First Solar

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#1
Hi all,

I can't find a thread on First Solar so I decided to start one. I think the solar industry is an interesting place to discuss about now and First Solar is one of the company I am interested in. 

I do think its hard to find undervalue stock in the market currently. However if you just have to be in the market, this will be a company worth looking into.

The solar industry is currently facing a oversupply of solar panel causing price to drop significantly. More recently, First Solar share price plummeted when they release their earning/guidance call where they expected a restructuring and asset impairment charges of $500 to $700 million, which includes a cash impact of $70 to $100 million due to the acceleration of the series 6 module from the current series 4. They also have their 2016 GAAP EPS guidance revised to a loss of ($4.00) to ($2.00) from $3.75 to $3.90 and a 2017 GAAP EPS guidance of ($0.10) to $0.45. This mean a possibility of losses in the next 2 years. 

It is still a question if the series 6 module can be cost competitive by the time it is in production in 2018 or will the price of their competitors solar drop faster.

However, First solar have one of the strongest balance sheet in the industry with large amount of cash and low debt. Currently selling at about 0.6 book value. Therefore I think they will do just fine in the coming years.

Do take a look at the company and comment on what you think. 
Reply
#1
Hi all,

I can't find a thread on First Solar so I decided to start one. I think the solar industry is an interesting place to discuss about now and First Solar is one of the company I am interested in. 

I do think its hard to find undervalue stock in the market currently. However if you just have to be in the market, this will be a company worth looking into.

The solar industry is currently facing a oversupply of solar panel causing price to drop significantly. More recently, First Solar share price plummeted when they release their earning/guidance call where they expected a restructuring and asset impairment charges of $500 to $700 million, which includes a cash impact of $70 to $100 million due to the acceleration of the series 6 module from the current series 4. They also have their 2016 GAAP EPS guidance revised to a loss of ($4.00) to ($2.00) from $3.75 to $3.90 and a 2017 GAAP EPS guidance of ($0.10) to $0.45. This mean a possibility of losses in the next 2 years. 

It is still a question if the series 6 module can be cost competitive by the time it is in production in 2018 or will the price of their competitors solar drop faster.

However, First solar have one of the strongest balance sheet in the industry with large amount of cash and low debt. Currently selling at about 0.6 book value. Therefore I think they will do just fine in the coming years.

Do take a look at the company and comment on what you think. 
Reply
#2
Hi COTDS

The following are the pro and con of what I think of solar panel industries.

First solar strength is based on what you have mentioned, strong balance sheet. It also have the more advance technology compared to other solar manufacturing companies. It main competitor are from china whom dependence on existing/older technology. Their primary competitive point is to keep the finish product cost low.

Since 1977 the cost of the solar panels have drop dramatically this will squeeze the profit margin on all solar panel manufacturing companies. The boom of solar energy since 2006 was partly due to the tax credit given by US government to solar energy companies which will gradually diminish till year 2020.

Moving forward I think first solar will capture more of the market shares due to it more efficient panels as there are limited areas on the planet with strong sunlight. Their profit margin maybe under continuous pressure due reduction in solar cell pricing and the diminish US solar energy tax credit.

Good luck
Reply
#2
Hi COTDS

The following are the pro and con of what I think of solar panel industries.

First solar strength is based on what you have mentioned, strong balance sheet. It also have the more advance technology compared to other solar manufacturing companies. It main competitor are from china whom dependence on existing/older technology. Their primary competitive point is to keep the finish product cost low.

Since 1977 the cost of the solar panels have drop dramatically this will squeeze the profit margin on all solar panel manufacturing companies. The boom of solar energy since 2006 was partly due to the tax credit given by US government to solar energy companies which will gradually diminish till year 2020.

Moving forward I think first solar will capture more of the market shares due to it more efficient panels as there are limited areas on the planet with strong sunlight. Their profit margin maybe under continuous pressure due reduction in solar cell pricing and the diminish US solar energy tax credit.

Good luck
Reply
#3
Been looking at this company for awhile as well:

Pros
Undervalued (asset wise).
Low PE ~7
Increasing revenue.
Increasing book value.

Cons
However, it is in a very competitive solar panel industry where the technology is increasingly commoditized and it has very little to differentiate it from the rest (it needs to be much cheaper and better in order to do so, not just marginally better). It will constantly face margin pressure and headwinds (cut backs in subsidy). There is no consistent and reliable cash stream. The company does not buy back it's stock or distribute dividends. In fact, their share base has been increasing every year.

IMO, there are safer bets out there.
Reply
#3
Been looking at this company for awhile as well:

Pros
Undervalued (asset wise).
Low PE ~7
Increasing revenue.
Increasing book value.

Cons
However, it is in a very competitive solar panel industry where the technology is increasingly commoditized and it has very little to differentiate it from the rest (it needs to be much cheaper and better in order to do so, not just marginally better). It will constantly face margin pressure and headwinds (cut backs in subsidy). There is no consistent and reliable cash stream. The company does not buy back it's stock or distribute dividends. In fact, their share base has been increasing every year.

IMO, there are safer bets out there.
Reply


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