Yes but credit in China was changed a few years back. They were restricting credit for new capacity since China had over 60GW of capacity and lots of idle capacity. Instead they have started to implement credit for the end projects which passed the buck through all the segments. So if they need to raise a portion of their own cash like in projects 30% and for capacaity expansion and inventories then the way they raise it is through dilution.
Their capacity for modules is target 3GW by the end of the year. Their target cell capcity is 2GW. Their target wafer Capacity is 2.5GW. Page 2 of the presentation for the Q2 Con call.
Their low cost is predicated on all internal manufacturing. They can not get the 3.3GW guided with the new increase in projects from that 2GW cell. Thus 1/3 is outsourced for the most expensive part of the product. Next year presuming a 20% growth they need to be at 4GW or 1GW more in capacity vertical else margins will get supressed from the module business.
As for the project numbers, you suggested they get lots of cash, what are your numbers? Or do you not have any?
To be practical, the presentation for Q2 on the Website states module capacity is at 2800MW not 3GW. The Cell capacity is at 1800MW or down 200MW from Q1. It is the wafer and cell capacity that matters and is what is the cost for expansions. Module capacity add has always been dirt cheep.
As for a Yieldco, options that is a plus for them. But how much cash do they really generate and do they put that back into the power business or do they use it fr core modules.If they sold everything I estimate they get returned roughly $640M on the 800MW. Not bad considering they invested around $0 of their own money after selling near half to a private investor.
Each MW of power produces 28KWhr at $0.18 subsidized or roughly $5 per watt. The long term 20 year cash generation is $4Billion on the 800MW. Investors in yieldcos generating a 7% return command nearly $3.80 in total cash back based on a $1.40 cost to purchase each watt. That leaves around $1.20 in cash returned to Jinko and partner for around $960M. They get half that or $480M. The yieldco will return the initial investment and interest paid to date or roughly $1.40/watt. Of this Jinko should get around 15%(half the 30% down to build) or appx $0.21/watt . The other half goes to the other investor and to the lender. That is around $160M returned to them for their initial investments. Total cash generation from the yielco is then probably around $640M.
I did not include the $250M they got from the partner but they did spend an extra $120-$160M that was part of the near half ownership. So the cash generation from that remained is around $100M on top of the $640M. Total cash returned roughly $740M from their initial investments.
Like I said, they will liekly need $500M cash. Some come from profits, some from sales and likely another secondary
no they are not or the stock would not tank. $25 for a stock about to pull down well over $1 n EPS for the Q is cheap unless there is about to be another major credit freeze and a removal of global fits.
Think about it. They have 2GW capacity and are looking to ship 3.6-4GW of product next year. They need to find 1GW of capacity. For expansion this capacity will cost some $200-$300M depending on level of vertical integration. The cost to fill the capacity and float AR will be another $200-$300M. They should be looking at adding 800MW of owned projects. That is a cash need of $900M. Total cash needs is $1.3B to $1.5B.
For projects they use 30% of their own money or $280M.
For capacity they will need to use 50% of their own or more or $100M+
For Inventory/AR they will need atleast $100M .
Their immediate cash needs will be close to $500M.
Even if the partner kicks down some cash for the projects they still need close to $400M
Can you say another secondary come the end of Q1? another 10-15% dilution that will generate little revenue and profits for the investment in the coming year?
Welcome back to growth and capacity expansion requirements.
Like all the Chinese solars, owning projects is expensive and requires gobs of cash they do not have. To build 100MW they need over $30M of their own money, if they want to develope that GW + back log, they need close to $500M. And that does not cover the capacity needs to expand to for increased shipments to offset continued module ASP declines
LOL when did you ever say revisions up to $100 per share?
I stated TSL was a buy between 10 and 11 and fair priced at $14 for the near term. For JKS I suggested a buy point of $22/24 and fair price around $32-$35. For CSIQ I suggested and entry point int he $25-$28 range and a fair price near term of $40-$45. My earnings estimates are for a ~20% growh by voilume (including projects) next year for those companies. That places earnings at $3.50 for JKS for 2014 and $4-$4.25 for CSIQ and ~$1 for Trina. For next year bump JKS to $4-$5 and CSIQ to around $4.50 to $5.50 and Trina at around $1.40-$1.65. Place a 10-12 PE to get where I think they are fair valued. That is based on current share count.
I expect that each company will go back to the well for another 10-15% dilution to fund their continued project and capacity growth. So earnings may pull down 10-15% based on dilutive impacts wiht limited upside to earnings.
The big boy solars are all raising $500M primarily from stock and equity investments. How is YGE to fund their projects they are going to own? Do they do this by Doubling their share count?
When all the manufacturing is done in the Asia Pac region and dominated by China that will supply their own equipment, they have a 1 to 2 year small sales cycle before competition sets in. That is no business model when technology shifts so fast
Just the opposite, I believe they will do what they said if demand is there. The cell capacity from stated is 1.4GW more than cell capacity. Where does all those extra cells come from? That is a big jump over current Cell to module ratios.
Many have said cells were the week link and under capacity. I would say based on their plans, they go to GCL to get most of their cells now. They appear to only be adding mostly modules now with minor cell growth.
Jaso is marginally profitable. They will be crushed by the Cell price collapse that was propped up by high Taiwan demand due to tariffs They do not ship enough modules yet to come close to offsetting the cell price drops.
I am not buying CSIQ or JKS at this point. I believe JKS is fairly priced in the range of $27-$32 and would be a buy in the low to mid $20's. I stated that several months back and nothing has changed. CSIQ had strong profits last Q and should be significantly stronger in Q3 and Q4. The pace of earnings should suggest that mid 30's is reasonably priced. Their pipeline maturity should allow for reasonably stable earnings except for the slight seasonality that slows acceptance and builds.
Yes sentiment trading. Way to much bravado a few weeks back was a sell signal. Another couple days of dire dropping and whinning will be the buy signal. Always start buying 2 or 2 days after the secondary trashes the stock.