3SOF

Quote from: Garoh on April 20, 2007, 07:30:13 AM
I don't see any down direction from these levels ....

It's at a discount price now and it should open higher than yestreday's close 

Yes, I think you are right.  I am seeing BxA = 25.25x25.40 for JASO.  The Shanghai stock exchange made up all its losses from yesterday apparently and the futures are pointing higher today for the market in general.  The Shanghai drop was what hit chinese stocks hard yesterday, so that being erased should likely bring them all back higher again today.

Read a disturbing article in this morning's wsj. Chinese solar companys have in effect been subsidized by the German government and it it may end at some point. We'll see.

Quote from: soxguy on April 21, 2007, 09:32:04 AM
Read a disturbing article in this morning's wsj. Chinese solar companys have in effect been subsidized by the German government and it it may end at some point. We'll see.

By the German government?  Im curious why the Germans would want to help Chinese companies.  I guess this was the paper version of the WSJ, not something you could give an online link to?

The WSJ article claims that the various high flier Chinese solar companies--many of which only recently jumped into the solar bandwagon and were originally businesses completely unrelated to solar--have had much of their growth tied to Germany, which has the world's largest solar market due to its government subsidies of it's vast solar farms. An analyst from Piper Jaffray claims that the subsidies constitute 'welfare' and may be at risk of being discontinued, causing sales in companies such as Trina Solar and JA Solar Holdings to decline. Another risk in this sector is over capacity, the analyst says. Many of the companies are working around the clock to sustain current demand and to build market share but he believes that the growth in future demand isn't rising nearly as fast as the growth in the industry's capacity. He concluded the article by suggesting that profit margins will come under pressure as companies sell below cost to continue to gain market share and that the solar bubble will more than likely burst similar to what happened to internet stocks.

MarketWatch / Weekend Investor
Chinese Solar-Energy Companies
May Be Next Stocks to Burn Investors
By HERB GREENBERG
April 21, 2007

Years ago, when the disk-drive industry was booming and Seagate Technology couldn't add capacity fast enough, the company's chief executive -- the late Alan Shugart -- was asked what would happen when capacity exceeded demand. His answer was akin to, "We'll worry about it then."

Indeed they did, with layoffs, plant closings and price cuts -- something investors, who watched the share price slide, likely won't forget. Such is life maneuvering amid the boom-bust-boom world of technology, where the experience of Seagate is more the norm than the exception.

Next on tap to learn that supply-demand lesson the hard way just might be investors in the handful of Chinese solar companies that have gone public in the U.S. in the past year. These companies have come out of nowhere -- some reformulated from industries unrelated to solar -- to become stock-market darlings amid the recent infatuation with alternative energy.

The solar crowd includes such companies as Trina Solar Ltd., which has been in the solar business since late 2004 (it originally made aluminum siding) and now has a market value of more than $1 billion after going public late last year; JA Solar Holdings Co., in business since May 2005, making products since April 2006, publicly traded in the U.S. since February and now with $1 billion-plus market value; Solarfun Power Holdings Co., which went public late last year and is now valued at nearly $1 billion; and Canadian Solar Inc., another recent initial public offering with China roots that started in 2001 as a maker of solar car chargers.


JA Chief Executive Samuel Yang says a few more Chinese solar upstarts are believed to be waiting in the wings to do an IPO. Plenty more, he says, are looking for ways to cash in on the boom, including companies that used to make clothing and shoes. "Everybody thinks it is such a lucrative industry," he says. To a large extent, it has been. Most of the young publicly traded companies have posted impressive sales and profit growth. That's right: they are posting profits -- lots of it.

But before investors get too excited, consider that much of that growth has been tied to sales in Germany, the largest market for solar energy, where purchases for large fields of solar panels have been subsidized by the government. Piper Jaffray & Co. analyst Jesse Pichel, regarded as one of the most seasoned in a rapidly growing field of solar analysts, says that is why he regards much of the sales and profit at these companies as "funny money" and "welfare." "There's a lot of risk that the subsidies don't continue in Germany and I think they will get reduced," he says. That, in turn, will cause demand to slow.

