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The New Normal Of Chinese Solar Dominance
eticketalpha & sammy100,
As stated in the article, FSLR has entered into the engineered systems, constructed systems, O&M services, project financing and end-of-life recycling businesses, diversifying its business model.
I think diversifying its business model to avoid insolvency risks amidst anticipated continuation of declines in energy (specifically natural gas) prices will likely put more pressure on FSLR’s margins in the short term due to the cost of acquiring these businesses or developing them internally.
GCL-Poly is a diversified solar company that not only manufactures wafers but develops, manages and operates environmental friendly power plants. Though it is more correct to say, "It offers a high quality, less expensive alternative to competitors like FSLR’s suppliers those suppliers’ suppliers…", the companies have similar industry risk exposures. Further, polysilicon price declines will also have a similar affect as it price squeezes FSLR’s suppliers, impacting FSLR’s business model.
I am not saying FSLR is not a viable company, but I do feel that GCL-Poly has a better chance of capitalizing on market conditions. I think FSLR has the potential to be a $100 stock in the long term, but in the short term, many markets where FSLR’s revenues were coming from are being cut. This squeeze could severely damage FSLR’s economies of scale and eat profit margins. FSLR and GCL-Poly are the #1 & #2 holdings in the Guggenheim Solar ETF (
), which I disclosed that I may purchase in the next three days. I just feel GCL-Poly has the opportunity to take a lot of market share in its larger target markets.
Dec 6 08:55 PM
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