The Devil Is In The Details Of Solar Securitization
Troy Jensen • 10 Comments
Troy Jensen • 10 Comments
Feb. 26, 2014, 12:14 PM
- With 17 of the 20 analysts covering First Solar (FSLR -11.5%) holding neutral or bearish stances going into the company's Q4 report, little sympathy is being shown in response to a big Q4 miss and soft Q1 guidance.
- Goldman (Sell, PT lowered to $42 from $45) continues to see a "lack of upside in First Solar's utility-scale model." The firm points to checks showing a "challenging U.S. growth outlook for large-scale utility projects," mixed performance in emerging markets, and the lack of a near-term yieldco spinoff/IPO for First Solar's solar projects (SunEdison recently filed for one).
- Goldman also thinks First Solar's ability to hit a 1:1 book-to-bill at the end of 2013 was accompanied by a mix shift towards lower-margin module orders.
- Morgan Stanley is pleased with First Solar's cost-cutting moves, but also thinks investors are counting on "a large degree of profitable international growth," which it considers "highly uncertain." Cowen expects gross margin to be down 450 bps Q/Q, but also notes Q1 guidance "may not be indicative of full-year results."
- In spite of First Solar, peers are turning in a strong day (TAN +4.1%). The Street's positive response to SunEdison's Capital Markets Day could be helping.
- Notable gainers: SCTY +6.6%. CSIQ +8.4%. DQ +6.9%. JKS +4.2%. JASO +3.5%. ENPH +4.1%.
Feb. 18, 2014, 4:03 PM
- On a good day for many tech momentum plays, solar and Chinese Internet stocks led the way.
- Solar names could be benefiting from Chinese government remarks suggesting Beijing remains open to trade talks to end its ongoing solar import dispute with the U.S. The comments come after the ITC added Chinese solar panels made with Taiwanese cells to its list of Chinese panels covered by import duties.
- Also: SunEdison (SUNE +6.6%) has filed for an IPO for its solar project business, a move that could entice other companies with major solar project ops to do the same.
- Solar gainers: FSLR +6.9%. SCTY +8%. JASO +12.6%. DQ +9.2%. CSUN +8.1%. YGE +5.5%. JKS +5.3%.
- Chinese Web gainers: CTRP +11.5%. CCIH +16.8%. RENN +11%. YOKU +6.1%. QIHU +6.9%. WUBA +10.6%. WBAI +7.9%. GOMO +9.1%. SOHU +5.6%.
- Solar ETFs: KWT, TAN
Feb. 5, 2014, 8:29 AM
- Chinese solar firms are said to be weighing a response to U.S. anti-dumping and anti-subsidy investigations on imports of silicon solar PV products from China and Taiwan (TAN; KWT).
- The disputes with the U.S. come after China last year resolved similar disputes with the EU, which accused China of undercutting European competitors by selling solar panels at below-cost price.
- Chinese PV makers have issued strong protests, and a senior executive at Yingli Solar (YGE) reportedly says the first step is to reduce the scope of products being investigated.
- The U.S. has become the second-largest market for YGE, with U.S. shipments taking 27% of its total output, surpassing Europe; ~10% of Jinko Solar's (JKS) production now goes to North America, becoming one of its three top markets.
Jan. 7, 2014, 1:05 PM
- Solar stocks started 2014 with a bang, and are adding to their momentum today (TAN +4%) with the help of positive industry and company-specific news.
- The Chinese government, which last year set a 35GW 2015 cumulative installation target, is now promising additional support, and says it will draft guidelines for industry M&A. Consolidation with China's fragmented solar cell/module market could both lower overcapacity (already declining thanks to rising demand) and lead to further margin expansion.
- Yingli (YGE +8.7%) and Canadian Solar (CSIQ +7.4%), both of which saw huge 2013 gains, are today's biggest gainers. Yingli has announced it's forming a JV with state-owned China National Nuclear Corp. to create 500MW of utility-scale solar projects. Canadian has announced a deal to supply 25.3MW of modules for four North Carolina projects.
