dicki31785

As Solar Sector Flies, Pay Attention to Values

I wouldn't discount the risk and the capital, needed, involved becoming a vertical player....surely it is a nice idea and everybody in the space seems to be heading that way....Since you can save a "couple" basis points of margin at every step of the supply chain....but you gotta be good at what you are doing....You can't jsut become a vertically integrated player and thats the end of the story....it involves a bit more than that....

my favorites from China are STP, SOLF, TSL ( I am long TSL)...SOLF i liked because it showed the most resiliency in the downturn (rev % change Q3 08 to Q1 09)STP because of Pluto...once the get their costs under better control they should take off(not spending 80 million on office HQ and high executive compensation would be a good idea etc., etc.)...and Trina my absolute favorite...I just like everything about them....we will see if I am right in a couple hours...the run up leaves lots of room for disappointment...but I am fairly optimistic that they managed to steer through Q1 quiet well...guesstimate of $140-160 mil in rev and a small loss....

With Kind Regards From Germany

CW

In the Battle of Best Solar Plays, U.S. Is a Distant Second

I Think your post is sort of misleading....Germany'... plan was to take nuclear power of the grid at a certain point of time....whether the plant could run longer or not....Thus abolishing nuclear power...This is indeed still the plan though....The only difference now is that they said "energy prices are quiet high so why not keep them until their lifetime is used up"...Furthermore the excess profits that the companies would get from keeping them on longer(since their is not really that big of costs to still incur....its just pure cash for the companies such as Eon, RWE, Vattenfall etc.)...would not all go directly into the pockets of the companies...actually Germany is planning on using that money(by some sort of extra tax or something of that sort) to pay off (part of)the bill for their renewable energy subsidy....So the move Germany is making is actually quiet friendly to the renewable energies around the world....

To SPWR...If you look at present numbers obviously 28 million net income is not enough for that valuation....but as we all now the stock markets incorporates in its valuation the future....And SPWR is actually quiet well managed and if it goes back down to $60 a strong buy....SPWR strategy relies on buying sales offices in expanding solar markets(Italy, Australia....etc.etc.) and thus gaining solid traction in these markets...The Spanish subsidy cuts I already have discussed and surely won't be as severe as expected, though it is about time Spains gov't clears up the situation so companies can plan better...and a lot of uncertainty which is surrounding solar stocks presently would be gone...Well my point was SPWR won't go down to the 20's....as they always say buy when the mood is the worst...and for solar stocks the outlook is pretty gloomy, predominantly, right now so it could be a buying opportunity...With kind regards from Germany CW

Long ABX, AUY, CSIQ, ESLR, SSL,TSL

In the Battle of Best Solar Plays, U.S. Is a Distant Second

@Rob Doc In Germany we got decreases of 8% per year(without a cap)....Why should the government(tax payer) pay for the margin of these companies....In Spain a harsher reduction will come....Not as bad as feared but still significant I see a cap of 750 MW and a cut of subsidies around 20%....(compared to analysts saying a cap of 300 MW and subsidy cuts of up to 30%)Which is still isn't enough to curb demand that much(1.1 GW vs 750 MW)...Although i could also imagine the scenario of 30% subsidy cuts without a cap....which is much better scenario for solar makers since demand won't be effected as much as one would expect thanks to Spain's placement on the "solar map"

Since other countries are putting bigger subsides online such as Korea, Italy, Switzerland etc. etc.......It is only natural the countries with already a lot of PV cut their subsidies a bit while prices are coming down....and countries still lagging behind are bringing programs online....So the subsidies in Europe are much more stable and EXPANDING even with the Spain factor(Not even to mention worldwide subsidies which are increasing as well)....And if an American program ever does come around, in a large scale, it will help that much more....Including other countries such as China, Great Britian, Greek (once they focus on solar expect this to be a HUGE market), India, France, etc. etc. etc.

In any case my point is that Germany and Spain lowering their Subsidies is normal, if Spain does not overdue it, since the costs are coming down and thus not that high amount of subsidies is needed to keep demand for Solar high!In Germany we for example we expect a significant increase in solar installations, despite the 8% decrease in subsides. With kind regards from Germany CW

Long ABX, AUY, CSIQ, ESLR, SSL, TSL

In the Battle of Best Solar Plays, U.S. Is a Distant Second

*that is why my main holdings are in CSIQ + TSL

In the Battle of Best Solar Plays, U.S. Is a Distant Second

The American solar shares trade also at a huge premium compared to the Chinese counterparts....FSLR especially...SPWR is not cheap by any means either....ESLR has, roughly, twice the market cap of CSIQ with sales of what $16 million....Showing that these firms are just not as cheap as the Chinese, or even German or Spanish firms....

