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1 hour ago, Klothilde said:

Plus you can always sell modules from cancelled contracts for good cash. S6 will have cash cost of 16 cts, so anything above that is juice. 

However Widmar has said no u.s. customer has talked about cancelling.

Can it really be 16 cts when they have these people running around doing manual things on the lines?

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19 minutes ago, SCSolar said:

Yes you can always resell but where and at what price?  Overseas where the ASP is $0.25 today for thin film? The issue is you have to find the demand. In the U.S. the market is not booming and is contracting.  As I pointed out the EIA estimates a 40% decline in ground mount systems due to the tariff impacts. That is FSLR markets. If you look at FSLR capacity at 5GW + 2GW for SPWR and what is looked at 5GW of new U.S. capacity, there will be competition in the U.S. 

I am not really sure why you are going down this route. FSLR stated that cancelations were simply not an issue. Even if they somehow became an issue, there are penalties in place that would actually benefit First Solar. And as the company is sold out for the next 2.5 years and booked an additional 1.1GW in the past three months, FSLR doesn't seem to have any problem whatsoever finding buyers for its modules.

While there might be increased competition in the US, First Solar is already booked out for 2019 and 2020. By 2021, there will be a boom in utility projects as developers rush to qualify for the ITC as the IRS safe harbored projects. If anything, First Solar might need to build that 3rd factory in Vietnam or 2nd in Ohio to meet the demand.

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I'm starting to think solars are really un-investible just like all the critics and bears and bashers say.  Just read the JMP note and it says: “The question for investors is a simple one – what multiple of earnings is reasonable in a situation where margins are likely to decline significantly once the existing profitable backlog of business has been worked through?”

Which isn't something new and is something we all talk/hear about here.  It's always about what's gonna happen 2 years out or more.  OR, its always about a quarterly miss because of lumpy project revenue recognition.  So it really feels like you can't hold a solar for more than a day trade or swing on earnings, because of the constant uncertainty and constant bearishness.  I've been in solars for maybe 6 years now, much shorter than many of you I'm sure.  But its been this way the whole time.  I got screwed by Trina going private, I got stiffed by Jinko selling off the project business, I'll certainly get stiffed by CSIQ and I'm in the process of losing a ton of money in FSLR.  If we're constantly worried about 2-3+ years out and constantly worried about quarterly earnings, will there ever be a time when the market isn't 100% skeptical and bearish on the future?  Or will there ever be a point when we can just accept this is a future energy technology that will change the planet and get behind it like people do Tesla?  When do we a get non-commodity-like treatment?  Multiple expansion?  This isn't soybeans.

I know there are plenty of shareholders here and out there who have profits.  They bought and held for years.  Now, those are evaporating once again because we're worrying about S6 in 2021 and beyond!  Disgusted that I'm losing so much money, venting a little, but this has been a constantly frustrating theme - that the solars can never do anything right that make them worthy of investment.  Feeling like I should just have day traded these from the start and been better disciplined about taking loss everytime someone decides to panic about something that will happen next quarter instead of this one, or something that may or may not happen 3 years out.  

Sorry, just had to vent a bit as I watch hard-earned cash get flushed down the toilet... again.

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Hey, I hear you, Mark!  Sadly, I, too think solars are now only daytrading vehicles.  And in the sustained downturn we've had over the past several months (again), even daytrading is well nigh impossible.  Sigh....

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Mark,

Don't worry pretty soon solar manufacturers will be making and giving their modules for free. This is going to happen in 2021. So yes ... while us investors lose our hard earned money or so called investments ... the world will get free solar energy and a cleaner environment.

Who cares if FSLR is showing more and more signs of being an industry leader and one of few companies best positioned for this consolidation phase. JMP is right, there will always be some newcomer out of China (presumably) with a bankroll who will just buy the latest manufacturing technology and then sell at a lower cost than everyone else. They too will eventually go bankrupt like all solar manufacturers before them.

So yes ... what multiple do you assign these companies when they are all going to go bankrupt anyway. 

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Folks.. if you need to earn back some money.. put some money into a short on MJ or even better HMLSF (thats Canadian and you probably need a good broker for that).   The fee to borrow is 17% per year.  

Many marijuana stocks are priced like they are SAAS silicon unicorns, but are in fact farmers.  

I think you can short pretty much any marijuana stock & come out ahead in 3-6 months.

 

MJ is the ETF.

Edited by sunnypease

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Thanks for the comments, folks.  I'm gonna need therapy after this one!  And an additional job.  Should have just invested in solar on our home rather than solar on.. other people's homes.  At least I'd have some ROI.  I wish that my assistance in helping to save the world felt more satisfying.  

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22 hours ago, SCSolar said:

Yes you can always resell but where and at what price?  Overseas where the ASP is $0.25 today for thin film? The issue is you have to find the demand. In the U.S. the market is not booming and is contracting.  As I pointed out the EIA estimates a 40% decline in ground mount systems due to the tariff impacts. That is FSLR markets. If you look at FSLR capacity at 5GW + 2GW for SPWR and what is looked at 5GW of new U.S. capacity, there will be competition in the U.S. 

7 cts penalty and reselling for 25 cts is not a big downside risk imho.

