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JA Solar (JASO)

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There are people who believe that JA made Q1 look like BS, so stock would drop and this offer could come up.

I wonder if the JA was buying shares to make the buy cheaper?

I would freak out if I held for three years and found out that stock was bought by the company so Chairman spend less money on buyout.

I think for the good of the industry, JA going private is the best outcome, Manipulation troubled that stock so much and it made look like it was a value but ended up as a trap. More of the solar veterans now will pick new objectives. The format is only having three good companies left so money should be or perhaps already was pouring into them. A bit of deficit on decent companies' shares never hurt anyone.

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In a letter to JA Solar’s board of directors, Jin requested that the potential sources of financing receive the right to carry out due diligence and noted that he is ready to negotiate and finalise a definitive agreement expeditiously. The CEO also mentioned that the proposed buyout will provide superior value to the company's shareholders.

In turn, JA Solar’s board said it will form a special committee of independent directors to consider the offer.

Skadden, Arps, Slate, Meagher & Flom LLP serves as the suitors’ US legal counsel.

http://renewables.seenews.com/news/ja-solars-ceo-offers-to-buy-out-company-479369

Ready to Negotiate?

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Ready to Negotiate?

 

I'm sure they are ready to negotiate the price down to $4.50 or so....

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I'm sure they are ready to negotiate the price down to $4.50 or so....

Yeah I think it doesn't mean much.

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I would be really surprised of JASO actually does go private.. unless the plan is to relist on another exchange.

In a market growing as fast as solar, there's absolutely no way being private is better than being public.  The ability to issue shares to raise equity at any time more is a significant advantage over private companies IMO

GL Jaso holders, may still be some air under the train, but i'm content with JASO for what it gave me last week.

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I would be really surprised of JASO actually does go private.. unless the plan is to relist on another exchange.

In a market growing as fast as solar, there's absolutely no way being private is better than being public.  The ability to issue shares to raise equity at any time more is a significant advantage over private companies IMO

GL Jaso holders, may still be some air under the train, but i'm content with JASO for what it gave me last week.

They have to do a buy out first before they can re-list, then they can IPO for double or triple their sp.

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I think the party for JASO is just getting started. I cannot believe the CEO can take the company private on the proposed bidding. JASO will get a lot of attention from all the energy and solar companies now. My feeling says that JASO will receive alternative biddings in a short notice. It is one of the last very cheap healthy options available in an industry that is about to be the next big thing. If you can get all those GW; customer base and latest technology for that kind of investment you would be crazy not to overbid the current CEO proposal.

 

During this period of time it was said that mergers and acquisitions would take place. The CEO of JASO could be the one that has just started the first openly bidding war. My feeling is that we are going to be surprised what kind of interest is out there. I really hope so because this whole JASO story is exactly how it felt all the time; manipulation at its finest. The CEO knows the second half of the year will be very strong. He knew this quater was one of the last opportunities to manipulate the stock price by bringing an on purpose bad quater result just before the company is going to take full advantage of the market dynamics that are around the corner. I trust there are a lot of interested companies out there that are not going to let this too good to be true story for this CEO happen.

 

I am sitting front row and to be honest I think the street it does not understand what an incredable investment opportunity is available right now:

 

1.

Already on the table: 9,69 USD/share from CEO -> you can buy on discount now

2.

Free risk of taking advantage of a bidding war with possible huge gains.

3.

If both will not go through you have bought JASO at the lower 9,.. number which is still a good price in my book. With all CEO saying a shortage in the second half of the year will come JASO could maybe be free from manipulation and see 9,..levels never again.

 

Lucky

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Good article. I agree with the view. The chairman is insulting shareholders here. I hope there's some more too it (that it is another one of those senseless at the time moves, but brilliant for shareholders in retrospect).

 

It's time for the board to show it serves its shareholders by not recommending acceptance of this offer.

 

Lucky, I agree with your points too. With $17 equity per ADS and a positive ROE a proposed valuation of $9.69 is insulting, especially knowing their 2H guidance. Shipping more than a GW per quarter on average in 2H could have them print quarterly EPS well above $0.50 in 2H.

 

Hopefully this was just the chairman giving the market a wake up call.

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Explo I'm very curious what's your game plan with JASO holding? Hope you had a great weekend Brotha.

 

The weekend's been great enough to keep me away from the keyboard for two days despite the action in solar and JASO land. :)

 

I still think JASO and DQ need to catch up with CN3, so at this point I'll just patiently keep my current positions. When some gaps close, say that TSL and JASO get closer to parity again I'll probably diversify by taking in some CN3 names at such opportunities. Opportunity for that is still not great despite the Friday jump in JASO.

 

Regarding the JASO buyout offer I agree with Lucky there good reasons to sit tight in the JASO boat and see how this plays out.

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The weekend's been great enough to keep me away from the keyboard for two days despite the action in solar and JASO land. :)

I still think JASO and DQ need to catch up with CN3, so at this point I'll just patiently keep my current positions. When some gaps close, say that TSL and JASO get closer to parity again I'll probably diversify by taking in some CN3 names at such opportunities. Opportunity for that is still not great despite the Friday jump in JASO.

