JASO

[mbaugh]

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

I saw that. The fact that he had to bash it on TV tells me he is purposely trying to bring them down.  I guess he was mad that his article didn't do the trick, so he goes on TV to try again.  I think we close towards the high of day.

[tokyopua]

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

I saw that. The fact that he had to bash it on TV tells me he is purposely trying to bring them down.  I guess he was mad that his article didn't do the trick, so he goes on TV to try again.  I think we close towards the high of day.

Haha, that would be funny.  Call it the Greenberg Contrarian Indicator lol.  I sometimes think Herb knows his draw to audiences is the drama he creates, not the content he provides.  I mean, his veins pop out on his neck he makes his points so forcefully lol.

[berloga]

Have you notice that when Cramer's show begins they display a small logo at the bottom left corner of the screen with the small face of Cramer wearing that goaty? He looks so much Russian communist Lenin that stood at the roots of the October 1917 revolution where the "poor" were supposed to beat the "rich". I guess Cramer is just like Lenin, out there to make us poor. No siree! 

[la-onda]

Resource News: Current Research on JA Solar Holdings Co., Ltd
Monday , April 23, 2007 12:04ET

Apr 23, 2007 (M2 PRESSWIRE via COMTEX) -- Current Research on JA Solar Holdings Co., Ltd (NASDAQ:JASO)

JA Solar Holdings Co., Ltd., through its subsidiaries, designs, manufactures, and sells solar cells primarily in the People's Republic of China. It offers monocrystalline solar cells. The company sells its products primarily through a team of sales and marketing personnel to solar module manufacturers, who assemble and integrate its solar cells into modules and systems that convert sunlight into electricity. It also sells its products to customers in Germany, Sweden, Spain, South Korea, and the United States. The company was founded in 2005 and is based in Ningjin, the People's Republic of China.

Shares were up 9% after being publicly traded in the U.S. since February and now with $1 billion-plus market value.

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. 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, 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.

[David Randolph]

Hi la-onda, that research piece is almost a direct copy/paste of the Herb Greenberg article in the Wall Street Journal weekend edition.

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"!

Hi mbaugh

It seems the stock responded positively to all bearish arguments, and when that happens ... it usually means we'll see much higher prices sooner rather than later.

As for Herb Greenberg and "Cramer the Clown", I don't know their work very well, because unfortunately (or perhaps fortunately) here in Europe CNBC transmits Jay Leno and Conan O'Brien at the time of Cramer's show. I once subscribed Cramer's service at www.thestreet.com and he held about 100 different holdings and has been underperforming the general market since inception. Another thing I didn't enjoy about his service was that he never seemed to buy or sell anything, just "buying a bit now" to "sell a bit later" of the same old core positions.

But let's focus on JASO. Technically the stock looks extremely powerful and will probably breakout to new highs above $28.30. Fundamentally, perhaps I'll need to lower my expectations just a bit more, considering more than 3% as a dilution factor and maybe reduce my net profit margin estimate from the current 10%. I still need to study the different methods of production of TSL and JASO to get to a new net profit margin estimate.

As of today I have no doubts I'll continue holding JASO.

[Garoh]

Yes David after it broke the Flag resistance , technically the target price is 35 

Good work David

[magu]

some reading

Solar Energy Stocks: The Good, The Bad and the Ugly
ENER, ESLR, FSLR, JASO, SOLF, STP, TSL, WFR

http://energy.seekingalpha.com/article/33275?source=d_email&u=66295

[David Randolph]

some reading

Solar Energy Stocks: The Good, The Bad and the Ugly
ENER, ESLR, FSLR, JASO, SOLF, STP, TSL, WFR

http://energy.seekingalpha.com/article/33275?source=d_email&u=66295

Thanks for the nice article magu. The author made the same mistake I initially made on JASO, concerning the number of ADS outstanding.

