[轉載] Solar May Start Seeing a Bottom

fatlone: 值得一讀

source: http://online.barrons.com/article/SB50001424052702303798104576538980292866232.html?mod=BOL_hpp_oe

 

TUESDAY, AUGUST 30, 2011

Solar May Start Seeing a Bottom

A drop in polysilicon prices soon is the first step, says Credit Suisse.

Credit Suisse

Solar stocks have neared the one times enterprise value (EV)/replacement value of capacity we have long argued as downside to the space, and there could well be a bounce trade into PV-SEC conference in Germany next week.

However, in this report we present several charts that highlight the excessive lending by Chinese banks to the solar industry, which is prolonging the necessary correction in fundamentals for the industry.

The longer and larger the Chinese bank-lending bubble for solar inflates, the sharper and more unpredictable will the eventual fundamental correction be due to industry consolidation.

A prolonged bubble could result in a worst-case scenario eventually that involves fire-sale prices driven by widespread inventory liquidation by companies forced to exit the business. We expect the lending spigot will tighten soon, and lead to production cuts for wafers and cells.

We will first observe the symptoms of that in the form of rapidly declining polysilicon prices. A trough in polysilicon prices is a prerequisite to call the bottom for the sector, and if not for the lending bubble, polysilicon prices could be a lot lower already.

How big is the bubble? Net debt for the U.S.-listed solar companies (about 50% of total industry volumes in 2010) has ballooned from $2.0 billion in the fourth quarter of 2010 to $6.2 billion by the end of the second quarter of 2011.

Gross debt has increased from $10.4 billion to $14.8 billion from the fourth quarter of 2010 to the second quarter of 2011 — an increase of $4.4 billion.

A vast majority of the debt financing is coming from Chinese banks in the form of short- and long-term loans. The capital has been used for increasing working capital and for capital expenditure.

This excess financing has resulted in artificially higher demand for equipment and polysilicon — investors need to distinguish the effect of lending on demand versus sell through on demand.

There is evidence to suggest that end demand has not kept pace with the rate of production in the first half of 2011, and our report today also adds evidence that bank lending is inflating demand for polysilicon from mid-stream companies at the expense of high inventories. There is also an incentive for polysilicon companies to manage the prices higher, as most contracts are tied to spot market prices as well.

For Chinese companies listed in the U.S., working capital (defined as receivables plus inventories less payables), has increased from $2.9 billion at the end of the fourth quarter of 2010 to $4.4 billion at the end of second-quarter 2011.

Capital investments by U.S.-listed Chinese companies have increased to $1.8 billion in the first-half of 2011, the highest levels in any two-quarter period for the industry.

The generous access to debt is being used by China solar companies to achieve economies of scale, offer extended credit terms to customers to augment their already industry-leading cost positions to gain share in the solar industry.

Will this bubble burst? We are already seeing production cuts happening for LDK Solar(ticker: LDK), ReneSola (SOL), JA Solar Holdings (JASO) and for European companies like Q-cells [of Germany] and Renewable Energy Corp. [of Norway], so there are signs that finally access to capital is starting to become an issue. JinkoSolar Holding (JKS) recently increased long-term debt, partly due to worries of tighter access and higher cost for short term debt.

However, we are yet to see the tightening credit manifest in the form of cuts to polysilicon production or downside to polysilicon prices. We need much sharper production cuts, which will only happen when the debt bubble bursts.

We expect the debt bubble will burst in the next six months, as debt/earnings before interest, taxes, depreciation and amortization (Ebitda) has spiked up from 1.5 times in the fourth quarter of 2010 to 6.1 times in the second-quarter of 2011.

The short-term debt has no covenants for Trina Solar (TSL) for example, but needs to be renewed each year. Long term debt for Trina Solar has covenants like debt-to-asset ratio, return on equity and income to net interest ratio. Certain loan agreements forYingli Green Energy Holding (YGE) have debt/Ebitda covenants.

We prefer to see a sharp cut in polysilicon prices soon to start the bottoming process for solar.

Once polysilicon bottoms, First Solar (FSLR) will be a name that will generate more interest, as incremental downside risk will be low from China competition.

However, no stock, First Solar included, is immune from a prolonged period of excess production due to irrational lending and the resulting unwind of inventory/production.

Thus, polysilicon prices remain a key metric to watch, we reiterate our $25 per kilogram (kg) view for polysilicon spot prices by year-end.

