rd4sndk

Will Some Solar Companies Face a Cash Crunch?

You've done a great hack job on the solar sector, but let's look at what the balance sheet really says. For CSIQ, inventory ramped to $81 mm from $71 mm. That's a 14% increase q-o-q. No company in their right mind will increase inventory when sales are not being made. Secondly, 30 and 90 day terms are typical for all businesses especially for service oriented business which have to rely on MFG credit worthiness to fund inventory builds. Solar companies limit their exposure to even heavier marketing cost by relying on a small number of integrators. They also limit labor cost by relying on integrators as well. However, nonvertical industries do share marketing and installation cost by providing consignment inventory to their custormers. Further, booking this cost is done only when the sales are made not when the consignment is delivered. The 30 to 90 day terms are used to help cash limited integrators.

Your post is nothing more than a cover to short these companies. The important matrix in the solar sector is visibility of sales. Companies like ELSR and CSIQ with 2 years of sales backlog is not a company going out of business any time soon. On the contrary, its apparent that with increasing volume, panel efficiency and growing awareness I for the life of me don't see this trend ending for at least 5 years-- with each year bringing surprised upward revision of capacity and revenue.

Great hack job though!!