The year ahead for REC


Basic thesis: in a market where polysilicon supply is lower than demand, a firm like REC that has some of the lowest cost of production, should be valued at the replacement cost of its facilities, which should be at least 25 billion kroner (more if they buy up to 49% in Yulin). Price target for 2021: 50-75 kroner. Expecting rest of COVID pandemic to have minimal impact on REC, if anything a positive impact due to "green new deal" recovery policies.

The boom scenario: REC is a spot market player with low(est) cost of production. Polysilicon is a very small fraction of the 1US$/Watt of installed PV: approximately 3 cents. A doubling of the price of polisilicon to 20$/kg, would only raise the cost of an installed PV watt by 3%. There appear to be very few capacity constraints in other parts of the supply chain (wafer, cell, module assembly, aluminium). There has been some limits in glass in 2020, but they are thought to be resolved in 2021. Any shortage in polysilicon is thus likely to result in steep price increases with little negative feedback on demand. A scenario where PV prices rise to 20$ per kilo in the spot market has decent probability of occuring in 2020 / 2021. There is precedent for large increases in poly price, in 2008-2010 when considerably more poly was consumed per Watt, German PV policy resulted in polysilicon prices in excess of 300$ per kg. In a scenario where poly prices exceed 20$/kg, REC should be valued considerably above the replacement cost of its facilities. PT: significantly in excess of 100 kroner per share.



Basic prediction on news flow in early 2021: good flow of REC-specific positive news in 2021 with expected rise in poly price. Expecting the policy environment to be strongly supportive in the USA with COVID recovering spending (Green New Deal) + Support for carbon neutrality + Strong trade stance to secure US jobs. Major RISK: Expecting announcements of big expansion plans of chinese poly producers, but unclear how likely it is for announced expansion to occur and in what timeframe. It could well be that there are several boom years beyond 2021/2022, before new capacity comes on line.

ST polyprice mouvement:
- Polyprice almost doubled with the loss of just some 10k MT in autumn 2020 >> this is a sign that supply must be relatively tight at the moment.
- IHS markit is predicting a lot of price pressure in 2021H1, which they believe will reduce towards the end of the year.
- Even Bernreuter (a poly price bear) predicts a tight poly market in 2021 (although he predicts large capacity expansions in 2022).
- Daqo has entered LT contracts with many customers and is announcing close to sold out capacity in 2021 and 2022 (https://www.pv-tech.org/news/daqo-secures-last-polysilicon-supply-deals-as-technically-sold-out-for-next-two-years)

REC basic
- Q4 results in (February 19.)
- ML re-opening timeframe decision (announcement 2020Q1, probably Q4 results)
- Yulin share: likely financed by emission (2020Q1) - Unclear whether REC can or must act in 2021Q1
- Is REC going to restart ML with production of mono quality. Would seem crazy to not upgrade FBR at ML to Monograde during current shutdown. Failure to perform upgrade would be a big negative as market share of multi has been falling for years.
- OBX inclusion (March 1.)
- Aker financial support has been crucial. Inclusion of REC in Aker Horizon's industrial portfolio would be even better and might also mean that Aker buys up more shares to gain greater control (2020Q1).

REC wild cards:
- RISK: Indemnity loan resolution: might have to pay up.
- Expansion plans at ML (old project that was never completed)
- Licencing deals to build new FBR factories based on REC technology (not inconceivable e.g. India, Saudia Arabia).

Existing partners funding and building progress:
- Actual partner building progress at ML (violet and G14)
- Who is behind Violet Power: probably solid backer (as a high quality leader like Charlie Gay has agreed to lead the company AND they had a supply deal with Meyer Burger)
- Who are Violet Power's customers? Could it be Tesla roof tiles (since Panasonic is no longer supplying them)?
- G14 just secured 17M US$ funding from OCI from Korea in Dec. 2020.

New partners:
- More battery partners: Sila? Sila (funded by Mercedes) is on some of REC's presentation slides.
- Who will produce ingots and wafers at ML for Violet? Norsun?

