Investing
Chart Reading: Chinese Stock Market Breaks Down from Bearish Flag
Chinese leading Shanghai Stock Index (SSEC) broke out to the downside today, confirming the bearish flag formation that has been running from mid-August. SSEC falls over 6% or 192 points in one day (8/31) to 2667, starting a new leg of selling. The target of this round of selling would be 2300.
Below is the chart showing SSEC index as of Friday, 8/28
Important Disclaimer: Product price and availability are accurate as of the date of most recent update. Please send correction requests to info@linked8.com
Earning Recap: Major Solars in Q2 2009
This post recaps key points in major solar companies most recent quarter earning conference call, the objective is to help readers to follow industry landscape change on individual company basis with least amount of effort of reading.
The post is not final in the earning season, as different solar companies report earning in different dates. So keep check back to find out the latest updates.
SPWRA (7/22)
Gross margin shrinking from 24% to 22% mainly driven by module margin going down from 29.5% to 24.6%
Module sales grew dramatically to 188M in Q2 from 108M of Q1, while system sales stay relatively flat vs. Q1.
2009 FY outlook: production 400MW, sales 1.35B – 1.7B (with 1H sales at $600MM)
FSLR (7/30)
Cost per watt produced was reduced from 93c to 87c in Q2 2009.
To protect core market share in Germany, rolled out rebate program for German market only in Q2, it may transform into permanent price reduction if polysilicon price never go back up in the future.
Production: 290MW in Q2
2009 FY outlook: sales $1.9 – 2.0 B
Efficiency: 10.9%
CSIQ (8/6)
FY 2009 shipment outlook raised to 260-270MW, higher than 200-220MW given in Q109.
Regarding 2010 pricing trend, predicts two sets of markets: higher priced value added one vs. lower priced highly competitive distribution retail one, which didn’t answer the big question in investor community now: whether there will be a significant degradation of ASP ($2.37 at Q2). Pricing in China is lower than in Europe and America markets, seen sub-$2 / watt for very large power projects.
e-Module strategy: treat it as an insurance product, which hedges the risk of polysilicon price going back up.
Restrictive cash helps arbitrage interest rate swap transaction.
Gross margin outlook for rest of 09 is around 20%, close to Q2 level, but much higher than Q1 outlook: higher single digit.
Conversion efficiency: 16% for e-Module, 18.5% for pilot monocrystaline, 17.2% for mass production monocrystaline
Wafer to module processing cost for polysilicon lowered from 71c to 60c per watt. Polysilicon wafer price is 80-90c per watt.
Gaining market share due to the relative competitive advantage of Asian suppliers with strong bank support vs. Europe based suppliers.
LDK (8/12)
Wafer ASP was $0.99/watt for the quarter, at $0.9 to $0.95 now, expect to reach $0.8 – $0.9 by end of year.
Sales outlook: expect Q3 wafer shipment to be in 260 – 300 MW range, module shipment in 10-20 MW range, and sales in the range of $240 – 270MM
Cost: processing cost was $0.33 for Q2, at full capacity, should be $0.3 per watt. Polysilicon price at $80 per kg. Inventory cost per watt was 80c after $175M writedown vs. $1.5 after previous writedown.
Expect mid-single digit gross margin, expect to be much better in 2010
Capex: spent $250M in Q2
Didn’t provide a good answer to the question of why not stop selling products when the margin is 0 or negative, indicating some problems with management capability.
TSL (8/17)
Shipment: expect 90-100MW shipment in Q3, 350-400MW shipment full year
Cost: multicrystalline silicon cost reduced from 79c in Q1 to 73c per watt in Q2, blended non-silicon cost down from 94c in Q1 to 84c per watt in Q2. Expect polysilicon based mudule cost level that’s 30c higher than First Solar’s product cost to be the level of equally competitive. In 2010, target thorough cost to be $1 per watt by end of 2010.
Gross margin: mid-20% guidance
European countries as customers by size: Belgium, Italy and Germany
Efficiency: achieved 18.6% for monocrystalline modules
ASP was $2.34 per watt in Q2, expect to drop 10-15% in Q3 and 10-12% in Q4
Capex: spent $9M in Q2
Technology roadmap: expect to take 9mm line into production in 2010
STP
Shipment increased 53% QoQ
European country as customer by size: Germany, Italy, Belgium
Cost: non-silicon conversion cost (excluding shipping and share based compensation) was 64c per watt in Q1 and 61c per watt in Q2. Expect to reach below 61c per watt by YE 2009, and below 50c per watt by YE 2010. Expect wafer price below $1 per watt in Q4.
Outlook: keep capacity stable at 1GW, expect gross margin to be flat from Q2; expect ASP to drop 15% – 20% in Q3 and wafer price to drop in the same range as well.
Further Reading
- Click here to read recap for Q1 2009 major solar earnings conference calls.
- Click here for an in-house free estimate from SunPower to install roof-top system in your house.
Important Disclaimer: Product price and availability are accurate as of the date of most recent update. Please send correction requests to info@linked8.com
Review of Online Stock / Option Brokers
This post reviews major online stock / option brokers for retail investors.
