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JA Solar (JASO)

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I think the Asian Markets might see a bigger correction. It could be by chance some that were looking to Privatize may begin to wonder if they were late. With all the Companies coming to Market in China and HK money is said to be pulling out of other stocks in anticipation for those Companies to IPO increasing the risk for Markets to fall further.

Shorting the YINN would of been a good bet and probably still is.

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They were disclosed in holdings (unfortunately those are not permanent records). Read some of posts around January 20 too, like this one: http://solarpvinvestor.com/community/index.php/topic/32-trading-solars/?p=69432

Not sure why I need to prove I'm telling the truth about which stocks I held when.

You do not, I said that if you said you posted, then you did. And BTW, that post that you linked to, is exactly the reason why I would not add to CN3 at this levels at this market time.  

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July the SA members seem to prefer $25 offer given by this analyst.

http://seekingalpha.com/article/3257205-unhappy-with-the-ja-solar-buyout-proposal-i-provide-a-fairness-opinion-on-this-potential-deal-on-your-behalf

 

I am not sure who is more delusional, Jin trying to buy JA cheap or shareholders who think that stock is worth $25. However I am convinced that  Jin's lunacy have a greater chance of success. Still all the best to everyone holding JA.

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July the SA members seem to prefer $25 offer given by this analyst.

http://seekingalpha.com/article/3257205-unhappy-with-the-ja-solar-buyout-proposal-i-provide-a-fairness-opinion-on-this-potential-deal-on-your-behalf

 

I am not sure who is more delusional, Jin trying to buy JA cheap or shareholders who think that stock is worth $25. However I am convinced that  Jin's lunacy have a greater chance of success. Still all the best to everyone holding JA.

 

Similar analysis and conclusion to mine. It's not that the offer was below PPS. It's that the EBITDA multiple at the current PPS is extremely low (as I've shown each quarter in the income and balance thread) and thus undervalues the enterprise for a buy out. Frankly the multiple is completely nuts for a company that grew revenue with more than 50% last year and thus makes it the mother of all cases in the sector for me and Jin thinking he can steal this from me is frustrating to say the least. I still have hope that the BOD firmly rejects this offer. If they don't then JA corporate governance is junk and I'll move on.

 

This is the critical table showing the undervaluation: http://static.cdn-seekingalpha.com/uploads/2015/6/12497871_14342103248883_rId20.png

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This is the proof of my discussion on the book value from last year

Of course, the book value is highly debated in my view. I am not a big on this discussion. I am for the operational savvy and producing income assets, versus the overbearing cost endured in times where they were worth a lot more, adding value. On the move to $1 to $2, this is also a good asset discussion. How is the company producing $1 earnings going to produce $2 earnings. One would say it is by ASP increase, lower opex and financial costs, or by doubling the sales and keep the same ratios or a mix. What is the real cost to accomplish it.
I think good exercise is to take PPE and projects and apply to NI. See what $1 of asset produces for net income. Then see how much asset adding would produce double earnings, and use existing liquidity and cash flow generation plus borrowing to apply it. Of course with the profile of sales changing, the asset creation changes too. So equipment costs 0.20 per watt, project in China costs 1.20. I think this would be a very interesting to illustrate that.

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Similar analysis and conclusion to mine. It's not that the offer was below PPS. It's that the EBITDA multiple at the current PPS is extremely low (as I've shown each quarter in the income and balance thread) and thus undervalues the enterprise for a buy out. Frankly the multiple is completely nuts for a company that grew revenue with more than 50% last year and thus makes it the mother of all cases in the sector for me and Jin thinking he can steal this from me is frustrating to say the least. I still have hope that the BOD firmly rejects this offer. If they don't then JA corporate governance is junk and I'll move on.

 

This is the critical table showing the undervaluation: http://static.cdn-seekingalpha.com/uploads/2015/6/12497871_14342103248883_rId20.png

I looked at this calculation showing $224M EBITA for 2015 and 2014 being 214M, I got only 185M excluding 11M on warrant pricing, and not counting non-controlling deductions which would lower it for 2014. I also see how other companies if accurate are relative low priced when comes to CN3

I have no time to evaluate the data presented, but I see highly unlikely anyone betting higher than Jin offer, never mind reaching anything in area of $25.

I wish I was wrong for your sake and probably many people who looked at those balance sheets for years.

Finally if $25 was the case I would imagine benefit for others. The reality is a lot less hopeful. I am  afraid.

