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13 hours ago, Klothilde said:

Here ya go, from the transcript:

"...Beginning with U.S., solar procurement from utilities and corporate customer is strong and growing. According to a leading third party market research firm, 8.5 gigawatts of utility-scale solar was procured in the first six months of 2018 alone. Looking forward, we expect this procurement trend will continue to be robust..."

Regarding the risk of module contract cancellation I fail to see how this can have a significant (meaning 20% or more) impact on earnings when a smaller fraction of module sales of $0.35/W is replaced by a penalty of $0.07 and a resale of $0.25...

I really think we should look into the prospects of some CN companies over the next two years so you can truly grasp the privileged position FSLR is in right now.  How many quarters can JKS survive selling at cash cost?

 

 

 

Thanks so year to date it is estimated that future projects to be built over the years is 8.5GW at a minimum. That does nothing to dispute the EIA revised estimates for 2019 of 5GW. 

 

First Solar has booked 4.4GW of both modules and projects year to date (Slide 4)

http://investor.firstsolar.com/static-files/77f00734-5b2c-4820-b8e8-dec1d9192972

 

The past quarter they booked 1.1GW. That is a booking rate decline of 33% from the first 6 months of the years average. That suggests that the ASP price collapse and slowdowns might be having significant impact on their ability  or willingness to get business to fill their pipeline.  They did in the con call  suggest competition on low ASP and bids is prevalent.

 

https://seekingalpha.com/article/4214736-first-solar-fslr-q3-2018-results-earnings-call-transcript?part=single

"I understand what's going on in the market now here as well sometimes from our customers. I understand pricing in some markets is very aggressive. We're not seeing anything today. And if we do, we're not going to book it "

 

The second point regarding lower bookings and lower prices is since when is an experienced ASP decline of 10% in a 3 month period "Nominal".

 

https://seekingalpha.com/article/4214736-first-solar-fslr-q3-2018-results-earnings-call-transcript?part=single

"Our sales teams have done a fabulous job of positioning the product, capturing the best value from the customer. And I'm talking nominal being 10% deltas on ASPs, right"

 

I believe that these series of comments are meant to be as CEO's do spinning the best positive light and minimizing the downside. That is what CEO do.

 

They basically said, bookings have slowed 33% and is lower than our expected capacity at year end.

 

The ASP has decline 10% in just 1 quarter.

 

They cut Shipment guidance by 10% or 300MW

 

They cut revenues for the year by $200M or 8% from full year guidance.

 

They have cut margins from 22 to 19%. This is a  14% decline from the start of this year. 

 

The gross profit impact is down $114M  full year or 20% from guidance due to lower margins and lower revenues.

 

These are not good trend numbers for a 3-4 month impact half year market change impact.

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You haven't factored in the impact on guidance from shifting the sale of the Ishikawa project into 2019.  The project is around 75MWdc and has credit facilities of $240M (10k), thus the revenue impact on guidance is likely >$200M and the GP impact $75-$100M.  

Also imo an ASP decline of 10% qoq is quite good compared to the price decline of 25%+ we've seen for si-PV.  Everything is relative, if not ask Einstein.

Anyhows, GCL should come out with Q3 numbers over the next days and then we'll be able to see what real trouble looks like...

 

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There's no connection to demand expectation imo.  Since the new plant in Xinjiang is one of the lowest cost plants they can sell the full production even if demand is low.  They simply displace higher cost producers like eg. Wacker and REC who have to throttle production because prices are below their cash cost. 

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1 hour ago, Klothilde said:

There's no connection to demand expectation imo.  Since the new plant in Xinjiang is one of the lowest cost plants they can sell the full production even if demand is low.  They simply displace higher cost producers like eg. Wacker and REC who have to throttle production because prices are below their cash cost. 

Good point.  So you're saying the low-cost producers will still prosper even in a low-demand environment, as the higher-cost producers will eventually be driven out of business (after a period of them selling below cost, as REC apparently did).

But that sounds promising for DQ as well.

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20 hours ago, solarpete said:

Good point.  So you're saying the low-cost producers will still prosper even in a low-demand environment, as the higher-cost producers will eventually be driven out of business (after a period of them selling below cost, as REC apparently did).

But that sounds promising for DQ as well.

You are putting words into my mouth and jumping to conclusions.

I would never use the word prosper because in a business setting I associate it with strong earnings growth - which I don't see coming for DQ.  To the contrary, imho there's plenty of pain ahead over the next months as the market is swamped by a tsunami of cheap polysilicon.  I warned everybody that DQ was going to hit the teens and we're almost there.  Looking forward I wouldn't be surprised if it hit single digits over the next few months.

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2 hours ago, Klothilde said:

You are putting words into my mouth and jumping to conclusions.

I would never use the word prosper because in a business setting I associate it with strong earnings growth - which I don't see coming for DQ.  To the contrary, imho there's plenty of pain ahead over the next months as the market is swamped by a tsunami of cheap polysilicon.  I warned everybody that DQ was going to hit the teens and we're almost there.  Looking forward I wouldn't be surprised if it hit single digits over the next few months.

Agreed the next few months will be challenging for DQ.  My point is it's not JUST DQ, though.  It will be challenging for ALL poly producers.  And they all KNOW that--and STILL are moving ahead with their expansion plans.  So either they're all just plain economically suicidal, or they think there will be a light at the end of that tunnel.

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Longi Q3 report:
http://www.sse.com.cn/disclosure/listedinfo/announcement/c/2018-10-31/601012_2018_3.pdf

Gross margin dropping slightly to 21% from 23% in H1 (p12&13).  Looks like they were able to maintain margins thanks to the sharp poly drop in Q3. 

Assuming an ASP of 31 cts in Q3 that puts them roughly around 25 cts production cost.  Since they run around 6 cts in OPEX&I I have them more or less breaking even in Q3.

At the current price level of mono-PERC (~27 cts) they are probably incurring losses since the cost drop in Q4 (polysilicon) is very limited.   Means imho that currently the whole PV component sector in China is in the red zone, without exception.

OMG how much speculation.

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