Please correct me if I am wrong. This project began as a $240MM project for 2,500 Metric Ton Capacity (They did have an estimate in hand for $410MM, but they chose to ignore it and publish $240MM as the number).
Then they increased the price and capacity to the $410MM number for 4,000 Metric Ton Capacity.
Now, they are back to 2,500 Metric Ton Capacity for $600MM and an additional $100MM to get to the 4,000 Metric Ton Capacity (watch that $100MM number climb to $150-$200MM).
1) Doesn't the escalating cost scare anyone?
2) Isn't anyone concerned about the debt load they have to carry that is so high it is questionable whether they can even make their debt payments, talk about turn a profit?
3) Do you think this project financially makes sense since it is now 250% more capital cost for the same return on investment?
How do you guys/gals keep these issues from scaring the bejeebus out of you?
Thanks everyone for the comments. I learned a bit from you all, and have also found the different views interesting.
To each his/her own on how to handle the information.
I am long on Hoku, just not very deep because it kind of scares me with the debt and substantial increase in costs.
I have run projects for their competitor in Moses Lake and know what things cost in this market.
I also understand from others I have talked to in this industry that the break-even point for this type of plant seems to be somewhere north of 2,500MT/yr and less than 3,000MT/yr. We'll see how things go I guess.
The link I posted got garbled. Looks like the link wazs too complex for Yahoo to parse and understand it's a link. One more time.
Debt's the way to go for shareholders. If we value HOKU highly we want loans not dilution. HOKU has passed the main barrier that all you shorts complained about for years. I guess you were worng because HOKU is 100% financed. Like a lame politician whine about the next level of HOKU's evolution without admitting you were wrong and now the stock should be higher.
Amazing how so many posts are flowing on this board by shorts that have barely felt the full pain that's coming. HMMM, maybe someone is scared of what's happening the last weeks. Tanking markets and HOKU is up about 40% in a month.
Here's a doozy of a chart below. Noticed anything that might make a HOKU short crazy?
HOKU is going far this year and farther in 2012. And when the plant opens all hell breaks loose taking down the shorts that wanted every penny. Well it's been to $1.35 and if you're still shorting or putting you're a pig and a fool.
HOKU is on a roll for sure. Now HOKU is a STRONG BUY.
i sure hope you don't believe that? it would cost around 400 million to double capacity and two years. is hoku set on going the way of LDK just keep on taking on debt and then sink when times sour?
I found it. Press release Feb 10. 2011
>The Company noted that planning for future growth has also substantially increased the cost to design and build the current 4,000 metric ton plant, further skewing the overall costs upward. Hoku said it had pre-invested in the infrastructure required for a potential future expansion to 8,000 metric tons per year, including underground piping that can support this additional capacity, and steel utility racks which have been built to correspondingly higher weight load tolerances. <
I knew it was some where.
That PR report was pure pump and hype.
About like I'm seriously evaluating the possibility of building a time machine, to go back and cancel my sell order on Apple for $27.00/shape, which would dramatically enhance my monetary assets, so I could be at the Riviera, losing a mil a week for fun, instead of this bantering.
Jumpy, I did find something back in the 2008 annual report, pg 10
We also plan to expand our polysilicon manufacturing facility. We believe we have sufficient space
to expand our polysilicon production to up to 8,000 metric tons per year on our existing 67-acre property; however the expansion size will
primarily be determined based on new polysilicon sales contracts that we may sign.
So I stand corrected, but I still believe the original plant, has an infrastructure only capable of a max of 4000mt
The way I understand it is they started out for the 2.5K goal but all the change of orders upped the price as they prepared the ground for eventual 4K tonnes. I think the site is prepped for 4K but to fill the spots with the extra crucibles will cost more. Poor planning and an unclear crystal ball at the time cost them. Like buying a car then adding on AC, then stereo, then changing the transmission. They should have stuck with original plan from the beginning and this plant would have been completed last year. I'm betting this plant is in major production mode before tianwe opens its super (everything poly) plant in January. But i'm not counting my eggs till then.
>I think the site is prepped for 4K but to fill the spots with the extra crucibles will cost more. Poor planning and an unclear crystal ball at the time cost them. Like buying a car then adding on AC, then stereo, then changing the transmission. They should have stuck with original plan from the beginning and this plant would have been completed last year.<
a good part of those cost over runs were to up grade the infrastructure to handle 8000 MT capacity/ production.
That was one of the smart things they did.
That extra production will make the difference in the long run of being profitable. If they had to go back and totally duplicate all new piping to add another 4000 MT in a totally seperate building it would have been a lot more extra cost to increase production. So this way they saved all that labor and pipe.
I'm betting this plant is in major production mode before tianwe opens its super (everything poly) plant in January.
Hmmn, let's see.
I heard that they are thinking about cutting 500bil from the military budget. That means about another 350,000 unemployed, not counting the defense contractors.
ObamaCare won't have been repealed yet, so no new business hires to spend money and pay Taxes, housing and auto sales still down.
The price of oil should be down quite a bit more, but - to little to late.
which means the economy is still in the sewer and the DOW <8500.
So, okay, I'll take that bet.
I admit, Cosmic, and have said it before, so far... you have been right as others have in knocking HOKU.
I remember someone (he/she is gone now) saying it will be under 2.00 when it was 13.00 Did not believe them, but they were right.
Back in a while, got to go feed the mosquitoes.
PS: For the record, as if anyone cares, I hold HOKU, it's got to work now. So close.
Tthe financing arguments was won by HOKU so the natsayers are starting the next argument. HOKU will now continue to rise good or bad market and when it's $10+ you can argue costs going ahead and it can eaither surge past $10+ or not. I think it will.
In fact, HOKU is looking like a great safe haven - not really serious but HOKU is very strong in this tanking market. This is a chance to get great gains in a bad market.