LT demand for poly:
- Predictions from BNEF that 2021 and 2022 are going to be massive years (30-40% more GW PV installed than 2020)
- RISK: Reduced consumption of poly in wafer cutting: thinner wafers and reduced kerf loss. Great progress has been made over the past 10 years, but additional improvements should become increasingly difficult.

LT supply of poly:
RISK - Bernreuter predicts big addition in 2022 which could be a reality, but:
- Bernreuter has an incentive to hype this to sell reports as this flags a danger on the horizon (>> sell more reports).
- All poly producers have an incentive to scare competitors with announcements of huge future capacity plans to deter competitors from adding capacity.
- GCL is planning FBR capacity, but it is not sure whether they can actually scale this up. REC has a better track record here.

US policy
- Democratic control of Senate (Georgia)
- Trade stance to remain tough: tariffs on China
- ITC support for solar PV >> now part of COVID relief package.
- Direct / indirect support for US manufacturing: e.g. preferential treatment of low carbon manufacturers.

Chinese policy: specifics of new PV policy to reach their carbon neutrality goal (announcement March 2021)

EU policy:
- France and South Korea are favourable to ultra low carbon input and have concrete supportive policies in place.
- REC best on EU taxonomy
- Green hydrogen in Europe will require large investments in solar and wind.
Redigert i dag kl 12:02 Du må logge inn for å svare
Pippen
06.01.2021 kl 18:52 5638

Det var bra trøkk i sluttauksjonen også!
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare
Sirbalo
06.01.2021 kl 19:11 5477

Litt uvanlig høy sluttspurt og den off book handelen... sluttet på HOD...
Kan spekulere mye ... noen som kjøper seg opp før en analyse?
Er jo analytikere som spår mangedobling i bøtter og spann... og vi kommer nærmere og næmere en reel melding om oppstart av ML..
Om den blir tatt opp i aker horizon skal de vel eie 51%?
Vi får se på shareholder listen i morgen :))
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare
Sirbalo
06.01.2021 kl 19:17 5392

Blir EKSTREMT spennende i åpning i morgen :))) mange som nok vil inn døra :))) det kan bli trangt :) er nok lite motstand oppover... folk burde vite nå hvor lav mcap er selv ved 25 kr...
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare
Delonghi
06.01.2021 kl 19:23 5317

Er det noen kyndige som kan fortelle litt hvordan det ser ut teknisk?
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare
Sirbalo
06.01.2021 kl 19:31 5223

Trenger en confirmation candle på den i dag i morgen, da er det super bull på fredag ;)

The market is finally giving hints of a bullish resurgence. Today a bullish pattern is detected.

Med tanke på den sluttspurten i dag og slutt på HOD hadde jeg gledet meg veeeeeldig til åpning :))

Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare
grabein
06.01.2021 kl 20:49 4796

Denne kurven kan bli interessant (sjekk 1Y og 5Y):

https://finance.yahoo.com/quote/LIT/
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare

Definitivt. Det er mest moro å være på karusellen rett før den starter:)
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare
grabein
06.01.2021 kl 20:59 4686

Definitivt!
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare

Bare ikke heltene til sembolinen skaper kaos i Washington nå så skal vi få et fint løft i morgen.
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare
Trier
06.01.2021 kl 21:59 4180

Tror nok ikke morgen blir dagen da aksjemarkedet viser framtidsoptimisme, det sørger den imbisile mobben til Trump for. Hvordan Trump skal unngå å havne bak lås og slå blir interessant - asyl i Russland kanskje :)
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare
Falco1
06.01.2021 kl 22:05 4113

Mannen er f.. meg splitter pine gal utrolig at han greier å få så mange med seg. Flaut for hele USA ... børsen i USA har klart seg bra i dag allikevel utrolig nok.
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare
BørsMR
06.01.2021 kl 22:08 4064