- Also: Hanwha (HSOL +4.6%) has signed an MOU to supply up to 50MW of modules to U.S. residential solar installer OneRoof Energy.
- Other gainers: FSLR +2.7% (hit by a Goldman downgrade yesterday). SUNE +4.4%. DQ +4.9%. CSUN +3.2%. JASO +5.5%. ENPH +6.8%. ASTI +3.8%. JKS +3%.
Jan. 3, 2014, 3:07 PM
- The recovery in the solar PV sector (KWT +1.9%; TAN +0.8%) should continue into 2014, Needham says, tapping Advanced Energy (AEIS +1.8%) and SunEdison (SUNE +0.8%) as its top picks in the space.
- Needham believes the solar sector will continue to improve due to technology approaching grid parity in several unsubsidized markets; increased availability of financing through a number of private funds and public vehicles; a more balanced supply/demand; and reducing cost structure.
- The firm believes overall worldwide solar installation will grow from 36 GW in 2013 to 42 GW in 2014, driven by rising demand in China, the U.S. and several emerging markets, while demand out of the Europe and Japan will remain stable.
Jan. 2, 2014, 12:09 PM
- On the first trading day of 2014, solar stocks are picking up right where they left off in 2013. Today's gains come in spite of a general selloff in equities.
- A bullish Deutsche note could be helping the group: The firm's checks lead it to think cumulative Chinese solar installations will pass a 2014 government target of 12GW this year. Last month, Deutsche defended Chinese solar names in the face of concerns about a possible 4GW 2014 cap on local utility-scale installations.
- Yingli (YGE +14.2%) is headlining today's winners. The company has announced it's forming a JV with a unit of Datong Coal Mine to build solar power plants in the Chinese city of Shuozhou. Hanwha, which has announced a Belgian module supply deal, is also up sharply.
- Other big gainers: CSIQ +9.2%. FSLR +4.9%. SOL +7.3%. JASO +6.7%. JKS +6.2%. SCTY +6.1%. TSL +6.1%. LDK +4.6%. SUNE +3.1%. CSUN +7.8%.
- Solar ETFs: KWT +2.9%. TAN +4.4%.
Dec. 10, 2013, 11:46 AM
- A day after solar stocks sold off amid concerns about a possible 4GW cap on 2014 Chinese utility-scale solar installations, shares are bouncing with the help of a Deutsche note that calls such fears overblown, and states checks indicate the Chinese government has become "even more serious" about achieving its 35GW 2015 cumulative installation target.
- In spite of utility cap worries, Deutsche's checks suggest "the policy outlook for large [solar] projects in China has improved since mid-November," with approval times having been cut. Moreover, provinces haven't shown any sign of being issued targets or quotas related to an installation cap.
- The firm also thinks a new Chinese solar subsidy program (focused on self-consumption) that kicks in next month will offset the expiration of China's Golden Sun subsidy program, and that a more streamlined incentive process will fuel installation growth.
- Deutsche is reiterating Buys on Yingli (YGE +4.3%) and Trina (TSL +5.9%). Also up: FSLR +2.6%. HSOL +9.7%. CSIQ +5.9%. JKS +6.1%. SOL +3.7%.
- Solar ETFs: KWT, TAN
Dec. 6, 2013, 12:25 PM
- Even as markets rally in response to a favorable NFP report, solar stocks are giving back some of this year's gains. ReneSola (SOL -10.3%), which tumbled yesterday after positing Q3 results and announcing it's shuttering a polysilicon plant, is the biggest decliner.
- Credit Suisse has cut its ReneSola PT to $3 from $5, while reiterating an Underperform. The firm notes the plant shutdown removes 40% of ReneSola's polysilicon capacity, and undermines arguments the company will benefit from rising polysilicon prices in 2014/2015. It's also worried about ReneSola's "relatively low margins" and limited downstream (solar plant) exposure.
- One positive piece of industry news: A Japanese trade group estimates Japan's solar cell/module shipments rose 25% Q/Q and 231% Y/Y in Q3 to 2.075GW. Imports accounted for 58% of shipments, and rose 30% Q/Q and 540% Y/Y.