That gets us back to this whole supply-demand thing. When supply outstrips demand, prices tend to fall. That is something to keep in mind because even as demand is slowing, many of these companies are pulling out all stops to expand capacity -- and they are doing it as more competitors are springing up. Consider Canadian Solar, which makes solar panels, which contain solar cells that absorb sunlight. It attributed a fourth-quarter loss in part to a decline in prices even as plants are running around the clock. "We're expanding capacity, but we're expanding to meet firm orders," Chief Executive Shawn Qu says.

While demand in such countries as Spain, South Korea and the U.S. may strengthen, and the business as a whole may get much stronger in future years, Mr. Pichel says it isn't rising as fast as the growth in capacity. As a result, he believes profit margins will continue to come under pressure for the time being as companies start selling below market prices to gain share. Mr. Yang and Mr. Qu believe there will be a shakeout in the industry and that their companies, as low-cost providers, will be among the survivors. Executives of Solarfun and Trina couldn't be reached. Still, between here and there -- wherever there is -- a lot will happen before it gets sorted out. Meantime, there is likely to be a comeuppance that investors in these companies will wish they had anticipated -- as was the case with Internet stocks, memory-chip stocks and, oh yes, disk-drive stocks. History, on Wall Street, has a way of repeating itself.

Thanks for sharing this soxyguy.

A few factors make me not too worried about this for the timeframe that I suppose we will hold this stock:

-Herb Greenberg seems to be an eternal pessimist.  That is his job when doing guest appearances on CNBC for both Mad Money and Fast Money. 
-Subsidies or not, Germany is just one country.  And the US will become a bigger market for Solar due to the "Green Day" Supreme Court ruling of 4/2/2007 forcing the EPA to do its job.
-Not too worried that these were not solar companies prior to recent years.  Japanese companies were like that, for example Hitachi used to be a shipping company before it became a high tech company.  IME many Asian companies are good at turning on a dime and going where the money is. 
-Even if Herby is right, he wont be right tomorrow, its going to take time.

Still interested in what David thinks of course but my initial inclination is not to be too worried.

Quote from: soxguy on April 21, 2007, 10:14:14 PM
MarketWatch / Weekend Investor
Chinese Solar-Energy Companies
May Be Next Stocks to Burn Investors
By HERB GREENBERG
April 21, 2007

Years ago, when the disk-drive industry was booming and Seagate Technology couldn't add capacity fast enough, the company's chief executive -- the late Alan Shugart -- was asked what would happen when capacity exceeded demand. His answer was akin to, "We'll worry about it then."

Indeed they did, with layoffs, plant closings and price cuts -- something investors, who watched the share price slide, likely won't forget. Such is life maneuvering amid the boom-bust-boom world of technology, where the experience of Seagate is more the norm than the exception.

Next on tap to learn that supply-demand lesson the hard way just might be investors in the handful of Chinese solar companies that have gone public in the U.S. in the past year. These companies have come out of nowhere -- some reformulated from industries unrelated to solar -- to become stock-market darlings amid the recent infatuation with alternative energy.

The solar crowd includes such companies as Trina Solar Ltd., which has been in the solar business since late 2004 (it originally made aluminum siding) and now has a market value of more than $1 billion after going public late last year; JA Solar Holdings Co., in business since May 2005, making products since April 2006, publicly traded in the U.S. since February and now with $1 billion-plus market value; Solarfun Power Holdings Co., which went public late last year and is now valued at nearly $1 billion; and Canadian Solar Inc., another recent initial public offering with China roots that started in 2001 as a maker of solar car chargers.


JA Chief Executive Samuel Yang says a few more Chinese solar upstarts are believed to be waiting in the wings to do an IPO. Plenty more, he says, are looking for ways to cash in on the boom, including companies that used to make clothing and shoes. "Everybody thinks it is such a lucrative industry," he says. To a large extent, it has been. Most of the young publicly traded companies have posted impressive sales and profit growth. That's right: they are posting profits -- lots of it.

But before investors get too excited, consider that much of that growth has been tied to sales in Germany, the largest market for solar energy, where purchases for large fields of solar panels have been subsidized by the government. Piper Jaffray & Co. analyst Jesse Pichel, regarded as one of the most seasoned in a rapidly growing field of solar analysts, says that is why he regards much of the sales and profit at these companies as "funny money" and "welfare." "There's a lot of risk that the subsidies don't continue in Germany and I think they will get reduced," he says. That, in turn, will cause demand to slow.

