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

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

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....

Solar Stocks Show Signs of Life

These guys get paid mostly in shares.....you should also take that into account

Solar Stocks Show Signs of Life

first of all those are trailing PE's supershot and if you look at the growth rates of these firms you will realize that those numbers are absolutly irrelevant....and @Phily Jim....just because in america you rather subsidize oil and gas firms for some reason doesnt mean their is not a market out their(just that market is not in america, so far, rather than that in spain, germany, and soon italy will boom too so take a look at spwr which positioned itself very well in italy as well due to a takeover of an italian firm)....and maybe it is wiser to subsidze alternative energies rather than to start a war for energy resources in other countries....saves a lot of money and more importantly lives...with kind regards from Germany

Disclosure: Long SPWR, CSIQ, and STP