There are both pluses and minuses for YGE - comparing to TSL.
1. TSL has better financials. YGE expanded more than TSL in poly which is quite expensive.
2. YGE has better name recognition than TSL although the difference is small.
3. YGE's poly plant is becoming a liability - a few quarters passed and its cost is still $65? If YGE cannot get it working properly, it may have to shut down the poly plant as you can buy spot poly for less than $65 now. Given the capacity expansion at OCI/Wacker/Hemlock, there is no way YGE can keep the poly plant running for long.
4. Price wise, now appears YGE is down more than TSL, making its share attractive.
I did a full analysis on JKS, YGE and TSL.
All three have basically the same processing cost. This is 0.73 per watt. So what makes the difference? For starters, one should ask what JKS bought to lower their in house GM from 31% to 26%? They sold wafers which lowered their ASP, but me thinks that they sold their wafers below their cost that is the only reason I can think of for their GM to drop. I do not like that math.
So we have YGE and TSL, TSL must have bought wafers at .88 and cells well above 1.10 per watt, to come up with external cost minimum 1.33 per watt/internal 1.16 and the average 1.25. So at the end of the day guess what my friend, YGE actually sold their module at 1.68 at the cost of 1.22. This is better than I thought originally 1.25. YGE is selling their modules below the price of Trina. This also indicates they are clearing regular modules vs. panda. as average is a lot lower than panda would sell for. I expect Q2 generate better sales per watt, due to panda taking a greater % of sales. Now with this drop and trading at $9, YGE offers the best return vs.JKS and TSL, but you do what you like.
Chang vertical integration is requirement for all flavors of the market conditions. You cannot just assume what works today, will work tomorrow. Only truly integrated organization can weather market shifts. There is very little cost benefit by Yingli over Trina, but their tech know-how may play a winning tune above others. Producing poly was always hardest task and it does not become easier when poly drops in value. However when you know what you are doing, it can add 10% to your GM in a hurry. You look at my data and REC and Daqo and literally they are GM kings, but none of them offer value of integrated companies. REC because its labor is most expensive in the world and Daqo simply not having scale in value chain.
I think of 5 companies as solar diehard ideas. YGE, TSL, JKS, LDK and SOL.
YGE and TSL are mirror of each other. I think that YGE has better in China connections and multi GWs of contracts ahead of them. I pick YGE also due to stock being in teens not in twenties or thirties. I am still seeing softness leading to 52 week low in next two weeks.
SOL and LDK. SOL is simpler company to evaluate. LDK is big , wants to be bigger and it is very aggressive also in spending money. Nothing else has to be said.
JKS is attractive but for the same reason why I do not buy TSL, I am not in JKS. I just like low pricing as it allows me to buy larger blocks of stock. I think those 5 companies will separate themselves from the rest in next 6 months.
Downside in YGE like in any solar stock today is associated with Q2 low selling numbers. I think that Taiwanese companies are not selling a lot in May as well, but June expectation may change the sentiment. Another catalyst is LDK reporting. I am almost positive this will drop the market.
I am eager to buy, but need to be patient here to nail the best price. I own YGE at 12 and want my average to be in area of 10. So I will be buying in this vicinity probably below 9 at best.
What do you mean rebalance portfolio? Do you mean lighten up in YGE or buy more? You sound positive but i'm not sure what you mean. How do you feel about Q2 and going forward? Do you think there is more downside risk or do you feel we are near the bottom? thanks.
YGE has delivered solid results based on the pre release. LDK just bombed their ability to refinance itself, opportunity to short the sector. Idiot analysts not able adjust results, opportunity to short. Industry seen as weak due to margin losses. Opportunity to short. ASP reduction is the powerful benefit to greater solar penetration. However ASP drop cannot be matched with equal drop in cost, those with high GM will lose less than those with low one. In fact one with low GM will will stop operating at one point only to empower survivors. This is a great time to re-balance your portfolio. YGE is a dollar away from 52 week low, with 84% increase in revenues and 41% increase in sales. American companies do not care for GM if you bring EPS, why would Chinese be different?