Unfortunately, more negatives than positives for WEMU. I see future net income being pressured downward in three ways for the rest of this year (and possibly beyond):
1. Solar module market continues to show declining ASPs. I think you even heard the RedChip analyst elicit a surprised reaction that WEMU was able to get 2.00/module.....I think that most prices are down a bit from those levels (not what the CEO said).
NOTE: The link shows retail prices, not wholesale, which is what WEMU was quoting. However, I think you get the general point, which is that prices are showing no signs of strengthening.
Lots of articles/analysts predicted this price drop for modules because of increasing capacity that is causing a glut of supply. That scenario is playing out, and WEMU will continue to be impacted, imho.
2. Ningbo (sp?) facility and outsourcing. This was supposed to be another catalyst for improved GMs this year, but this is now not occurring at the predicted pace (reading between the lines). Management didn't want to discuss the % of outsourcing in the quarter, but it seems that they are changing gears and trying to build a new factory on land they own the rights to. This will further delay any improvement in GMs.
3. Minority interest expense. Did management factor this in to their net income projections? It wasn't discussed on the call, but it could be a significant expense going forward depending upon how it is calculated.
4. Refusal to disclose backlog in terms of units. From their previous PRs, giving backlog in terms of $$ and not units was a bit disingenuous and misled many investors because they didn't include their price/unit projections. They also didn't disclose that GM in the backlog weren't fixed. A prudent and seasoned solar investor would have seen through this, but it was a big eye-opener for others.
Those are the take-aways that jump out to me after digesting the call and the Q. I think there are better oppts out there....
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