— Satya Kumar
— Brandon Heiken

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本篇發表於 fatlone's view, 太陽能。將永久鏈結加入書籤。

7 Responses to [轉載] Solar May Start Seeing a Bottom

  1. Sing 說道:

    I sent an email to 712 in weekend and asked two questions. The reply is that the 400MW production line is fully utilized in Sept (I asked if the new production line is fully utilized from the beginning of Sept – she answered not very clear). The reply for the next question is the quantity of the mono wafer in this season is a bit more than the first and second season. The increase of a bit quantity may not covered the drop of price, but surely the third season should be better than the second season.

    • fatlone 說道:

      Sing 兄, 多謝報料

      你提供既資料, 我既理解係:

      佢用得"a bit", 9月份既產能利用率, 先預佢唔會係整個9月份, 否則, 以712一向既利用率接近9成去計算, 400MW單月就可以做到接近30MW既出貨量, 過去半年既出貨量只是109MW, 一季大約55MW, 如果單季+30MW, QoQ出貨量就增加約5成, 但係佢講到咁保守, 應該無乜期望

      不過, 出貨量可以增加, 已經算唔錯

      但係, 我對Q3業績係有保留, 因為呢一季既硅價成本降幅比硅片ASP來得慢, 不過我都只係估估下, 我對Q4既業績更有信心, 因為硅片價係Q3尾段跌幅減慢, 係上星期energy trend既報價更係無變動, 我覺得已經減價空間已經無, 再跌就做一件蝕一件, 不如退出算數, 反而硅價我認為仲有空間可以跌, 一線大廠應該可以做到成本30美元/KG以下, 依家仲賣緊接近50美元, 跌到落40美元都仲有>25%GP, 712既料源大部份都係spot price返黎, 對GP好有幫助

      而400MW確認在9月份全面運行, 即係Q4營收有望大幅提升, 我一邊回你一邊又計下D無聊數, 我自己估2H有機會賺到50-70M, 如果tax rate成功由25%>15%, 我覺得2H係有唔細機會賺夠70M, 不過, Q3未出成績都唔好講咁多, 同埋用返15%稅, 1H就唔係賺1億咁少

      可唔可以beat estimate, 暫時寄望Q4, 如果Q3已經有料到, 咁就expect下年3月尾4月出業績時會見2蚊以上, 如果現價1.33入, 即係半年睇升5成

      我今日用BV價1.33入左712, 呢個位, 唔理佢乜野海嘯地震龍捲風, 多少都要買下

    • Gary 說道:

      多謝 sing 兄提供資料, 正如 fatlone 兄講, 我都對 q3 無咩寄望, 但 q4 同之後一年產能大增, 而且n 型開始量產, 個 profit 應該可以慢慢增加.

  2. Gary 說道:

    系日本返來一星期, 尚未有空更新太陽能趨勢, 但今日看到一篇野, 最尾是及到卡姆丹克的 n 型硅片送左去日本三洋同夏普做測試, 如果成功, 可能有一番新景象, 大家可以看下這篇報導.

    http://finance.sina.com.cn/stock/hkstock/hkgg/20110916/111610492103.shtml

    • fatlone 說道:

      Gary兄, 去玩定公幹? long time no see

      我有信心, 712過到sunpower呢關, sharp同sanyo過關機會唔細, 如果落實, 最出名既高效率模組廠商, 712有望做到其中3家, 呢3家已經出左名好耐, 連日本仔生意都做到, 712既賣點又多一個, 仲要唔細

      樓上已經覆左sing兄一次, 我忍唔住要再講多次, 今日用左BV價1.33買左712, 第二D人唔講, 但係你地2個係最早係度同我交流既人, 我覺得呢個價真係一個機會, 見返3蚊真係1,2年既事, 我當等足24個月先見3蚊, CAGR=50.19%

      我堅係想大家可以齊齊再係712賺多次大錢

    • Gary 說道:

      去日本玩 12 天, 自己一個人去, 主要睇煙花, 超正.

      呢兩日跌到落 1.26, 1.27, 真係好平, 開始心動, 好想入, 但個市有些唔知點甘, 日日都睇住佢跌, 自己之前仲有 10k 股, 真係有 d 心痛, 但而家呢個價位, 如果無記錯, 係上年最低的位, 真係好平, 係一個幾好的機會, 我都系度計緊數.

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