Enphase Energy Review: investing in inverters and solar energy

Обзор Enphase Energy: инвестируем в инверторы и солнечную энергетику

Enphase Energy IncENPH$166.13BuyService in partnership with Tinkoff Investments. Quotes are updated every 15 minutes

Enphase Energy (NASDAQ: ENPH) - American supplier of power systems for solar energy. This is a successful and efficient business. However, its cost raises questions..

When creating the material, sources were used, inaccessible to users from the Russian Federation. We hope, Do you know, what to do.

What do they earn

The company designs and sells solar microinverters - essentially, this is the main part for solar panels, which converts solar energy into electricity. More Enphase Energy sells modules to control solar panels. There is no segmentation in the report, but it doesn't really matter.

The company's annual report is rich in technical details., but there is no special information about the business there, and that's bad. Known, that Enphase Energy not only sells the microinverters themselves, but also provides services in the field of solar energy, developing the software division.

Обзор Enphase Energy: инвестируем в инверторы и солнечную энергетику

Обзор Enphase Energy: инвестируем в инверторы и солнечную энергетику

Arguments in favor of the company

Energy is energy. Enphase Energy is one of the best companies in its field. And her area, solar energy, – beneficiary of direct and implicit subsidies from governments of different countries. This may help pump up her quotes ESG lobby.

Rising prices for traditional energy sources and the emerging aggressive transition of the EU to clean energy sources in order to reduce energy dependence on Russia play into her hands..

I see this as one of the main drivers of the company's business growth in the future.. Although the main market for it now is the USA, and that could be a problem. But I still think, what Enphase Energy can capitalize on the EU's hyperactive transition to clean energy. By the way,, in the European Union paid great attention to clean energy in 2020 in the structure of spending on stimulating the economy in the era of the coronacrisis, so they are very serious.

Обзор Enphase Energy: инвестируем в инверторы и солнечную энергетику

Development develops. Except microinverters, the company began selling components and devices for managing solar energy systems to its customers, as well as own systems.

Her evolution in this regard is very clear.: in 2019, Enphase Energy sold only inverters to the average household and could only earn $2,000 worth of them from them. In 2021, to those that have risen in price by 300 $ inverters added batteries costing in the range of 6.2-7.2 thousand.

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In 2023 inverters will be more advanced, refueling components for electric cars will also be added to the company's product line, control panels, software offers and other things, which will increase the potential for receiving revenue from one household in the region of 12 thousand. All in all, according to the company's plans, that her business is moving in the right direction.

Обзор Enphase Energy: инвестируем в инверторы и солнечную энергетику

What can get in the way

The Question of Benefits. Now in the USA there is an exemption for those, who installs solar panels: they get a deduction 22% from the cost of the panel. It's already less, what happened in 2021 26%.

From 2024, the benefit will cease to be valid - there will be a deduction 10% for enterprises, who install solar panels. Due to the abolition of benefits, the company's sales may fall, if she doesn't lower the price. well, Or will it lower prices?, but with negative consequences for the profitability of your business.

Consideration should also be given to the possible removal of a generous system of incentives for solar panel users in California - the main market for solar energy in the United States.. If cancellation occurs, this will be a problem for Enphase: her sales may well drop. And other states may follow the example of California - and the negative effect may intensify..

Accounting. At the moment, the company has 1.649 billion debts, of which 439.796 million must be repaid during the year. Enough money at her disposal to close urgent debts. But the debt is still high, taking into account the possible slowdown in the growth of Enphase Energy due to the abolition of benefits in the US.

Logistics. A significant share of the company's assets in Asia, as well as the operations of its production counterparties. In connection with the well-known events around the Russian Federation and the developing logistics corona crisis in Chinese ports, I would prepare for that, that the reporting of Enphase Energy the next couple of quarters will suffer. We do not forget about the growth in the cost of raw materials and components for the company, in particular chips. This problem will also affect her business.. Although I, certainly, I'll be glad to be wrong.

But the company's performance is already suffering due to these factors.: margins are slowly declining.

Expensive. The price of the company is bewildering: P / S = 20 and P / E = 191,4. Capitalization is more than 27 billion - this is a lot, and therefore, for its further pumping, significant efforts of the green lobby will be required. The question here is, whether engaged banks and funds will be ready to enter the company's shares at such a price, like now, - and even more so pump it significantly above this level.

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Обзор Enphase Energy: инвестируем в инверторы и солнечную энергетику

Обзор Enphase Energy: инвестируем в инверторы и солнечную энергетику

Company assets in different countries, one thousand dollars

2020 2021
USA 19 870 37 685
India 4371 17 490
China 9948 12 906
Mexico 4808 8735
New Zealand 3837 4622
Other 151 729
Generally 42 985 82 167


24 March 2021 I bought these shares on 155,97 $, to sell them for 190 $ during the next 15 Months. Bought, literally "because ESG", in counting, that an inadequate ESG lobby will keep quotes afloat contrary to economic logic.

In November, the shares were already worth 267 $, exceeding historical highs, and i took profit 71%.

Does it make sense to take these shares now? It seems to me, here it would be better to wait for the development of the situation in at least one of the two key stories for the company:

  1. How prices for traditional energy carriers will behave. The longer they stay at their current high levels, the more active will be the reception of solar energy in the world.
  2. How will the situation with the abolition of benefits for users of solar panels in California develop?. Unfortunately, there is less certainty: California regulators should have made a decision a month ago, but postponed the vote on this issue indefinitely.

Already starting from this, decision to invest in Enphase. In my opinion, the current price of its shares, combined with visible logistical problems, could lead to a sell-off. Although there is a possibility, that the green lobby will pump up her quotes for ideological reasons.

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