because there was a horrendous supply glut in 2012
but instead, there will be a supply shortage in 2017 and 2018, at least high risk
that's why SolarCity builds its own module factory, and Elon Musk is the brightest and most forward-thinking guy
it's a mathematical problem how quick demand grows as price decreases
current players in this space cannot meet demand, that's a given, because they cannot take on the debt that is required to build new production capacity
think about it, Yingli is out of the game (one of the biggest)
small players cannot grow production volumes by +20-40 % every year, they cannot finance such construction: it has to be done with debt and their balance sheet can't support such increases in debt, thus these solar companies have to issue shares and stock prices have to be higher to do that
Even Trina, Jinko and JA have difficulty meeting global demand 2017-2018 and later
Trina and JA are taken private cheaply just a moment before the supply shortage strikes
there will be more demand than the analysts can imagine
Elon Musk believes there will be supply shortages
We see that there's wafer shortage right now and it's getting worse
Jinko Solar benefits from shortage in wafers
cell/module shortages follow
demand outstrips supply, mark these words!
Yingli cannot invest in new production capacity and it's not the only one out there
either current players have to invest and grow volumes or new entrants have to step in and do the investments! there's enough polysilicon, but not enough wafers and soon not enough cells/modules
oops sorry that was S&P-IQ not CS. CS March 1st has a BUY and target of $42
Bottom line – beat and grow: JKS reported a Q4 beat driven by a higher mix of 3rd party module shipments, in line with positive sentiment echoed in preannouncements by peers. The company has strong demand visibility in 2016 with stable gross margins and is expanding wafer/cell/module capacity by 7%/40%/47%. We also expect downstream performance to improve significantly in 2H and inch closer
to a potential spin-off this year. We increase our 2016/17 EPS to $6.48/$6.98 due to higher shipments,
and introduce 2018 EPS of $6.09.
I don't know what the date on your document is. Mine is March 19th where Credit Suisse down graded JKS to hold and a target of $27. I didn't buy then, I bought yesterday. Buy low, sell high.
We forecast that sales will rise 13% in 2016 and see a 2% increase for 2017, following growth of
54% in 2015. We expect shipment growth be-tween 35% to 40% in 2016. We anticipate an annual gross margin between 21% and 24% for 2016 and 2017, compared to the 22% margin posted in 2015. We anticipate modest pricing declines, but see pressures mostly offset by cost per watt improvement ($0.39/watt currently). Despite our favorable view of JKS s margins relative to the overall in-dustry, we see significant capacity expansion in 2016, which we believe could put margins at risk.
This is from Credit Suisse........
Solar Manufacturing Oversupply: Likely
Exacerbating Before Correcting
■ Bottom line – More capacity expansion announced despite growing
oversupply fears: We believe solar manufactures face an exacerbated
oversupplied environment in 2016; we tabulate the industry is planning on
adding ~10 GW cell capacity to an already oversupplied market while we
estimate demand only increases ~6.1 GW (~11.7% y/y). Compounding
potential margin pressures from cell oversupply, the opposite looks to be
occurring in the wafer segment, with wafer capacity growth of only ~4.9 GW
which may continue to pressure margins for those with less in-house wafer
capacity. We lower our estimates for JKS, TSL and JASO will also lowering
our target prices for JKS and TSL.
Stock calls – JASO & TSL most at risk, no one immune… but we still prefer JKS
on a relative basis: We see JASO, TSL as most at risk in this environment. We prefer
low cost manufacturers, like JKS, with a higher degree of vertical integration which
helps keep internal production & external sourcing costs low, and established capacity
outside China resulting in higher margin on shipments to the US, but recognize an
increased risk of oversupply pressuring margins beyond consensus estimates (See
Figures 3, and 4 inside). We lower 2016/17/18 earnings estimates for JKS/TSL/JASO
as we model slightly lower than expected margins and lower JKS target price to $40
(from $42), and TSL’s target price to $14 (from $15). Our JASO TP of $9.69 remains
unchanged as it reflects the take-private offer. SOL estimates remain unchanged as we
believe our estimates already prudently reflect lower module prices.
Survived Q4 earnings and outlook. Barrier of over capacity didn't materialize. Barrier of delayed projects due to the goverment subsidies being extended didn't materialize (delay because of no rush to meet deadline).
JKS panels are best of breed.
Nice bump in a down tape on decent volume. Love to see it reclaim the 200 dma @ $23.67 but I'm as lost as to what gets it there as I am about why it fell so low in the first place.
But isn't SUNE primarily a project developer while JKS is a panel manufacturer? Though it is true the big production facility SUNE was going to build in India isn't going to happen now.
Twoplanker the difference with this pattern is oil being much cheaper. That could change the pattern but we are going into the strong season.
looking for $23 by 4/15 The dollar has been lower in Q1 than Q4. This time of year is typically good for solar.
The demise of Sunedison means there are deals to win.
I think panel manufacturers are looked at like a commodity play. Volumes can be ramped to meet demand fairly easily so there is no pricing power, the panels are all more or less the same, and of course there is the Chinese discount as you noted. What else explains the stock being treated this way with the 2017 forward p/e below 4x?
Your spot on Toast, this sector as a whole has been just that a big hole. Just a trading vehicle at best as the Chinese plays can't get any respect. Maybe later on in the year will see.
Is there a catalyst you see out in the future? Because the market does not appear to be willing to pay more than a ridiculously low multiple despite 16'-17' EPS growth projected at over 10%. Don't get me wrong, I'm long a few calls as of the recent dip. But I'm beginning to wonder is this is a value trap stock that will not get anything close to a reasonable multiple unless something about the story changes.