- Rising shipments to Japan have already lifted the sales and margins of many Chinese module suppliers. First Solar (FSLR -1.9%) announced its entry into the market last month.
- Notable solar decliners: YGE -6.7%. TSL -3.5%. CSIQ -2.7%. JKS -2.6%. LDK -2.1%. JKS -2.6%. JASO -2.2%.
- Solar ETFs: KWT, TAN
Nov. 4, 2013, 12:56 PM
- Positive Q3 guidance revisions from Canadian Solar (previous) and Daqo (DQ +11.2%) are fueling another massive rally in solar stocks, some of which jumped last Friday thanks to blowout Q3 numbers from First Solar (FSLR +4.6%).
- Canadian hiked the midpoint of its Q3 module shipment guidance range by more than 10%, and the midpoint of its gross margin guidance range by 800 bps. Daqo has upped its polysilicon shipment range to 1,200-1,275 MT from a prior 1,000 MT, albeit while slightly lowering its wafer shipment guidance to 6.5-6.6 MT from prior 6.8 MT (shipping delays are blamed).
- The guidance hikes follow a string of positive Q2 reports from Chinese solar firms in August, as companies saw both their sales and margins benefit from growing local demand, diminishing overcapacity, and strong shipments to the high-margin Japanese market. Credit Suisse recently predicted improving demand could lead excess Chinese supply to evaporate by late 2014 or 2015.
- Also: Suntech (STP +13.6%) has officially reached a deal to sell its large and bankrupt Wuxi, China unit to solar cell maker Shunfeng (previous), SunPower (SPWR +10.9%) has announced it's buying module cleaning robot developer Greenbiotics, and SolarCity (SCTY +16.4%) has announced (as part of its seemingly non-stop financing binge) it's selling $54.4M in solar asset-backed notes maturing in Dec. 2026.
- Today's winners, aside from the aforementioned companies: JKS +9.8%. JASO +9.2%. RSOL +8.3%. LDK +6.5%. HSOL +5.2%. YGE +7.4%. CSUN +6%. SOL +6.9%. SUNE +3.5%. TSL +9.7%.
- Solar ETFs: KWT, TAN
Oct. 28, 2013, 5:58 PM
- Today's solar selloff is overdone, and investors should buy the dip, Deutsche Bank's Vishal Shah says, as Q3 earnings could provide a catalyst.
- Expectations have been reset, and most solar stocks are well below their 52-week highs, the analyst says, expecting a rally through year-end based on prospects of further improvement in pricing/margins and upward estimate revisions.
- The firm's top picks in the sector are Trina Solar (TSL) and Yingli Green Energy (YGE).
- ETFs: KWT, TAN.
Oct. 18, 2013, 2:28 PM
- Rumors Carl Icahn is set to disclose a stake in First Solar (FSLR +7.9%) have helped shares fly higher. Similar rumors popped up back in April.
- Several solar peers are also doing very well on what's proving a good day for momentum stocks. SPWR +4.9%. SUNE +5%. SCTY +7.5%. DQ +14.3%. CSIQ +4.8%.
- JinkoSolar (JKS +2.7%) is up more moderately after announcing a deal to develop a 120MW Chinese solar plant that will be built over the next three years. Shares jumped yesterday in response to a Credit Suisse upgrade.
- The Guggenheim Solar ETF (TAN +1.9%) is now up 152% YTD.
Sep. 25, 2013, 2:45 PM
- U.S. solar trade group SEIA has issued a proposal that aims to remove the anti-dumping tariffs imposed last year by the ITC on Chinese solar module imports, and also put an end to China's threats to issue retaliatory tariffs on U.S. polysilicon imports.
- The SEIA proposes Chinese manufacturers establish a fund to compensate U.S. rivals for losses caused by Chinese state subsidies, and that mechanisms be created to protect U.S. firms from having to deal with a flood of Chinese imports.
