For modules it costs appx 4-5 cents per watt to ship to the US and Europe, other local regions is ground transport. Wafers take up way way less space for international shipping. Most wafer sales are regionall though with negligable shipping costs per watt. Do the math, look at the Sale costs as they increase appx 5 cents per watt of module shipment increases betweem Q1 and Q3.
Well based on company 2014 estimates, you would think the C7 are planning on shipping 30GW with 30% in China. Reality is they will ship around 18-19GW of modules with appx 6GW in China or a 25% shipment rate. That 6GW based on forcast is a 50% share which is similar to current share. YGE never stated they were shipping 3GW of projects in 2014, they were talking pipeline in progress, same for Trina and Jaso and the rest.
The analysts missed a good portion of the runup, they see what the future potential is now and are looking to bring it down for entry.(imho)
The only real risk is a 1GW variance to the US listed demand estimates that also includes LDK and STP at near 700MW combined and a Jaso that will take around 800MW in China in 2014. The top 3 JKS Trina and YGE are all estimated to be over 1GW in shipments in China for 2014. Thus their downside risk is 20% or 200MW each. That is 50MW a quarter or 1/10th to 1/15th of their shipments targets.
///SOL is on its way to completely DESTROY every other panel manufacturer with 20% margins in 2014 ///
yeah 20% not in 2014. They will be lucky to make 14% based on the ASP prices stated in the Q3 con call for 2014 and their current costs that have little room for improvements. All that data is in the con call
Their only hope is to get 500MW of inverters sold at $0.15. Oh wait that is only $75M in revenues.
Maybe they can sell the LED lights to replace all those popup light bulbs in the looney tunes cartoons or better yet they can OEM them LED to light Bright the game the lights.
Interesting as $0.70 ASP at $0.60 cost is 14% GM.
Operational expenses at near $50M currently is $200M
Interest currently is appx $48M.
Increased Opex for shipping 1.2GW in added sales roughly $72M
Total Opex and interest $320M
3GW at $0.70 is $2.1B
$2.1B*.14= $294M GP
294M-320=(26M) as a loss.
Read an article on guanfu bjx in which the CFO Wang is considering withdrawing from solar PV farms in China. Something about needing the cash for other activities on the component side. Forget the fact they have no competative capacity to adress the chinese market.
Seach on Yahui.
Polaris Solar PV Network News : ReneSola CFO Wang Cheng said Friday, as the overstretched and money consuming huge Yuhui is considering phasing out farm business, focus on doing business components.
Wang Cheng afternoon on investor interactive platform, said Yu Hui in the domestic photovoltaic power plant to achieve total 100MW (including Golden Sun project), foreign 25MW, but there is no more power plant investment plan, and its long-term strategic direction of the power plant is not.
In any point, it appears that SOL has hit bottom on cost savings and is reliant on ASP movement for the majority of their margins gains and future profits. That is not a good sign.
For startersthe good news for Rene Sola reported margins of 8.2% for Q3 and guided 9-11% for Q4. They also reported a very large and unexpected writedown on their poly plant basically shuttering 4,000MT that they view as not being competitive to current markets.
So where does the guidance improvement for margins come from?
1: $200M write off should result in a $5M perQ cost savings from depreciation. This alone at $450M in revenue should add 1.1% in margin improvement. This is a 1 time improvement and becomes less a % as revenue increases.
2: Ratio blending shifts of more higher 10% margin modules from ~4% wafer margins. This should add about 0.15% to margins. If they shifted entirely to modules, this would add about 0.8% to overall margins.
3: ASP increase. An ASP increase of $0.02 on modules with the new blending ration would drive margins to around 10.6% or an increase of 2.4% over Q3.
4: Cost reductions. There is likely little cost reduction as they outsource most cells and now module manufacturing oversees as well.
So to analyze this a 9-11% margin guidance would imply that at the low end of guidance with the writedown adjustments, they should have 9.4% GM with no ASP rise or fall or no cost savings. Just the blend ratio changes plus the saving of $5M in depreciation they no longer take.
If the ASP was to rise by $0.02 for the modules, and all other costs remain the same, margins should rise to 10.6% and 1.1% for the adjusted lower depreciation of $5M would put margins at 11.7%. Even a single penny rise would place margins at 9.4% + the 1.1% for a 10.5% margin.
From this analysis, SOL should very likely be over 10% and pushing 11% with the potential to surprise and reach near 12% in margins if the ASP rises as guided and costs maintain the same.
Guidance however does not suggest beating 11% and thus one might presume that costs will increase a bit from tolling services or the ASP will not rise the $0.02 suggest
All the good news is out. All the bear news is being searched for. SOL was the last to report and you new by the delay it was going to be bad. Look for harping on China as a big risk for lack of payments and lack of growth for the only bear argument. You might get some traction on lower ASP as several reported ASP down by a penny or 2 while some had an increase.
Since the ER is over, there were only 3 solars that had positive news with respect to being in the black. JKS CSIQ and TSL. Yingli while good news on volume growth is still quarters away from profitability and need by my estimates shipments in the 1.1GW range for that to happen.