That gets us back to this whole supply-demand thing. When supply outstrips demand, prices tend to fall. That is something to keep in mind because even as demand is slowing, many of these companies are pulling out all stops to expand capacity -- and they are doing it as more competitors are springing up. Consider Canadian Solar, which makes solar panels, which contain solar cells that absorb sunlight. It attributed a fourth-quarter loss in part to a decline in prices even as plants are running around the clock. "We're expanding capacity, but we're expanding to meet firm orders," Chief Executive Shawn Qu says.

While demand in such countries as Spain, South Korea and the U.S. may strengthen, and the business as a whole may get much stronger in future years, Mr. Pichel says it isn't rising as fast as the growth in capacity. As a result, he believes profit margins will continue to come under pressure for the time being as companies start selling below market prices to gain share. Mr. Yang and Mr. Qu believe there will be a shakeout in the industry and that their companies, as low-cost providers, will be among the survivors. Executives of Solarfun and Trina couldn't be reached. Still, between here and there -- wherever there is -- a lot will happen before it gets sorted out. Meantime, there is likely to be a comeuppance that investors in these companies will wish they had anticipated -- as was the case with Internet stocks, memory-chip stocks and, oh yes, disk-drive stocks. History, on Wall Street, has a way of repeating itself.

QuoteStill interested in what David thinks of course but my initial inclination is not to be too worried.

Hi Tokyo, thanks for your comments. I'm not worried about the forecasting elements of the article, as I've written at TSL's thread, but unfortunately JASO is going to be stabbed by my valuation model today due to the "$1 B market cap " claim present in the article. But perhaps not in a deadly way, let me explain and make the study as I write.

Yahoo says JASO's market cap is $661.85 M:

http://finance.yahoo.com/q?s=jaso&x=0&y=0


Market Watch says JASO's market cap is $3.26 B:

http://www.marketwatch.com/Quotes/jaso


They're both wrong. But misinformation gets worse, because, over the latest earnings release, we get the following:





The initial share count I had on my valuation model was 26.67 million ADS outstanding (each ADS  represents 3 ordinary shares). If this were the real number of ADS outstanding, the current market cap would then be 26.67 million*$24.82 = $662 M.

But, after some more digging, I found a PDF document published by the company in its website, at JASO's Investor Relation's homepage, dated 3/30/2007 (so, less than one month old), saying the following:



This is sad , instead of the 26.67 million ADS I thought was the initial share count, there are 46.09 million ADS outstanding. This cuts JASO's potential almost in half, because, instead of a $662 M market cap, the company has a $1.14 B market cap. The valuation model stays like this:



The estimated share price CAGR went down from 66% to just 38%, and the optimal selling price declined from $73.08 to just $42.29.

The conclusion is JASO is still attractive but a lot less than what it was before this initial share count misunderstanding, which is undoubtedly my fault. After all the stock isn't trading at a deep discount when compared to its peers, it is trading in line with them.

I'll keep holding the stock, even though my profit expectations were severely damaged by this.

David, do you think that all this negative news could already be factored in the share price since JASO fell last week due to the downgrade.  It seems that someone is buying large blocks each time it dips since the stock rallies after each dip.  I wonder if this was intentional since after  3 large white candle days a downgrade comes and once it seems that the stock was stablizing another negative article comes out. I just wonder if all this could already be factored in since the recent article is very weak.  Why would anyone downplay solar energy at a time when the world's energy supplies are dwindling at a rapid pace?  Anyways, JASO could come out with news on a new deal anytime soon!  I plan on holding for awhile longer.  As a last note, I can't stand Herb Greenberg and the Clown "Cramer"!

This stock moves so erratically that who knows what's next,$20 or $30. Fundamentals,governmental decisions and and constant stories in the media take all these solar panel stocks higher over the next 2years  imho.

I'm not sure how to read those other lines and numbers yet but I think this chart looks neat (got the chart from Cumulina's link).
The white lines are the ones I drew.

