04-29-2014, 01:57 AM
Stock price under some pressure lately, the following article sums it up, but is too gloomy:
One of the key driving forces behind the solar boom has been the abundance of cheap Chinese-manufactured panels. Well, rising input costs — the cost of energy needed to run solar panel factories — along with supply constraints are lifting prices for Chinese-produced PV. According to Boston-based green think-tank GTM Research, the price of Chinese-made solar panels will rise about 20% this year. And already, the price rise is beginning to take shape. According to its latest report, GTM shows that Chinese solar producers like JinkoSolar (JKS) have priced their modules at 80 to 85 cents per watt for new deliveries. That compares to just to 70 cents per watt at the end of 2013.
The Sun Is Setting for Chinese Solar Stocks | InvestorPlace
They cite other factors:
- Trade issues with the EU and the US
- Shale gas revolution in the US
- A cut in Japanese solar feed-in tariff
- China might not make it's 14GW 2014 target (by far the largest market in the world)
And indeed, Trina and Yingli issued warnings, but consider the following quote from Barrons:
But Trina Solar can still beat expectations, says Nomura Securities. This is because Trina Solar raised its gross margin guidance from the mid-teens to 18-20%, even as the company lowered its shipment guidance. Here is analyst Nitin Kumar doing the numbers for us: Prior to Trina’s latest update, we had expected 1Q14F external module sales of 725MW with margins of 16.2% (Trina’s original guidance: Shipments – 670~700MW; GM – midteens) for a net profit of USD17.4mn. Based on the new guidance update, we now see external shipments of 567.5MW along with a 50MW project sale in China for a gross margin of 19.7% (Trina’s new guidance: Shipments – 540~570MW; GM – 18~20%). This translates into earnings of USD27.1mn for 1Q14F as per our estimates. Note: Lower shipments have a corresponding reduction in SG&A as shipping charges are included in SG&A.
Trina Solar: Q1 Could Beat Despite Guidance Cut, Says Nomura - Emerging Markets Daily - Barrons.com
For years, there was a solar slump with steeply falling prices. Then these stabilized, margins improved, and the stocks shot up. But now prices are even rising and margins expanding, that doesn't seem the recipe for a solar crash to us..