The problem as I view YGE is their debt loads and higher Capex. These costs lead to a generally higher fully loaded cost for production and higher needs for gross margins to achieve profitability. YGE has spent on average $0.88 per watt of vertical production while peers spent around $0.50-$0.60 on average. That makes their loaded costs with depreciation at $0.02-$0.03 per watt more. That impacts margins by 3-4% compared to peers like Trina JKS and CSIQ. While that is loaded cost, they do recover that money in cash flow. Those are nameplate numbers as well meaning that the impact is 20% lower but so are their peers. The second part is debt load, YGE has appx $0.07 per watt in interest shipped based on nameplate. That is $0.04-$0.05 more than the industry leaders like TSL at $0.025 per watt nameplate and JKS is even lower. In the end that is a negative cash flow of $0.02 per watt for Yingli vs peers and is an impact of $0.06-$0.08 per watt on profitability. When profits are measured in ranges of $0.06-$0.12 per watt in the present and the future, that is a very large impact on EPS and requires a very large volume where #$%$ the peers like JKS CSIQ and Trina would be rolling in major profits by comparison.
$10 cash cost is possible. Stay on path the point being made is that legacy Siemens was not efficient when built at $80/MT. That loaded cost was around $22/KG and a cash cost at around $16 with around $6/kg in depreciation.
LDK still caries the plant at a construction cost of nearly $150/MT when accounting for the capitalized debts and fast track on a 16,000MT capacity. They were looking at $13-$15 in depreciation and a cost of around $32/kg. That places cash cost at around $17/KG.
But unlike SOL, LDK has not devalued the plant that has been idle for around the past 2 years due to not being competitive. Instead they claim they are going to upgrade it and get the beneifts of a 25KMT efficient capacity. Odds are that fails because the $300M to upgrade the plant places the total cost around $2.7B or over $100/KG capitalized. That is around $8/KG in depreciation.
I am stating that the plant for LDK needs to be devalued nearly $1.5Billion. And when that happens, it still will not be cost competitive and LDK will still have the massive debt from building it.
Let us not forget, LDK basically wrote off a Billion in inventory and not capital equiptment. They are avoiding writing off the capital equipment even though the intrinsic value is GONE.
yeah 11% on $450M in revenue, with Opex and interest over $50M not to good. You can expect Q1 to be down in shipments from Q4 putting added pressure on the solars near term
SOL just wrote off a plant that produces at $20-$22/kg as non efficient. This was 4000MT of capacity valued at $200M.
LDK has 16,000MT with a production cost of $30/kg that they paid estimated $2.4B including capitalized costs. If they can retrofit(now 2 years + in process) for the couple hundered million in costs identified they will get only to $20-$22/kg. That is the same value of what was just written off by SOL.
Oh and the $200M places a real value of $800M for the LDK 16KMT plant not the $2.2-$2.4B that is on their books
LOL real value is not negative $950M but rather should be negative $3Billion in shareholder equity.
A wafer company with no cost effective Poly
A module company with no Cell capacity
This company now looks to be flat lined in the 11-13% GM range for 2014.
That lower end is a loss for the year
That higher end is pennies in earnings for the year.
Li has lost credibility with his recent ER's, the first major hit was cost suggestions for modules being equal to what they produce for. Try around 13% more expensive. Then stating the flooding was the reason he Poly plants were slower to come on line. Now the truth is out.
They spend $10M per Q on RnD and have no competitive advantage over peers and no technological superiority... That is some $160M over the past 4 years they spent on things like wafer technology, furnace technology, wire saw technology, inverter technology, Poly technology, Crucible Technology, and Light bulbs.
This company is now officially the doormat right behind LDK and STP.....
My how quick fortunes turned....
take the $35 million 1 time gain off m cancelled wafer contract and they missed by ~$0.25
One must wonder why SOL stated they were migrating the plants but wound up not migrating the first phase to cost competitiveness technology. I questioned the blaming of the flood on low delayed production volumes.That suggested there might be other issues. Now we know.
In theory, LDK is migrating 15,000 MT that was valued at over $2B on their books. Their target cost is $20 all in when done. That will also not be cost competitive. A dead company that will be even further dead when that is recognized. LDK has needed to write off the Poly plant since day 1 when they were building it. Some analysts recognized this.
yep late er is never a good sign. The company is shifting to be a module company but has no cell capacity. They are a wafer company with only 6000MT of Poly, Very bad. There are clearly far better companies.
They have halted expensive solar until 2017 and instead is going with cheaper coal, nat gas and geothermal. Is this the first salvo by 3rd world companies that do not have lots of money trying to keep costs down? Read it on "renewable energy world" website
///Obviously, if the Chinese are willing, they can keep shoveling loans into this almost indefinitely. In my view, though, this is less about keeping LDK afloat than it is about preventing LDK's creditors from being bankrupted.
Much like feeding a dying mule so that the parasites living on its carcass don't starve.///
excellent way to describe why LDK is still around.
If you factor in cost difference between modules, that could account for a 5%+/- lower return for Jaso vs what JKS is indicating.