HERB GREENBERG
How Chinese solar stocks may burn investors
Commentary: Plus, a reminder about a forgotten financial fraud
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By Herb Greenberg, MarketWatch
Last Update: 9:23 PM ET Apr 22, 2007

This column first appeared over the weekend in The Wall Street Journal.
SAN DIEGO (MarketWatch) -- Years ago, when the disk-drive industry was booming and Seagate Technology couldn't add capacity fast enough, the company's chief executive the late Alan Shugart was asked what would happen when capacity exceeded demand. His answer was akin to, "We'll worry about it then."
Indeed they did, with layoffs, plant closings and price cuts something investors, who watched the share price slide, likely won't forget. Such is life maneuvering amid the boom-bust-boom world of technology, where the experience of Seagate is more the norm than the exception.
Next on tap to learn that supply-demand lesson the hard way just might be investors in the handful of Chinese solar companies that have gone public in the U.S. in the past year. These companies have come out of nowhere some reformulated from industries unrelated to solar to become stock-market darlings in the recent infatuation with alternative energy.
The solar crowd includes such companies as Trina Solar Ltd. (TSL :


, , ) , which has been in the solar business since late 2004 (it originally made aluminum siding) and now has a market value of more than $1 billion after going public late last year; JA Solar Holdings Co. (JASO :


, , ) , in business since May 2005, making products since April 2006, publicly traded in the U.S. since February and now with $1 billion-plus market value; Solarfun Power Holdings Co. (SOLF :



, , ) , which went public late last year and is now valued at nearly $1 billion; and Canadian Solar Inc. (CSIQ :

, , ) , another recent initial public offering with China roots that started in 2001 as a maker of solar car chargers.
JA Chief Executive Samuel Yang says a few more Chinese solar upstarts are believed to be waiting in the wings to do an IPO. Plenty more, he says, are looking for ways to cash in on the boom, including companies that used to make clothing and shoes. "Everybody thinks it is such a lucrative industry," he says. To a large extent, it has been. Most of the young publicly traded companies have posted impressive sales and profit growth. That's right: they are posting profits lots of it.
But before investors get too excited, consider that much of that growth has been tied to sales in Germany, the largest market for solar energy, where purchases for large fields of solar panels have been subsidized by the government. Piper Jaffray & Co. analyst Jesse Pichel, regarded as one of the most seasoned in a rapidly growing field of solar analysts, says that is why he regards much of the sales and profit at these companies as "funny money" and "welfare." "There's a lot of risk that the subsidies don't continue in Germany, and I think they will get reduced," he says. That, in turn, will cause demand to slow.
That gets us back to this whole supply-demand thing. When supply outstrips demand, prices tend to fall. That is something to keep in mind because even as demand is slowing, many of these companies are pulling out all stops to expand capacity and they are doing it as more competitors are springing up. Consider Canadian Solar, which makes solar panels, which contain solar cells that absorb sunlight. It attributed a fourth-quarter loss in part to a decline in prices even as plants are running around the clock. "We're expanding capacity, but we're expanding to meet firm orders," Chief Executive Shawn Qu says.
While demand in such countries as Spain, South Korea and the U.S. may strengthen, and the business as a whole may get much stronger in future years, Pichel says it isn't rising as fast as the growth in capacity. As a result, he believes profit margins will continue to come under pressure for the time being as companies start selling below market prices to gain share. Yang and Qu believe there will be a shakeout in the industry and that their companies, as low-cost providers, will be among the survivors. Executives of Solarfun and Trina couldn't be reached. Still, between here and there wherever "there" is a lot will happen before it gets sorted out. Meantime, there is likely to be a comeuppance that investors in these companies will wish they had anticipated as was the case with Internet stocks, memory-chip stocks and, oh yes, disk-drive stocks. History, on Wall Street, has a way of repeating itself.
The forgotten financial fraud
A trial in U.S. District Court for the Southern District of California started April 12 for the remaining top executives (and an outside auditor) of Peregrine Systems Inc. who haven't already pleaded guilty. Peregrine, you may recall, is the San Diego software company that was alleged to have overstated revenue by $509 million and understated losses by $2.6 billion over a 33-month period starting in 1999. Because of the timing, it was overshadowed as a national story by the Enron collapse and relegated to a footnote in the annals of corporate fraud. It is a tale, however, that deserves not to be forgotten.

we got a flag here , and I hope it doesnt break the support which is  22.50 for tomorrow

The market views the WSJ article as favorable? I can live with that.

Quote from: soxguy on April 23, 2007, 10:27:24 AM
The market views the WSJ article as favorable? I can live with that.

Or maybe the market does the opposite of what Herb Greenberg and Clown Cramer say to do since they seem to be far more wrong than right.   

Greenberg was just on CNBC rehashing the warnings in his article. Let's see if it affects the solar stocks going forward.