Over TSL's thread the first indication I have is JASO doesn't have a cost of production disadvantage against TSL, so I'll keep my 10% net profit margin estimate for JASO. I thought I would increase  my dilution factor from 3% (1.03 in my valuation model), but no, because 46.09 million ADS outstanding was already the # of ADS outstanding in the company's IPO back in February 7, 2007:



If we divide the 138,270,000 ordinary shares outstanding immediately after the IPO we get 46,090,000, which is the number of ADS outstanding. Each ADS represents 3 ordinary shares, so all information is consistent.

I'm glad I'm able to maintain my estimates for JASO, the stock remains quite attractive:



Given my estimates, today's optimal selling price for JASO is $42.29, so I'll keep on holding the stock.

[Garoh]

It's up 5% pre-market ... any News ?

[basanlas]

Garoh,

Looks like this may be helping the pre market spike.


JASO Trade
News 26.5 0
JA Solar Holdings Started At Outperform At Raymond James

Apr 25, 2007 08:22:11 (ET)

[David Randolph]

JASO traded at a new all time intraday high yesterday, but it closed just a bit shy of it. My valuation model says the stock will eventually breakout to new highs, since the optimal selling price is $42.29. I'll continue holding JASO. 

[soxguy]

     

Investor's Business Daily
Another Chinese Solar Cell Maker Joins The Subsidized Fray
Thursday April 26, 7:00 pm ET
Amy Reeves


No question about it: Solar power is energy's latest "gold rush." New government subsidies in several countries have brought many new start-ups onto the market, where their stocks have exploded.
Yet as we saw with the dot-com bubble -- and more recently with ethanol -- gold rushes carry risks. Some fly-by-night operations pop up just to take advantage of the hype.

ADVERTISEMENT


Though he heads one of the newer outfits, JA Solar (NasdaqGM:JASO - News) Chief Executive Samuel Yang says his company is here to stay.

"We have the right philosophy," he said. "We're not just jumping into it to make money. We're working for the earth."

Not that JA Solar isn't making money in the meantime. Founded in August 2005, it only started selling its solar cells last year but made 37 cents a share doing it. This year, analysts expect sales growth near 90% with roughly 30% profit growth.

Though it's going up against more established players like Suntech Power (NYSE:STP - News), analysts say JA Solar has some advantages in the market. Its parent company is JingLong Group, China's largest maker of silicon wafers. Since the solar boom started, there's been a frantic scramble for these wafers, which are used to make the photovoltaic cells that make up solar panels.

JA Solar's close relationship with JingLong has helped it get wafers on favorable terms, which it has also filled out with a deal from Hemlock Semiconductor, a joint venture of Dow Corning and two Japanese firms. It has procured all of the wafers it needs for this year and 80% of its needs for next year.

"We think getting a reliable source of silicon from an incumbent player is critical in (determining) which companies are able to build capacity and take market share in the industry," said analyst Stuart Bush of RBC Capital Markets, an underwriter for the firm's February initial public offering.

The silicon crunch has been especially hard on a sector that's always trying to cut costs because the larger competitor for all solar players is the traditional fossil-fuel industry. Currently the field relies on government subsidies to compete on cost, but the ultimate plan is independence.

Still, Yang says, he's not willing to sacrifice quality. Other cell makers use the thinnest wafers they can get away with to save money on silicon, he says. But these makes the cells break more easily. Yang claims that in fact many solar modules come off the ship with cells already broken, but customers don't realize this.

"Our warranty is 25 years," he said. "If the price is better, but it lasts only 10 years, then the price is really expensive."

The quality pitch has landed JA Solar some big customers.

On the solar-power supply chain, JA Solar sits smack in the middle. Companies like JingLong make the silicon and cut it into wafers, which JA Solar makes into cells. It sells these to companies that assemble and install the modules, including PowerLight, now a unit of SunPower (NasdaqGM:SPWR - News). Another customer is Crown Renewable Energy.

Not all solar companies have JA Solar's singular focus. Suntech makes both cells and modules, while Trina Solar (NYSE:TSL - News) is trying to get the whole sequence under one roof.

Yang, however, thinks the cell-only strategy is appropriate, since that's where the managers' expertise lies. Before JA Solar's founding, Yang worked for a Chinese cell distributor and also worked two years in marketing at Suntech. Chief Technology Officer Ximing Dai used to be an academic and engineer specializing in photovoltaics in Australia.