- Both Chinese and U.S. solar names seem to be responding well. JASO +8.6%. SOL +8.4%. TSL +8.2%. SUNE +6.3% (previous). JKS +5.9%. SPWR +5.5%. FSLR +4.2%. YGE +5.8%. JKS +5.9%. CSIQ +3.3%.
- China and the EU reached a solar anti-dumping settlement in August.
- Solar ETFs: KWT, TAN.
Sep. 16, 2013, 3:26 PM
- China says it will impose a 6.5% tariff on materials from most U.S. polysilicon suppliers (TAN +1.4%; (KWT +1.5%) beginning Friday, but that's far short of threats it could slap anti-dumping duties of as much as 57%.
- The decision follows a U.S. move last year to impose tariffs on Chinese-made solar cells and after China and the EU settled a dispute in July over the alleged dumping of Chinese-made solar panels in Europe.
- High tariffs on solar-grade polysilicon would have risked hurting Chinese solar manufacturers, which depend on imports of raw materials, by raising their costs.
- Three U.S. suppliers are exempt: U.S.-based MEMC Pasadena (SUNE -2.2%) and two U.S. subsidiaries of Norway's Renewable Energy.
- CSUN +1.4%, CSIQ +1.3%, YGE +0.8%, TSL +0.3%, STP -3%, FSLR +1.4%, SPWR +3.4%, JKS -1.6%, JASO -0.2%, SOL +1.2%.
Sep. 12, 2013, 5:58 PM
- California's legislature takes a major step toward lowering the state's high electricity prices, passing a bill that repeals a law requiring state utilities to sell power at rates that rise sharply the more electricity a customer uses.
- The new bill, which needs Gov. Jerry Brown's signature, also allows regulators to cut some subsidies for solar power (TAN, KWT) while also removing caps on the total amount of power that can come from rooftop panels.
- Pacific Gas & Electric (PCG) supported the bill as "necessary to reduce very high, punitive rates that some of our customers are now paying."
Sep. 12, 2013, 8:16 AM
- Solar panel installations in the U.S. jumped 15% to 832 MW during Q2 as booming business for utility-scale systems helped offset weaker demand for residential and commercial projects, according to a report from GTM Research and the Solar Energy Industries Association.
- The utility-scale solar market soared 42% Q/Q, but the report says utilities in California and other key states have slowed their procurement of power from new solar projects.
- The average installed price of solar systems fell to $3.05/watt from $3.36 in Q1 and $3.43 a year ago, but prices vary greatly state to state and project to project.
- ETFs: TAN +6.6% premarket; KWT.
- Related tickers: JASO, FSLR, JKS, TSL, SOL, STP, LDK, SPWR, CSIQ, YGE, CSUN, SCTY, RSOL, SUNE, HSOL.
Sep. 5, 2013, 1:22 PM
- A day after JPMorgan provided a big lift to Chinese solar stocks, Deutsche is giving a boost to both Chinese and U.S. names.
- Analyst Vishal Shah predicts U.S. solar installation growth will total 6GW-8GW in the 2013-2014 timeframe, and that the market could see "an inflection point" in 2015 ahead of a 2016 tax credit expiration.
- He expects the adoption of new incorporation and leasing structures - a SolarCity (SCTY +4.4%) specialty - to boost growth by lowering financing costs, and views the potential arrival of residential leasing options as another major growth catalyst. In spite of ITC anti-dumping tariffs, Chinese firms are expected to gain share.
- In addition to SolarCity, winners include First Solar (FSLR +4.9%), Canadian Solar (CSIQ +5.1%), Daqo (DQ +11.9%), Suntech (STP +14%), Trina (TSL +4%), Yingli (YGE +5.6%), SunEdison (SUNE +2.4%), and ReneSola (SOL +2.5%). ETFs are also up: TAN +3%. KWT +2.6%.
VanEck Vectors Solar Energy ETF (KWT) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS Global Solar Energy Index (MVKWTTR), which is intended to track the overall performance of companies involved in photovoltaic and solar power, or the provision of solar power equipment/technologies and material or services to solar power equipment/technologies producers.
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