Concerning the three stocks FSLR will be eaten alive, I mean just destroyed...I would be quiet surprised if they manage to ever see their ATH again....(but they got major support from the institutional investors) I do not believe in thin film(poor efficiency but cheaper thats not enough)....also the Telleraium issue....Their advantage will be eaten up in no-time if a lot of Poly becomes available...

SPWR I like due to its management....ESLR I just bought after Q2 results....The Quad technology is quiet nice and the stock will explode when the first solid earnings come in sight.(Probably Q4 2008-Q1 2009)...But in summary they are just quiet expensive with no advantage that justifies their premium to Chinese counterparts(yet)........ why my main solar holdings are in CSIQ and TSL...

They took care of their financing problems....and it looks like they might have found a bottom....With Kind regards from Germany
CW

Long ABX, AUY, CSIQ, ESLR, SSL, TSL

Canadian Solar: The Next Solar Takeover Target?

Agree with you "user" to a certain extent...I am long as well....Since 16 on and off....and if we get offered a 100$/share and up....i would take it but otherwise no thank you!!!After Q2 results we are going to go through the ATH easily and stand around 60$/share and then we would at least a premium of 50-100% with those growth rates....so between $90-120 would be the price for a takeover which is still ridiculously cheap actually in the long term as you pointed out...but who knows their is still some unknowns and if would get a 200% premium it would be tough to say no....

@Kelvin Schulle nice article....but sell those FSLR longs if you like your money...;):)Alternativ... are TSL (based on value) and LDK(if poly stays constrained that should be quiet the nice investment...though I have some info to the contrary concerning Poly)...but FSLR...at that valuation...and not even that great of a technology since you need twice the panels to reach the same efficiency as SPWR but the panels cost half....so i can't really see the adv. of holding FSLR...and the problems your fellow writer mark anthony mentioned are also worth taking a look at....
kind regards from Germany

CW

The 'Problem' With Solar Companies is Not Really a Problem

Atticvs research - We have the $1.05 Non Silicon costs + 1.40 silicon costs (2.45) at the end of 2008...I expect that to drop to .85 N.S.C(You can actually move this number down quiet a lot depending on the learning curve)+ .70 silicon costs in 2010...That would put us at 1.55 production costs...The silicon costs are due to come down very sharply for two main reasons,1. The market will be swamped by silicon...I know a guy from Wacker Chemie...(German poly producer) and they expect the market to be swamped and thus opted for a big junk of forward contracts in the future...Also I expect the Grams/Watt used in Wafers to come down to about 4-5 g at least....Then you also have to model what energy prices will be like...That depends on what you believe...In any case this is an aggressive model and picture that I am painting...obviously you can tweak the numbers any way you want to...But I Believe ASP costs will be around 1.50 around that time...Which will put it an Grid Parity in all sunny regions at the very least....

And do not get me started on thin film....their are costs involved their that one does not realize I think the efficiency of the cells is much more important than the cost actually...Obviously not in the long term but the thin film advantage that FSLR has for example will be eaten up real quick because the biggest solar opportunity is on factories...or office buildings....for now....and their efficiency counts and not the cost I mean it is great that FSLR panels are so cheap but you need an abundance of land....then you need to get hooked up to network etc.,etc. So in the places space is a concern and that is just about everywhere especially in Europe it is important to go for efficiency...Where the density is unbelievably high...Otherwise you can use cheaper models....But FSLR is doomed anyhow...but that is for another day....I keep on hearing thus numbers thrown around that you mentioned how is supposed to reach them?Nanosolar...?!?Th... Chinese players are set up well for the future....At least when considering CSIQ,LDK,SOL,STP,TSL..... the only question is how will demand look like in 2009...That is the only year these stocks could get hurt bad....But IMO Spain will not introduce a cap at all...Why would they...They are reaching grid parity next year....They will reduce feed in tariffs about 20 percent and why shouldn't they....the demand will still be their...even with less subsidies...and don't forget that many American/Chinese players will have a huge exchange rate advantage...(With the American adv. bound to stay for awhile with that interest policy and Chinas exchange rate policy is well known...but I guess they will edge up on the Euro in medium to long-term)This will make it easier for these companies to compete...But basically what we need is an incentive package for the US and Spain will work out by itself people(banks) just want solars at cheaper prices....With kind regards from Germany and happy 4th of July...CW