Regarding the 5GW utility market didn't Widmar say utilities signed 8.5GW of contracts in H1 and momentum was steady? That would be 3 times your run rate... Just sayn..

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2 hours ago, Klothilde said:

Regarding the 5GW utility market didn't Widmar say utilities signed 8.5GW of contracts in H1 and momentum was steady? That would be 3 times your run rate... Just sayn..

 

I believe you may have misread what I was saying or  you are inter mixing threads and comments.

 

The EIA has forcast for 2019 a decline of 40% for Utility scale markets. They lowered US Utility scale projects from 11.4GW to 6.33GW. That is a decline of 5GW in Utility scale projects for 2019 in the U.S.

https://www.pv-magazine.com/2018/08/09/us-eia-forecasts-modest-uneven-solar-market-growth-in-2019/

"EIA has dramatically reduced its expectations for utility-scale deployment from 11.4 GW-AC to only 6.33 GW in 2019, which it attributes to changes in incoming data from its Annual Electric Generator survey (EIA-860). STEO is predicting another 3.94 GW-AC of residential, commercial and industrial solar, will come online over the course of 2019, to bring the total to 10.3 GW."

 

You posted and article that had this to say about U.S. Manufacturing

https://www.pv-magazine.com/2018/08/09/us-eia-forecasts-modest-uneven-solar-market-growth-in-2019/

“With existing PV module manufacturing is factored in, by pv magazine’s calculations in mid-2019 there could be as much as 5 GW of crystalline silicon PV module assembly

 

 I  made comments regarding overall manufacturing capacities for the U.S. in part based on your recent article  you posted + I expanded more with the tariff free module capacity of FSLR and SPWR. 

" If you look at FSLR capacity at 5GW + 2GW for SPWR and what is looked at 5GW of new U.S. capacity, there will be competition in the U.S"

 

 

I am not certain what you are referencing for the 8.5GW, but I presume that is the backlog you are estimating that is for module sales based on their presentations. That would be over the next 2.25 years or more going through the end of 2020  or longer and not just a single year.

FSLR has not indicated the regionality  of the backlog based on shipments either. They did indicate 300MW of new international bookings of the 1.1GW. That is almost 30% of their new bookings. That has significant downside pressure on that $0.35 ASP you are tending to use. In the past they had about 20% international business. From  the 10K, they are counting on the international markets for significant growth. That would suggest that atleast 1.4GW of pre 531 Policy change has risk  of being lowered in ASP or lost.

Now some  are playing down cancellations, but to be clear shipments are being impacted internationally. They have experienced cancellations( at least 1 mentioned) and are experiencing some form of issues with more international shipments as noted in their comments that is identifying this as the reason of the couple hundred MW guidance lowered for this year.   In fact they have  cut nearly 10% off this years Feb 22 guidance of shipments. That is 300MW being dropped from this year.

 

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

Secondly, we expect a reduction on our module sales for the year, as a result of some changes in shipment timing, as well as a reduction in certain international shipments.

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On 10/27/2018 at 9:18 PM, SCSolar said:

...I am not certain what you are referencing for the 8.5GW...

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?

 

 

 

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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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Price Trend reversal, everything is going up components to modules with PERC leading the charge

 

http://pvinsights.com/

Item    High    Low    Average    AvgChg    AvgChg %
Multi Cell Price Per Watt    0.135    0.090    0.103    Positive Change Sign 0.002    Positive Change Sign 1.98%
Non China Poly Cell Per Watt    0.140    0.090    0.103    Positive Change Sign 0.002    Positive Change Sign 1.98%
Poly PERC Cell Per Watt    0.135    0.105    0.111    Positive Change Sign 0.002    Positive Change Sign 1.83%
Non China Poly PERC Cell Per Watt    0.135    0.115    0.122    Positive Change Sign 0.002    Positive Change Sign 1.67%
Mono PERC Cell Per Watt    0.170    0.145    0.149    Positive Change Sign 0.004    Positive Change Sign 2.76%
Non China Mono PERC Cell Per Watt    0.170    0.145    0.149    Positive Change Sign 0.004    Positive Change Sign 2.76%
High Eff Mono PERC Cell Per Watt    0.170    0.150    0.155    Positive Change Sign 0.005    Positive Change Sign 3.33%
156 mm Multi Solar Cell    0.630    0.400    0.472    Positive Change Sign 0.01    Positive Change Sign 2.16%
156 mm Mono Solar Cell    0.870    0.530    0.605    Positive Change Sign 0.005    Positive Change Sign 0.83%

 

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Latest SEIA quarterly report.  It's titled Q4 but refers to Q3.  As if life wasn't complicated enough.
https://www.seia.org/research-resources/solar-market-insight-report-2018-q4

11.2GW of utility PPAs signed in the first 9 months of 2018.
Multi selling for 38 cts in Q3 and Mono-PERC for 41.

That's just wonderful for FSLR.  Strong demand and strong pricing.

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1 hour ago, Klothilde said:

Happy new year to y'all 😊

From this article I'm getting a vibe that U.S. utility demand will be humongous over the next years.  That bodes well for FSLR:
https://pv-magazine-usa.com/2019/01/01/solar-tsunami/

It bodes well for all solar manufacturers.  Slowly but surely, the drop in prices is building the groundswell across the globe.

Of course, it's best for high-margin manufacturers.

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