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This is the proof of my discussion on the book value from last year

 

Book value is a different thing. The article and my analysis look at cash flow multiples (e.g. EV/EBITDA). Book value is more about how much room left there is to leverage BS to fund growth. First you need good cash flow metrics (EBITDA), then a cheap price (EV) of that cash flow to have a case of a cash producing machine costing less than the cash it produces. Then if the companies have growth avenues (growing market, new business segments) and equity (book value) to fund investments in such growth avenues it is icing on the case.

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Book value is a different thing. The article and my analysis look at cash flow multiples (e.g. EV/EBITDA). Book value is more about how much room left there is to leverage BS to fund growth. First you need good cash flow metrics (EBITDA), then a cheap price (EV) of that cash flow to have a case of a cash producing machine costing less than the cash it procduces. Then if the companies have growth avenues (growing marktet, new business segments) and equity (book value) to fund investment in such growth avenues it is icing on the case.

Explo I linked my post about the book value based on the date of my post to illustrate SA readers that my view on it is at least 7 months old and to be honest older. This has no relationship to yours posts.

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Explo I linked my post about the book value based on the date of my post to illustrate SA readers that my view on it is at least 7 months old and to be honest older. This has no relationship to yours posts.

 

Ok. We can agree that "real" book value is good as it is funds to use for growth investment. Regarding if JASO's reported book value is "real" is what you question. I've done this analysis too and not found inflated book values for any CN4. For the other ones this is the case though.

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I looked at this calculation showing $224M EBITA for 2015 and 2014 being 214M, I got only 185M excluding 11M on warrant pricing, and not counting non-controlling deductions which would lower it for 2014.

 

Not sure how you count. But net profit cleaned of non-recurrents plus interest (close to 40m) plus depreciation (close to 120m) have me around 220m where the article has it and Yahoo finance has it.

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Ok. We can agree that "real" book value is good is it is funds to use for growth investment. Regarding if JASO's reported book value is "real" is what you question. I've done this analysis too and not found inflated book values for any CN4. For the other ones this is the case though.

I also did the analysis on JA and it is the highest of them all with the least capacity and exclusion of plant value. I have made those statements long time and I consider them to be reflective of sales of the warrants, current offer by Jin. My argument here is that the company itself does not believe in that value.

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Not sure how you count. But net profit cleaned of non-recurrents plus interest (close to 40m) plus depreciation (close to 120m) have me around 220m where the article has it and Yahoo finance has it.

Yes, I counted this poorly, depreciation was 685M RMB so I used 114M, so it is $223M for 2014.  The number is actually higher than one in the article

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The book value has been used here and everywhere as the indication of the value of the company. I never used it. If $300M is taken off this is about 6 dollars bring it down substantially. So while $9.69  is probably lower than my value of some $11 perhaps, it is indifferent to the outcome of this particular event.

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The book value has been used here and everywhere as the indication of the value of the company. I never used it. If $300M is taken off this is about 6 dollars bring it down substantially. So while $9.69  is probably lower than my value of some $11 perhaps, it is indifferent to the outcome of this particular event.

 

Book value (=net asset value) in itself is not usually of interest to the market as the company value unless someone wants to liquidate the assets. The cash flow (which EBITDA is a nice net debt cleaned metric of) and the cost of the cash flow (which EV is a nice net debt cleaned metric of) is the primary interest to investors in assessing quality and price of operations. Ones that is established the book value then becomes a secondary interest as a resource of funding growth of the scope of the quality operations. In this sector at this time the book value allows companies to retain value of projects developed. Those without it like YGE and SOL need to sell what they develop as they don't have the BS to hold on to their created value. Sponsoring a yieldco is basically a cheap way of boosting your book value by selling equity expensively. Book value is created in two ways:

 

  • Sell equity
  • Make profit

And it is destroyed in two ways:

 

  • Pay dividend
  • Make losses

If you have ways to grow and want to invest in it then you want to create book value. If you have not then you pay divident to not have idle capital (owner get it and can put it to work elsewhere).

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I also did the analysis on JA and it is the highest of them all with the least capacity and exclusion of plant value. I have made those statements long time and I consider them to be reflective of sales of the warrants, current offer by Jin. My argument here is that the company itself does not believe in that value.

 

I use $0.24 for ingot + wiresaw lines, $0.18 for cell lines and $0.05 for module lines. I did not end up with inflated assets for CN4. YGE and HSOL is another question. Do you use the same line cost estimates as I?