TradeKing is a nationally licensed online broker offering low flat fees ($4.95 per trade plus $.65 per option contract) with no hidden costs or account minimums. Mutual fund trading cost $14.95 per trade, while TDAmeritrade cost $49.99 per trade, and E*Trade cost $19.99 per trade. TradeKing offers great education to investors who heavily trade on options, it offers pre-programmed option strategies in its tading platform to facilitate option trading which is common used in hedging risk. Regarding accessing research information, TradeKing offers access to research from MarketGrader.com, “a quantitative system that analyzes publicly-traded companies based on a strict fundamental analysis”
E*TRADE FINANCIAL offers $12.99 stock trades ($9.99 if your have more than $50,000 in your portfolio or makes 30+ trades per quarter). Available research includes: Credit Suisse, Thomson Reuters, S&P Stock Reports, BNY Jaywalk, Morningstar, Dow Jones and Market Edge, a complete list can be found here.
E*TRADE retirement accounts include: No-Fee Roth IRA, No-Fee Traditional IRA, and Rollover IRA accounts. Opening an account is quick and easy, and takes a matter of minutes.
Important Disclaimer: Product price and availability are accurate as of the date of most recent update. Please send correction requests to info@linked8.com
Economy Watch: Dichotomy of Reflation vs. Deflation
As the debate of inflation or deflation currently taking the center stage of financial professionals attention, here I put together a collection of comments from various authors on this debate:
Jeff Nielson commented on Seeking Alpha on May 25th:
All these talking-heads continue to act like inflation and deflation are purely “either/or” scenarios. Not true.We will see continued deflation in asset classes which are grossly over-supplied (i.e. U.S. dollars, U.S. financial products – including bonds, and U.S. real estate).
On the other side of the fence, there are the asset classes in short supply: commodities – and especially gold and silver.
Precious metals should be the CORE of any/every portfolio, not merely some ancillary hedge for people who really have no clue about what is going on.
Economist Menzie Chinn commented in his article on June 1st:
Of course, the United States in 2009 is different than Japan in 2001. One key difference is that Japan was, and remains, a net creditor. America is a big net debtor to the rest of the world, with extremely large holdings of US Treasurys by foreign private and state actors. And so, for me, I worry more about higher real interest rates (portfolio balance effects) than higher inflation. But even here, real yields according to TIPS seems fairly low in historical perspective (and roughly comparable to those prevailing during the period characterized as “the saving glut”).
J Clinton Hill stated in his article on June 5th:
That’s all for Thursday’s economic data and related news events. I will buy the notion of economic recovery when the issuance of government debt begins to show signs of contraction or deceleration. Thursday’s data underscores the tug of war between the deflationary forces of economic weakness and the inflationary monetary policies of the Fed. Although the game is still on, the scoreboard (i.e. bond market) indicates that the Fed is scoring points and determined to make history as one of the greatest comebacks of all time
Important Disclaimer: Product price and availability are accurate as of the date of most recent update. Please send correction requests to info@linked8.com
Earning Recap: Major Solars in Q1 2009
Here is a recap of major solar companies’ Q1 2009 earning conference:
STP
Shipment: 600-700MW for FY 2009, with 40% in first half, with 15% in first quarter.
Consolidated tax rate was 8-10%.
Gross margin: expect Q2 to be flat from Q1, expect long term goal to be 15%.
LDK
Regarding 15000-ton poly plant, 5000-ton train will be completed by end of Q2, the 2nd 5000-ton train will be completed by end of Q3. When asked about why not delaying building the plant, answered that 1.4-1.5B have been spent, only small amount is left to be spent, therefore it’s not reasonable to stop the progress now.
When asked about Capex, answered the FY 2009 number will be in $500-600MM range, with $200MM already spent in Q1.
Cost: Wafer sales was based on rate of $1.4 per watt, acknowledging it will drop to ~$1 per watt by end of year. Inventory cost at $1.1 – 1.3 / watt range after $87M writedown at YE 2008. Polysilicon price at a wide range between $100 – 150 / kg.
YGE
Regarding Chinese solar subsidy program, the management pointed out a recent high-level meeting held by Chinese government officials on developing alternative energy. A news came out today corroborates the spirit of increasing emphasis Chinese government places on alternative energy: China will spend 3 – 4.5 trillion RMB on alternative energy by 2020, this investment program is not part of 4 trillion RMB stimulus package. Mr. Miao estimated that Chinese solar market size to be in 400MW – 800MW range for the two years of 2009 and 2010 combined.
YGE did not submit many applications to the first round of roof-top solar projects applications, but is interested in power generation projects with 5 major utility companies in China.
CSIQ
FY 2009 shipment outlook lowered to 200-220MW, lower than 260MW given in Q408. The management explicitly called the outlook conservative, in support to that, they indicated that the total contract size has grown (more than 260MW) since last quarter instead of going down.
Gross margin outlook for Q209 is higher single digit, and is expected to return to mid-teens in Q3 and Q4.
Conversion efficiency: 15.5% for e-Module
TSL
Gross margin in Q2 is expected to be between 18% to 20%
Cost per watt: 79 cents per watt for multi-crystalline, 89 cents per watt for mono-crystalline. Multi takes 70% of all shipment, 30% was in mono.
FY shipment is expected to be 350MW to 400MV range.
Tax rate is below 15% given the tax treatment to the company that is considered high tech status
In Q1, poly gram per watt was 6.2 gram for multi-crystalline, expect to improve to 6 gram per watt by Q4; and 5.6 gram per watt for mono-crystalline
ASP in Q1 is a 20-25% decline vs. Q4, and will decline another 12-15% in Q2 from Q1, on top of that, TSL still expect room to cut prices.
Conversion efficiency: 17.5% for mono, 16.5% for multi this year; 18.5% for mono next year.
Important Disclaimer: Product price and availability are accurate as of the date of most recent update. Please send correction requests to info@linked8.com