Regarding the JASO buyout offer I agree with Lucky there good reasons to sit tight in the JASO boat and see how this plays out.

Great... Always curious as to what you are thinking. Enjoy the rest of your weekened and lets make some money on Monday.

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I am quite excited with the JASO situation for the sector. The most critical part is that at the price JASO was on Thursday, Friday offer made it appreciate in value, pointing to how devalued those companies are. Private transaction while not takeover or a merger puts Chinese companies on the map and offers more value debates across capital markets.

 

However, I am more skeptical than most here to consider this to be a turf for a bidding war. Who would be bidding against the chairman of the company for the company? It will not be a another company, that is clear. The buyer would would have to be local to China, nobody private would buy Chinese company from the US.

I have seen JA give up value so much, now I am almost certain that it was method to the outcome we are looking at.

 

Once more, I would pay attention to see if the company in fact bought few million of shares for cancellation so Chair could spend less to take her private. Perhaps, the original low trading prices in $7s when share buying could happen, but did not, was not a good time for the offer. Q4 results were going to be awesome and sector got a nice lift.

They sort of got the second chance by cooking results in Q1, by not selling for bad orders, while others blew it out of the water on the volume sales. We were all caught how poor this looked and couple well placed PTs lowering a price in significant way made it look bad for potentially new buyers.

 

In reality there is a force of shareholders standing against, low offer of the company's insider, who by most accounts will have support of the company's board. In fact, some of the posts sound like Chair is force, which came out of nowhere, despite July predicting this action for months.

The situation is orchestrated with full support all the parties and the company directors. I hope nobody here thinks Friday this was news for those people.

In my view everything happening from this point is an administrative formality.

The good news is that in theory you should get cash paid to you account when you have cease and decease order on shares, so no risk should be present, but may take a bit of red tape to finalize it.

Shareholders will vote on the offer, I am almost 99.9% offer will be accepted by the board and recommended.

Done deal, but all the best if I am wrong here on price and the white knight as a secret suitor.

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One more thing, since offer is made Chairman and his means could be buying stock of the company without disclosure beyond his original 15% on free market all the trading for weeks he could have been buying. You may soon find out that he accumulated a lot more stock than originally disclosed. All legal as well.

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I think a couple of those Institutional holders Man and Capital Heights a subsidiary of Susquehanna have Branches in China. Both bought shares of JA Solar with agreement in force I believe not to own more than 5%. I think by not having more than a 5% ownership takes away their voting right but not sure about this?

I read which someone of you probably already are aware of a processes before going Private would be a R/S in order to have fewer outstanding shares.

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If Modi/India is serious about growing solar market to 100GW, an Indian company might be interested in taking a swing at JASO.  They could kick up the offer price a buck or so figuring either they get a running start or at least make a competitor pay more...

 

Without a better offer, I think CEO wins no question.  If I already owned shares, I would hold on. 

 

Odyd, do you think there is a Chinese (solar) company in the second tier that could get backing for a JASO offer? 

 

Valuation even after yesterday's jump is a long way from stretched...

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A couple of things Where I believe JA Is at Fault

1. The announced Buyback made on Nov. 17th: This now looks deceptive from management to string Investors along even worse in the 2014 20-F filing that came out in April 2015 they said they hadn't purchased any shares and if they did repurchase it would be only if stock price was under 9.00, I think they should of said that when they announced Buy back in November. The 20-F was filed on April 23rd and stock traded over $10 but while noy knowing ahead of time the Company's plan to Buy back was only good for prices under $9 an investor informed of this earlier could of made an informed decision on whether to buy or sell before reading about it in the 20-F.I think this should of been disclosed at the time the Buyback was announced in Nov. Well I think they can be held responsible for this and a Class Action Lawsuit could be filed and perhaps they'll have to up the ante on the Buy Out Offer as a result.

2. Buy Out Offer is not in line with the Company's Growth Trajectory or current Valuation. There is question to whether they held back shipments to China in Q1 when everyone exceeded shipments in the Quarter and where China showed strength questionable when JA has always shown strength there in the past. Then next a lowball Buy Out offer from Company's CEO at a price at close to half the book value and when JA Solar has seen Net revenue rise and profit rise $1.8 billion in net revenue reported for 2014, up from $1.2 billion in 2013 and all while revenue and profits are expected to rise even more in 2015. Net profit was considerably up as well, with an operating profit of $106.8 million reported, as compared to an operating loss of $14.7 million in 2013 (fiscal year 2013 that is). Buy Out Offer is at a 2013 Price in fact the sp was higher in 2013 rising along with Company's Growth forecast. If by chance the Buy out offer is not raised then I feel the Company did not act in line with Corporate Governance and CEO of JA Solar is in Breach of its Fiduciary Responsibilities to Shareholders.