The 'Problem' With Solar Companies is Not Really a Problem

Who cares about the analysts I live in Europe and I know what is going to happen next probably a cap of 1GW people throwing around numbers such as 300 MW for Spain it is utterly crazy why would spain do that?Their place on the solar map is excellent in actuality in Spain we will reach Grip parity next year...yes next year if we haven't already reached it....so incentives will come down surely but the demand for a cost cutting technology will not drop as much as the analysts say.....even if incentives are dropped 35%...the effects are much smaller especially for American solar makers or Chinese...due to a favorable exchange rate which will only get better due to FED policy....

Concerning cash flow...can't wait until the first solar companies present in that case SPWR..which has an a huge exchange rate advantage they will blow numbers away and raise guidance...again...To GS these people are criminals but banks need money too...I think in their case they should worry about themselves not being able to pay their debt(maybe not in GS's case)....In any case I am so long TSL look for 75 cents next Q....and an expanding margin in the second half of 2008 and they have 60% of their production pre-sold for 2009...(excluding the new contract with the Italian firm)...So that is a pretty stable outlook with a constant flow of cash income either GS didn't research well or want to kill the stock, my guess tends towards the latter...and by 2010 Grid parity will be reached by Trina...(obviously not in all geographic locations but in most)....and at that PE it is just sooooo cheap...well make a picture for yourself...in any case solar is the answer to a lot of problems now the US has to support it to increase the market(demand) for the solar makers...this is the greatest and cheapest opportunity to get into solar you will see for quiet a while...kind regards from Germany CW

Canadian Solar Shines With Strong Guidance and Results

Hi Jack how do you come up with trading @20 times earnings?...this was my simple calculation which I already posted in missed opportunities in Canadian Solar...

"To CSIQ after reading some comments(for ex. zachs.com comments) I just want to clear some things up....they (CSIQ) raised revenue guidance from $650-750 mil. to 750-870...In Q1 they had revenues of $171.2 mil...and earned just about 19 million....which leaves at an operating margin of just 11%...Lets us just assume that margin stays equal(which it will not the margin of CSIQ will expand but lets just talk worst case scenario)...and we take 810 mil of revenues(also conservative IMO but that is in the eye of the beholder) then we would get an income of about (.111x810)$90 million mil....so the stocks is actually trading at around 14 times earnings at the moment....and not trading at forward earnings of x24...which would imply earnings of $54 million so I cannot really understand those calculations..."

Is their some error in my math?or do you use different numbers?kind regards from Germany CW

Long ABX, CSIQ, NFLX, STP, TSL

A Missed Opportunity in Canadian Solar

I do have to, sort of, agree with "absurd"....I have my concerns that Trina Solar is going to make a big move before they report their next earnings...but on the other hand as I have been playing the sector for a few years and realized the perfect timing to buy these volatile stocks is nearly impossible...so who knows maybe 39 is a great price to buy or maybe it is 35...in any case Ill be continuing to pick up TSL because I cannot predict when the move will come, but what I have learned in Solar stocks if you believe in your stock you shouldn't care so much about big moves (up o. down) just try to stay as rational as possible....and TSL is certainly not expensive @39$, but rather than that, it is quiet cheap....

To CSIQ after reading some comments(for ex. zachs.com comments) I just want to clear some things up....they (CSIQ) raised revenue guidance from $650-750 mil. to 750-870...In Q1 they had revenues of $171.2 mil...and earned just about 19 million....which leaves at an operating margin of just 11%...Lets us just assume that margin stays equal(which it will not the margin of CSIQ will expand but lets just talk worst case scenario)...and we take 810 mil of revenues(also conservative IMO but that is in the eye of the beholder) then we would get an income of about (.111x810)$90 million mil....so the stocks is actually trading at around 14 times earnings at the moment....and not trading at forward earnings of x24...which would imply earnings of $54 million so I cannot really understand those calculations...

