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Non-Tech : Alternative energy -- Ignore unavailable to you. Want to Upgrade?

To: brokenst0nes who wrote (11577)	8/22/2011 9:11:19 PM
From: Jacob Snyder	Respond to of 16955

<how YGE/TSL have maintained margins yet others like LDK/JASO haven't> That's an interesting and complicated question. short answer: I don't know long answer: 1. For an investor, it doesn't matter why. All that matters is results. If the results were random, they wouldn't be useful. But there is a pattern: the ranking of companies for full-year 2010, is close to the rankings in 1Q11 and 2Q11. That is, the good companies stay good (relatively), and the bad companies stay bad. 2. Gross margin results from a combination of many variables, only some of which are publicly known. Poly contracts are only one part of the equation. Low cost manufacturing, brand premium pricing (if any), and maintaining 100% capacity utilization are probably more important. 3. JKS had higher margins than TSL or YGE for 2Q11, but lower for 2010, because they buy their poly in the spot market. This is a risky strategy, which works well, when there is oversupply in poly, like now. But, at other times in the past (and probably in the future), it won't work. IMO, this is not a sustainable advantage. 4. As poly and wafer prices decrease for the c-Si companies, FSLR's advantage (in manufacturing costs per watt) also decreases. But FSLR started so far ahead, I confidently predict they will still be at the top of the gross margin rankings, in 3Q11 and 4Q11. But this is definitely something to watch, long-term. 5. FSLR's solar conversion efficiency: 11.1% 2009 end 11.6% 2010 end 11.7% now 12.1% 2011 end, guidance 13.5-14.5% 2014 end, guidance 18% theoretical limit for CaTe technology Efficiency has been slowly increasing. If they can achieve their guidance, by those dates, they will continue to be competitive with c-Si, at least through 2014. The leading c-Si Chinese companies have also been having problems ramping up production of their more efficient types of cells. What's important, is what can be done in industrial-scale production; I ignore all news about lab results. 6. There doesn't seem to be any "economies of scale". JKS, with less than half of STP's revenues in 2Q11, has gross margins far better. Big isn't better. 7. Experience also doesn't matter. If anything, the longer a company has existed, the worse it does. All the European companies aren't even on my list. They are the oldest in the industry, and they are all dying. Older isn't better.