Words from CEO

http://cleantechnica.com/2015/03/23/ja-solar-highest-solar-module-shipment-growth-whole-industry-2014/

We expect our revenue growth rate of 57% to be among the highest in the industry. Our strategic decision to shift our product mix to more profitable modules and better geographies paid off, with gross profit more than doubling as our gross margin expanded by 500 basis points. We continued to invest heavily in R&D, increasing this expense by 58%, but held other operating expenses under control, resulting in solid operating and net margins. Our intention in 2015 is to sustain this track record of rapid growth and high profitability.

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I think a couple of those Institutional holders Man and Capital Heights a subsidiary of Susquehanna have Branches in China. Both bought shares of JA Solar with agreement in force I believe not to own more than 5%. I think by not having more than a 5% ownership takes away their voting right but not sure about this?

I read which someone of you probably already are aware of a processes before going Private would be a R/S in order to have fewer outstanding shares.

Correction on that Man Group owns 5.15% http://archive.fast-edgar.com//20150323/AL256Q2282223ZZ222282ZN9AQ2QZ222L272/

Capital Heights owns 9.9% http://stocknewsflow.com/1385598_000110465915009924_0001104659-15-009924

These look to be their latest filings.

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Could someone here run some numbers on what JA should be worth in a normal Buy Out Offer?

 

I would use equity as hard value. There's more than $17 per ADS of that. Some of the assets might have higher market value than book value like inventory and project assets. Some might have lower. I think it evens out to total book value representing net asset liquidation value.

 

That's the assets perspective.

 

Other perspective is the operations value usually measured as EBITDA which is sort of cash flow from operation on a debt and cash free basis. Use a low multiplier of 5 on last years above $200m EBITDA and you get $1.2b EV (enterprise value). Deduct the around $400m net debt (since cash flow was measured on a debt and cash free basis) and you get a market value of $800m or $16 per ADS.

 

It's easy to see that anyone trying to get their hands on JASO's net assets and operations under mid teens stock price is attempting a steal.

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I would use equity as hard value. There's more than $17 per ADS of that. Some of the assets might have higher market value than book value like inventory and project assets. Some might have lower. I think it evens out to total book value representing net asset liquidation value.

 

That's the assets perspective.

 

Other perspective is the operations value usually measured as EBITDA which is sort of cash flow from operation on a debt and cash free basis. Use a low multiplier of 5 on last years above $200m EBITDA and you get $1.2b EV (enterprise value). Deduct the around $400m net debt (since cash flow was measured on a debt and cash free basis) and you get a market value of $800m or $16 per ADS.

 

It's easy to see that anyone trying to get their hands on JASO's net assets and operations under mid teens stock price is attempting a steal.

Thanks explo!

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What about FSLR guys. Is jaso not the opportunity for them also get a strong foothold in this type of field. One of the last rare opportunities out there. They would have the cash to do so.

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Some SEC filings by the company now, disclosing the letter the board received form the chairman. He believes he's offering superior value to shareholders. What a joke.

http://investors.jasolar.com/mobile.view?c=208005&v=202&d=3&id=aHR0cDovL2FwaS50ZW5rd2l6YXJkLmNvbS9maWxpbmcueG1sP2lwYWdlPTEwMzIzNjU4JkRTRVE9MCZTRVE9MCZTUURFU0M9U0VDVElPTl9FTlRJUkUmc3Vic2lkPTU3

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Some SEC filings by the company now, disclosing the letter the board received form the chairman. He believes he's offering superior value to shareholders. What a joke.

http://investors.jasolar.com/mobile.view?c=208005&v=202&d=3&id=aHR0cDovL2FwaS50ZW5rd2l6YXJkLmNvbS9maWxpbmcueG1sP2lwYWdlPTEwMzIzNjU4JkRTRVE9MCZTRVE9MCZTUURFU0M9U0VDVElPTl9FTlRJUkUmc3Vic2lkPTU3

Why all the selling today in JA if the Plan is to go Private? That would be yesterday:-)

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While it was a great foresight anticipating company to be taken private, IMO its naive to expect CEO to care about current shareholders in such action. And while its naive to expect CEO to pay up, its even more naive to expect different suitors. The reason its "going private" is because of the low stock price and hence the "low" offer. In the extremely unlikely event of bidding - the company is going nowhere. The company will be "sold" to CEO at discount or not sold (if there're more bidders and PPS goes up) at all and stay public (at which time PPS would come down to Earth once again). 

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While it was a great foresight anticipating company to be taken private, IMO its naive to expect CEO to care about current shareholders in such action. And while its naive to expect CEO to pay up, its even more naive to expect different suitors. The reason its "going private" is because of the low stock price and hence the "low" offer. In the extremely unlikely event of bidding - the company is going nowhere. The company will be "sold" to CEO at discount or not sold (if there're more bidders and PPS goes up) at all and stay public (at which time PPS would come down to Earth once again).

[/quote

Who's calling who Naive? My Question of what was going on with the stock price was one of pun, I don't think you got.

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Who's in pos JA? And that other pos MY?

Whoa Back off with the sarcasm!

I'm in MY at a good price and i don't share your opinion.

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