Want to hear your thoughts on this solar stock - JASO
Its pricing doesn't make any sense to me
Market cap: $927M
Net income in Q4 2010: $783M (on $3.8 billion revenue)
How can it be so cheap???
Posted Jun 22, 2011, 7:22 PM UTC · edited
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Stay away from solar modules as investment. The market is saturated with PV modules, so the prices a plummeting and margin are shrinking.
My favorite play in solar are with inverter manufacturers. Every solar module sold will need an inverter... They still have pricing power and plenty of margin.
Look at either AEIS or PWER, both of them could be take over candidate to boot. Stay away from SATC, this is a company that can't make money in the best market ever, this means they have a fundamental problem within the company.
I tend to prefer PWER because it is international and position to take advantage of all upcoming market (ie China and middle east) AEIS has good product but is pretty much north american only, so doesn't have other global market as buffers. If NA market was to shut down because of austerity, AEIS would be hit pretty hard.
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I agree with your investment advice, but the statement that every solar module will need an inverter is misleading. Large arrays use 1 inverter for a large number of panels ranging from 30 to several hundred with the exact number depending on the characteristics of the inverters that are deployed.
Also it is worth noting the new experimental solar modules that directly emit AC without an inverter. These do not have significant market share yet, but they do counter the statement that "every solar module sold will need an inverter".
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a 1MW array will need a 1MW inverter. I guess my statement should have been 1W worth of PV will need 1W worth of inverter...
AC modules have been trying to get market share for the last 15yr when Trace (Now Xantrex/Schneider)came out with there "Sine Wave" micro inverter(I forget there brand name, its been a while.) and it didn't work, over heating. Even looking at Enphase right now, anybody that knows the market knows that they are selling at cost. And they are the closest company to be able to turn a profit, but the maintenance cost are through the roof. Also the two big manufacturer, SMA and Power One, have micro inverter technology (look at power one website), but they are not available to purchase. Probably because they can't turn a profit on them.
AC modules have been talked about for a long time, no one has been able to turn a profit on them yet. I don't see any technology out there that will change the that in the next few years. Although more will try... and fail
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That is good to hear since I recently started working for Solar Power Technologies Ltd. which is a startup that is launching products that monitor and/or automatically optimize panel and string outputs. Our technology currently targets traditional DC arrays.
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SATC is going to be making inverters using TRANSPHORM's technology of Gallium integrated circuits rather than silicon thus increasing efficiency of energy transfer. TRANSPHORM is currently funded by Google Ventures.
You should look them up, it is some groudbreaking material.
Also, BCON just launched their forst 20MW plant in NY and Ireland is looking into the technology as well.
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Could be another Chinese fraudcap. Watch out.
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It's cheap because (like everything else that's cheap) it's Chinese. Several Chinese companies have "cooked the books" recently, so investors are a bit sour on Chinese stocks. It's also cheap because a few European countries have reduced their incentives for solar panel installation (Italy comes to mind). Add to that the problem with Greece, and you've got a very low JASO price.
I personally own JASO as a speculative stock. About 20% of their business comes from Germany, and they are one of the largest PV companies. Given the recent decision in Germany, if it holds up, to do away with all 22 nuclear plants and divert to green initiatives, I'm hopeful it will pan out. Also, since the TEPCO incident, China has decided to forego construction of many of their nuclear plants and instead use wind and solar for new power plants. America, unfortunately, is not as solar-friendly as the rest of the world just yet.
I am hoping that, given JASO's position as a large, cheap PV supplier, the rising diversion of interest from nuclear to solar will benefit JASO in the long run. However, this is a very speculative play as there are other undervalued stocks here in the US where you can trust the numbers a bit more. A lot of pieces need to move in the right direction at the right time for JASO to hit.
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I bought it in September of last year and sold it in October. And not looking back.
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The company is reporting Net Income that Exceeds Operating Cash Flow:
https://robotdough.com/equities/nasd/jaso/cash-flow/quarter
That is, the company is reporting more in Net Income than the actual cash the business generates through its operations. This often indicates that the company is inflating its reported Net Income by using aggressive revenue recognition methods, such as overbooking sales via channel-stuffing, underestimating returns or bad debt, or recognizing as current revenue the full value of long-term contract payments that actually are spread over many years. Over the short-run, many such aggressive accounting methods naturally unwind in future periods, which consequently reduces Net Income in those periods. Over the long-run, a company that consistently reports Net Income in excess of Operating Cashflow might be trying to hide the crumbling of its core business (think Enron or WorldCom).
Thank you! The first reply that actually explains the situation.
You bet!