Also as Jack mentioned above, the market is really not looking too "hot" right now....So surely there is the possibility solars will correct even further...Anything can happen, especially with solars, but I am a firm believer in the sector and really like TSL, STP, CSIQ, SPWR(but a little cheaper would be nice in the case of SPWR especially).....With kind regards from Germany CW

Long ABX, CSIQ, NFLX, STP, TSL

PS What do you guys think about investing a little bit more downstream in the solar sector....For example AKNS?I mean at 170 million it has quiet the low market cap(just concerning the market cap since they don't earn money...)but their is some obvious issues....but has anybody have extensive knowledge about AKNS and its future....would be much appreciated....

Which Solar Stocks Will Continue To Shine?

Just look at the guidance Buystocks and then do the math...with kind regards CW

Which Solar Stocks Will Continue To Shine?

Dear Jack,

Exactly what you said is correct while listening to the TSL conference call this afternoon...the first thing that stuck out was that 4 million dollar charge they took....really made the earnings look "disappointing" while they were really not disappointing at all....Another point that you did not mention and I would like to add is Trina's position in Italy...They positioned themselves excellent in order to take advantage of that emerging solar market...IMO it will be the next Spain....and currently Trina holds a market share of 25% in that market and if you looked at where their products go in the near future they will even expand that markertshare...

Also you did not really get into reduction of unit costs which look quiet promising...with poly costs dropping at least 12-15% in the next year(more realistic is 20%...TSL is conservative in the estimate which surely is not a bad thing) and also non poly costs reduction from $1.17 to 1.05 by the end of the year...So I think their is actually a possibility of a margin expansion....rather than a margin squeeze which other companies possible face with reductions in feed-in tariffs in ESP and GER...All in all the numbers were quiet good and as you said it is so cheap...and after a couple people do their math and raise guidance the stock will go up....I added to my position as well today and will continue doing so in small steps since they are, as you also said, so volatile but i do not expect a big pullback....

also i know it is kind of outta the way....but it looks like the ECB is quiet serious about raising those interest rates(The German Central bank is putting quiet a lot of pressure on them) and if it does not happen this month it will happen next month...putting further pressure on the dollar and this will obviously raise commodity prices...I doubt that is smart for Europe but that was not the point I was trying to make:)...Kind regards from Germany CW

Which Are the Bargains In Solar Stocks?

I Guess the rumors were right STP announced the deal today...not looking bad pre-market we'll see what happens throughout the day...kind regards CW

Which Are the Bargains In Solar Stocks?

Hi Jack,

As always I agree with you on most things...But that STP doesn't deserve a higher valuation than the likes of CSIQ or TSL is in my opinion not true...the company is the greatest producer of solar panels(overtook Q-cells and I think Sharp)....and I think that size is ,and will be, quiet important in the coming years when it comes to lowering ASP's...(bargaining power, faster learning etc.)...does it justify twice the PE of CSIQ or TSL no probably not but what does it mean?Does it mean that STP is overpriced or that the other two are underpriced?My guess is the latter, these companies are trading at levels that Blue chips usually trade at(but with earnings/revenue growth very much unlike Blue chips)...I think STP will break out in the near-term....at the latest when they will announce a hugh poly deal that is rumored to happen soon....$1 Bil. in short term cash flow certainly speak for that scenario....

Also i started building a CSIQ position, again, but quiet slow....jumped in @$38 and now waiting either for lower prices (gap close)...or just earn some money either way I am quiet comfortable with the investment at that price in the short term(less than 1 year)....with kind regards from across the pond CW

Long ABX, CSIQ, STP, TSL

PS this week in Germany they are meeting to discuss the future of incentives...(EEG)We'l... see what happens there...if anything unexpected happens I would get myself ready for the solar stocks getting pummeled...but nothing extraordinary is expected but who knows....

Canadian Solar Should Continue to Head Higher

@Van Gastel...Didn't mean to insult, while assuming you are Dutch;):)

@Piggy bank Vestas, Nordex, Repower are quiet the buys...but what I heard is from a friend at the EU commission for Energies...Enercon and Choren when they have their IPO just buy, buy and buy....Will see if they(the IPO'S) take place anytime soon.

Also Piggy Bank don't burn your fingers with German solars....they are expensive and didn't make use of their early entrant advantage at all(total mismanagement in my opinion)...i would be very beware of whats next for most of German solar companies...With kind regards from Germany