Analyst Pierre Maccagno of Needham Research (another underwriter) says that one advantage of specializing in cells is that it has lower selling, general and administrative expenses than some other parts of the supply chain. On the other hand, he says this limits the company's marketing abilities, since it doesn't deal directly with end customers.

Bush says he doesn't expect the firm to move into module making, since that's a low-value-added business. He does think it may expand in the other direction, however -- into making the much-needed silicon wafers.

For the foreseeable future, though, making high-quality cells in the low-rent location of China is enough to compete on the global market, Bush says.

"Right now, you're effectively playing the spread in the market price for silicon and the market price for cells," he said. "We believe that long term, as silicon becomes less of a percentage of costs, their lower manufacturing costs vs. producers in Europe and America will be an advantage."

Still, the gold rush can be tricky to negotiate. After JA Solar's stock shot up 45% in just three days this month, CIBC World Markets analyst Jeff Osborne hit it with a downgrade, saying such a valuation for what was basically a commodity player wasn't justified. Osborne was not available for comment, but he kept his rating at "sector perform."

[BigSully1]

Not all solar companies have JA Solar's singular focus. Suntech makes both cells and modules, while Trina Solar (NYSE:TSL - News) is trying to get the whole sequence under one roof.

Hmm, good article. So which do you think is best? Jaso with maybe higher quality, higher cost, or Trina working to lower the price of solar energy, maybe at the expense of quality? How about Trina's strategy of vertical integration? Could be a good debate on this.


have you guys read about AEIS? Not a pure solar play at all, but the market loved their ER which included this;

"We are pleased with our results this quarter and are particularly encouraged by the strength in the semiconductor and solar markets. Semiconductor revenues were sequentially 8% higher than the fourth quarter of 2006, and solar revenues were 103% higher from the prior quarter representing 7% of our overall sales," said Dr. Hans Betz, president and chief executive officer of Advanced Energy."

Solar energy revs grew 103%, but still represent ONLY 7% of overall sales of this well managed, profitable, fast growing and diversified company. LOTS of room for mucho growth still in the solar area.

Read more about on thread;

http://www.3stocksonfire.org/trading/index.php?topic=8942.0

[David Randolph]

Thanks for those articles and comments soxguy and BigSully1

There are things in that article that worry me, especially this:

«Founded in August 2005, it only started selling its solar cells last year but made 37 cents a share doing it. This year, analysts expect sales growth near 90% with roughly 30% profit growth.»

On my valuation model I have stronger revenue growth of 120%. I guess the 30% only EPS growth is due to the increase in the # of ADS outstanding. The stock also failed to breakout yesterday, and we have a pretty strong resistance level around $28. I've been expecting the best for JASO, but now I'm going to insert just a bit less optimistic estimates in my valuation model, like I did for TSL.

1) I'll increase my expected dilution rate from 3% to 6%, because, after all, this is a Chinese company and recent IPO, and we know how the Chinese usually dilute value through American shareholders;

2) I'll reduce my revenue CAGR estimate from 120% to 100%;

3) I'll reduce my long term net profit margin from 5 to 10%. If the sector lives on subsidies, even though there can be more subsidies, I don't think governments will subsidize fat net profit margins. 5% seems reasonable for now;

4) I'll keep my 35 times earnings multiple, which can be somewhat high

The results come out like this:



Given these less optimistic estimates, the model says JASO will decline about 5.5% a year going forward, so, not attractive at all. I believe the risks pointed are quite real and the stock looks overvalued. I'll take my 8% or so profit and will look for more attractive investments.

The trading plan for JASO is SELL.

[cumulina]

Hmmmm.... I have decided to hold both my JASO, and also STP and SOEN.OB

I wonder how much of today's slide in JASO's price was due to the "3SOF-effect"? Hopefully most of it. 

I see only upside to the solar-industry, so these stock are long-time holdings for me.

I hope that I'm not alone here...?