JKS down 27% today, hitting an all-time low, far below its IPO price. My average cost is $13.2, which means I've lost half my money so far. I'm not selling. In fact, I'm thinking about buying more.
The problem of industrial pollution in China is real, in solar and many other industries. The government, by allowing pictures of the protest in the government-owned press, and by shutting the factory, is siding with the protesters, and against the company. Allowing freedom of expression in China is a change from previous policy. They used to send the army into the streets to machine-gun protesters.
I think Jinko will pay a fine, change their practices, and then re-open the factory. Their manufacturing costs will increase marginally, but they will still be among the most efficient of all the Chinese solars. Stock prices, for JKS and others, are getting so low, I think we are going to start seeing companies go private, or buy back a lot of shares. In general, I don't think it's a good idea for companies to buy back shares using borrowed money. But the valuations are absurd. Their PE is 1 (one). The next JKS conference call will be interesting.
When I get nervous about buying more solars, I remind myself of these trends:
solar panel cost, per watt of electricity produced:
$60 in 1976
$6 in 1990
$3.50 in 2007
$2.00 in 2009
$1.05-1.40 today, and still falling
solar power installed globally, in GW:
1.5 2005
1.6 2006
2.5 2007
6.5 2008
7.0 2009
17 2010
22 2011 estimate
First Solar's module manufacturing cost, in $/watt at end of period:
1.59 2005
1.40 2006
1.23 2007
1.08 2008
0.87 2009
0.75 2010
0.70 2011 company guidance
0.52-0.63 2014 company guidance |
