solar gross margins:2010;2011
year;1Q,2Q,company (E = estimate)
46% 46% 37% FSLR
33% 27% 22% YGE
31% 27% 17%E TSL
29% 26% 25% JKS
23% 20% 03% SPWRA
22% 17% -3% JASO
22% 32% 02% LDK
17% 19% 04% STP
15% 15% 13% CSIQ
21% 16% ?? HSOL
Since I posted 1Q11 results
Message 27397504
the expected margin compression has been severe. The 4 stocks on my Buy List, had the highest margins for 2Q11. They were ahead; they are getting further ahead. And this list just includes Tier 1 big companies. In addition, there is a long list of Tier 2 and 3, whose results are worse than anything on this list.
Current industry conditions cannot continue for more than 1 or 2 more quarters. Capacity is being taken out, companies are going bankrupt. Single-digit or negative gross margins for many companies are going to bring a dead halt to their expansion plans. Credit conditions are tightening all over the world, including in China. Companies dependent on borrowing or secondary stock offerings, are in serious trouble, especially if their debt is short-term.
Once the industry gets through this painful phase, we'll see a few survivors dominating the industry. Poly and panel prices will stabilize, at prices low enough to cause a big increase in demand.
LDK, which had surprisingly high margins in 1Q11, remains firmly off my Buy List, with its awful 2Q11 results, matching its awful balance sheet.
SPWRA is showing that low manufacturing costs trump high efficiency, in this industry. They keep talking about their "brand name" and "high quality", and the Chinese keep taking market share. SPWRA is on the same road as Q-Cells: a dead end.
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