.......
JinkoSolar (JKS)
At first glance, JinkoSolar earnings were alarming. The company showed just a 20-cent non-GAAP EPS. That was in comparison to a 40-cent estimate and more than $1 at the previous quarter. What happened? As I examined the report, I witnessed very strong operational results, even better than I expected, with strong guidance.
JinkoSolar incurred approximately $18M in foreign exchange loss, as the RMB/USD suddenly changed direction at the beginning of 2014 and caught JinkoSolar hedged in the wrong direction. That loss distorted the operational picture. This was a perfect moment to examine investor sentiment.
If investors were still edgy, it was almost obvious that they would take that foreign exchange loss for more than what it really means. If not, investors might understand that JinkoSolar has been showing stable and growing profits for the past few quarters. Neutralizing the foreign exchange loss, Jinko had an EPS of 80 cents, twice the expectations.
The stock held up nicely after the report, closing the day at just 3% of decline. In the following days, the stock price recovered and moved up.
Fundamental Updates
ASPs- Most of the companies reported stable ASPs for the rest of the year, confirming my thesis about growing demand catching up with supply.
Costs- Polysilicon prices moved upward at the first quarter, causing the polysilicon dollar content in solar modules to go up. I do note that the best companies in the industry managed to offset that cost increase with non-silicon cost reductions. JinkoSolar is still the cost leader in the industry, with an amazing $0.47/watt.
Demand- The general hunch I got from listening to the various managements talking about 2014 demand is that China is picking up, and is set to reach its goal (or close enough) of 14GW this year. Some managements expect demand to go up to the 55-58GW neighborhood in 2015.
Downstream- Things look extremely good for the leaders in the downstream market in China. Almost all of their projects expected to come online this year are already permitted. JinkoSolar management commented about the DSO (Days Sales Outstanding-the number of days it takes a company to collect revenue after a sale) as related to electricity sales in China. Jinko management believes that the DSO will go down to just 30-45 days, marking a substantial improvement in China's government payment morale.
Conclusion
3. Fundamentally, the market evolves in the right way......
2.The sentiment is slowly changing, and I'm monitoring the situation from day to day. When the sentiment turns positive and investors start to value their investments more on fundamentals than on emotions, the best solar stocks will show extremely good fundamentals and will be rewarded the most.
seekingalpha.com/article/...e-solar-industry-earnings-round-up
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