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Book value (=net asset value) in itself is not usually of interest to the market as the company value unless someone wants to liquidate the assets. The cash flow (which EBITDA is a nice net debt cleaned metric of) and the cost of the cash flow (which EV is a nice net debt cleaned metric of) is the primary interest to investors in assessing quality and price of operations. Ones that is established the book value then becomes a secondary interest as a resource of funding growth of the scope of the quality operations. In this sector at this time the book value allows companies to retain value of projects developed. Those without is like YGE and SOL need to sell what they develop as they don't have the BS to hold on to their created value.

You used in the past as a gauge of value. Regardless of your views, I am trying to establish track of my statements not discuss this. My view on JA book is old, that is the point.

I find pointless to further discuss the subject of JA, until outcome is clear. My article was a response to avalanche of criticism of the offer ignoring everything we observed as the forum here in last two years.

Cheers and good luck on your holdings

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You used in the past as a gauge of value.

 

I'm not sure what you refer to, but if it's something  I said I think you've not understood me correct. Book value is equity, two different words for the same thing. To invest you need equity. When you have it you might be able to leverage it with debt to invest more for less equity. To get equity you need to sell shares or wait until you accumulated it in retained earnings. If you want to invest (e.g. in retaining a developed plant) now and need equity now to do it it is a value to shareholders if the company already has equity and don't need to dilute them to get it. Thus the value of a company having equity already is that they don't need to dilute shareholders in order to grow. It's not an intrinsic value like profitable operations is. The value is that the company have room to grow its revenue base without diluting you. This room to grow without diluting shareholders is secondary to cash flow performance and the price of the cash flow as well as the ability to grow in my investment philosophy.

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I sent a very long and entailed e-mail to an Attorney yesterday in reference of slimy buy out offer from Baofang and other.

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After looking at what Zheng paid to acquire core assets and the extra expense to acquire Suntech the Buy Out offer from Baofang Jin Offer is nonsense. China Daily reports for Zheng to acquire the hard assets of Suntech a sum of $492 Million would be paid. This amount  does not include monthly expenses of paying Suntech debt and perhaps shares that were acquired before final acquisition was made. 

In addition to the $492 Million as quoted below, Zheng also had to pay other expense and Zheng is also over the next 2 years has promised to spend an additional $500 Million to upgrade Manufacturing assets. 

Shunfeng also said it would pay an additional $25 million to a local State-owned investment company, Wuxi Guolian Development Group Co, which has been helping to oversee Suntech's restructuring.

As part of the deal, Shunfeng said it would absorb Suntech's losses of up to 20 million yuan per month between March 20 and Oct 31. It will also provide funds for upgrading Suntech's facilities within two years.  http://www.chinadaily.com.cn/bizchina/greenchina/2013-11/04/content_17080022.htm

A more true cost of Zhengs acquisition is a reality of all costs which will be incurred to acquire Suntech and the money needed to bring manufacturing lines up to date. At a  brief look not counting shares that Zheng purchased before acquisition comes to a rough total sum of $1.043 Billion. Suntech had no cash it was teetering BK. JA has liquid cash of $305.63 Million and restricted and cash equivalents of $468 Million and the Offer Price of the Company made by Baofang is total nuts at $489 Million.  The Manufacturing assets have all been updated shareholders helped to pay that expense earlier from Secondaries. There will be a lesser expense made for new facilities in Malaysis and India since they will partner that. Plus JA's revenue grew 57% Year over Year, 2013  to 2014. Suntech that Zheng bought was a destroyed Company, JA is not. The CEO 's Offer is by far a much better steal than Zhengs purchase of Suntech was. Hopefully this low ball offer goes nowhere because it would cause others to shy away from CN Solar Investment.

Edited by Julyw

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http://www.benzinga.com/news/15/07/5714006/ja-solar-announces-special-committee-retained-financial-advisor-legal-counsel

JA Solar Announces Special Committee Retained Financial Advisor, Legal Counsel

JA Solar Holdings Co., Ltd. JASO (the "Company"), one of the world's largest manufacturers of high-performance solar power products, today announced that the special committee of its board of directors (the "Special Committee"), formed to consider the proposal from a buyer group (the "Buyer Group") comprised of Mr. Baofang Jin, Chairman and Chief Executive Officer of the Company, and Jinglong Group Co., Ltd.

 

Edited by polarsparkie

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Anyone think this thing is going to go through? Might be before earnings

doesn't look like the "Market" believes it anytime soon (if at all) ?

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JASO's turn up to bat.  What is everyone expecting?  I really don't follow JASO's business all that closely, just hoping for a better quarter than the last.

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Explo, if you are ou there people want to know. Sent from my HTC One_M8 using Tapatalk

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