First Solar Review: investing in solar panels

Обзор First Solar: инвестируем в солнечные панели

First Solar (NASDAQ: FSLR) is an American solar panel manufacturer and service provider in the industry.. The company breaks even and is inexpensive. But the current speculative interest of investors in solar energy is not so important for the company., how to preserve the existing system of benefits in this area.

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

FSLR is engaged in the design and manufacture of solar panels and provides services in this area. The company's revenue according to its annual report is divided into two segments:

  1. Solar modules - 79,74%. Segment gross margin — 20,29% from its proceeds.
  2. Other - 20,26%. Segment gross margin — 43,42% from its proceeds. In this segment, FSLR provides services: involved in the construction of solar power plants, operates and maintains solar energy systems, sells energy from its solar stations, engaged in design and procurement work in the field of solar energy, as well as control of foreign stations. As a matter of fact, the segment works to service power generating enterprises.

Revenue by country and region:

  1. USA - 84,03%.
  2. Japan - 7,1%.
  3. France - 4,15%.
  4. India — 1,28%.
  5. Australia - 0,4%.
  6. Canada - 0,18%.
  7. Other, unnamed countries - 2,86%.

The main consumers of the company are integrators of relevant solutions and housing and communal services enterprises.

Обзор First Solar: инвестируем в солнечные панели

Обзор First Solar: инвестируем в солнечные панели

Arguments in favor of the company

This sun won't go out. Reception of solar energy in the world is happening rapidly, among other things, and through open and hidden subsidies from governments. This will help maintain demand for the company's products and may attract speculative investors into its shares..

energy crisis. The recent rise in prices for traditional energy sources could spur the world's transition to clean energy - provided, that gas and oil prices will remain high for quite some time. absolute guarantees that, that it will be like this, No, but still the probability of this is high - and this makes companies like FSLR quite an interesting investment.

Inexpensive. The company is not very expensive: P / S — 2,91, P / E — 18,16 And, finally, capitalization 8.94 billion dollars. Combined with the improving market conditions for her business, we have some reason to expect an influx of investors into these shares..

  of interesting:

Accounting. The company is not burdened with large debts: enough money at her disposal, to close over 99% all her debts. It's good: large debts scare away investors in a situation, when everyone expects a raise.

Обзор First Solar: инвестируем в солнечные панели

New power generation facilities in the USA, introduced in 2021

Wind 40,8%
The sun 35,6%
Gas 18,8%
Biomass, oil, hydropower and others 4,9%

40,8%

What can get in the way

Logistics. Tem, who will invest in these shares, several supply points should be taken into account.

First moment. The company has only a third of its assets located in the US, the rest of the assets are scattered mainly in Asian countries, but not in China. Rising shipping costs and disruption to supply chains will hamper the company's operations in the next couple of quarters, because, as you remember from the history with Trafigura, The trucking world is in a bit of a mess right now..

The second point is the availability of the right raw materials in the long term.. Solar panels are very voracious in that, with regard to minerals. This raw material is mined in a limited number of countries, and the share of some countries in the production of this raw material will gradually increase.

This can lead to supply issues., because all ports of the supplier country may be quarantined or supplies may be interrupted due to the political motivation of the exporter. This is a long term risk., and it doesn't work right away., but it must be taken into account.

Обзор First Solar: инвестируем в солнечные панели

Обзор First Solar: инвестируем в солнечные панели

Concentration. The company's two large customers provide a disproportionate percentage of revenue - 12 And 10%. A change in relationship with one of them could negatively impact First Solar's reporting.

California love. In February, I wrote about the possibility of California reviewing the Solar Benefit Program.. If such a revision occurs, then solar panels will become less profitable for California citizens.

Faced with strong opposition from the public, State regulators postpone vote on new standards indefinitely, but didn't give it up. The abolition of the system of benefits in its current form may have negative consequences for the company. Mainly because, that California emission standards are accepted by all progressive states. And if California starts winding down these programs, then the rest of the states can follow suit.

  about how not to do

Well, California also accounts for a significant part of solar panel sales - this also needs to be taken into account..

Unfortunately, the situation with the abolition of the existing system of California benefits hangs like a sword of Damocles over all solar businesses, and incomprehensible, when the state regulators will make a decision and what kind of decision it will be.

Other perks. Now in the US there is a discount: deduction 26% from the cost of the solar panel. In 2023, the benefit will be reduced to 22%, and in 2024 - to 10%. All this in itself will make solar energy projects less attractive.. If oil and gas prices remain high for a long time, then this will somewhat balance the loss of benefits.

Обзор First Solar: инвестируем в солнечные панели

Resume

FSLR is a very interesting company, and it's not that expensive, how could. But still, I would like to wait for more or less clear signals on the cost of traditional energy sources.. The more expensive they will remain for as long as possible, the more widespread will be the adoption of solar energy.

Well, at least it's worth a look., How will the situation with direct and indirect support for clean energy in the US develop?.

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