makes the most sense by far.

Jm2c

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July, Q1 volume was weak compared to CN3, but I'm not too worried since they kept full year guidance and also made comment confirming that they would have a very back half loaded year. I'm more surprised that the other 3 report and guide for evenly loaded 1H and 2H. JASO guidance should be at more risk though since it assumes such high back half loading.

Regarding buyback I think that, although PPS is not as low as it got on previous dip, having secured that 96m project debt boosting their cash position a lot could motivate them to buyback now. It might just have been tactic to cushion PPS when announcing buyback, but when PB is 0.5 and cash and cash flow is healthy it is one of the best investments they can make to increase shareholder value.

Regarding buyout I'm not as convinced of JASO interest, but if they don't want buyout they should do buyback, since from a buyer's perspective now you pay 450m (pre premium) and get 900m, i.e. you both get all of JASO's assets and operations AND lower your PB as you get 450m more book value than you pay for. This seams very attractive.

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In simplified term:

 

The buyback situation is confusing. If the company feel they are going to do well further down the line, isn't this going to be reflected in the share price? So why aren't they buying hand over fist at these levels? Does anyone think part of the drop in SP is due to this lack of conviction? If they don't buy anything back in Q2 with the price down here, is there a chance the lack of conviction might translate into lack of credibility?

 

Saying all the above. Reward to risk trade is highly favourable down at these levels. I'm sure it will tack on 20% by the end of the year if not sooner. But I'm equally sure we will revisit this level again in the future, got to be the most infuriating stock to buy and hold in the sector.

 

Explo/July, you ever thought about trading JASO instead of holding, because the thing just gets 'whack a mole'd' every time it reaches a certain level. Also if they don't buy any shares back this time round will this effect your view of them?

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In simplified term:

The buyback situation is confusing. If the company feel they are going to do well further down the line, isn't this going to be reflected in the share price? So why aren't they buying hand over fist at these levels? Does anyone think part of the drop in SP is due to this lack of conviction? If they don't buy anything back in Q2 with the price down here, is there a chance the lack of conviction might translate into lack of credibility?

Saying all the above. Reward to risk trade is highly favourable down at these levels. I'm sure it will tack on 20% by the end of the year if not sooner. But I'm equally sure we will revisit this level again in the future, got to be the most infuriating stock to buy and hold in the sector.

Explo/July, you ever thought about trading JASO instead of holding, because the thing just gets 'whack a mole'd' every time it reaches a certain level. Also if they don't buy any shares back this time round will this effect your view of them?

If they confirmed they are buying back stock, JASO would probably rally 15-20% in a week just based on that news.

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