Fleste sol-aksjene i usa opp 8-20 % i kveld. Rec skal opp og teste 17 det føler jeg meg trygg på
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare

Hehe, ja - statskupp i USA hadde vært toppen av ironi😅

Nei, det viser seg heldigvis at de fleste republikanerne har vett i skallen. Trump frykter nok dagen (20.1) når han ikke har makten lenger - Og FBI banker på døren:)
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare

Det blir nok mer enn en test i morgen. Tipper den får forbi 18.
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare
Falco1
06.01.2021 kl 22:19 3924

20.1 ? Avsett dritten i dag forsøk på statskupp burde straffes hardt med lang fengsels straff, gjerne også noen av tilhengerne hans....
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare

ser sol og TAN dabbet betydelig av utover kvelden
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare

Antifa, BLM og demokratene som har laget kaos siste 4 årene. Hudson er fortsatt sår over at Hillary ikke vant 2016
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare

denne skal ta av imorgen. sjekk facebook gruppen aksjeforum de snakker jo om rec der i flere tråder og et jævlig bra skrevet innlegg av en av disse. hvis det blir så mye snakket om på facebook..... da vet vi at folk har våknet opp litt i dag! Tror jeg kopierer og limer inn i eget tråd og kanskje dette er en av oss?? haha.

I morgen blir GØY! Åh elsker følelsen av å vite at jeg kommer til å tjene minst noen hundre tusen kroner i morgen. Ikke værst, eller hva BMWi8? Kanskje det blir 400k til og med! Jadddddaaaa
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare

Ned igjen i morgen, usikkerheten øker

Fredfulle demonstrasjoner mot elitens forsøk på kupp. mostly peacefull som cnn sier
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare
Sirbalo
07.01.2021 kl 09:47 2756

haha, nei vi bare får bekreftelse på bull candle i går for å klargjøre til i morgen :-))) så vil den ta av enda mer :-))
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare

Unexpected good news that should affect Butte positively. This is a source of poly demand that the REC CEO has mentioned at previous quarterly presentation, but looks like it is finally happening.
Car manufacturing hit by global semiconductor shortage - https://www.ft.com/content/e264fd41-7ee9-4fba-be3c-21446298efd9
"The rapid growth of the electric-car market has increased the motor industry’s demand for semiconductors, which power everything from battery management, to driver assistance systems and in-car entertainment."
"Renesas said it has managed to address a sharp rebound in demand for automotive chips by boosting production. But industry officials say there is a shortage in certain chips outsourced to Taiwanese suppliers as well as bottlenecks caused by a **sharp rise** in materials costs."
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare

Is that the sound of some Norwegian PV veterans riding into Moses Lake to help resurrect the US PV industry by freeing it from Chinese tariffs? Get ready for some epic renewable-energy action!

For years, REC has not been able to sell PV poly at a profit, as all PV ingot pulling is in China and there is a 65% tariff on poly import. It is possible (and likely) that during 2021 the chinese poly price will rise to above REC production cost + 65%. REC would then be able to sell to China at a profit despite tariffs. However, this is not the case yet and would seriously limit profits. Further, China could still decide to simply ban poly imports. Of course, there is also the possibility that they could remove the tariffs. The bottom line is that REC is currently locked out of China and entirely dependent on chinese policy decisions which are unpredictable. For a solid and reliable future **independent of Chinese policy**, REC needs ingot pulling in the USA. VP claims to be a cell and module manufacturer, but for their location at ML to make sense, there **has** to be some kind of concrete plan for ingot pulling (and wafer cutting) at ML. Quoting directly from slide 34 of REC's Q3 presentation: "1. REC Silicon & Violet Power to collaborate on nonChina ingot & wafer solution 2. REC Silicon & Violet Power to build out US solar supply chain, including ingot/wafer located in the United States".

The reason the VP ground breaking ceremony is a key event for REC investors is because it is likely to provide concrete information on how REC and Violet power are planning to build a US-based PV supply chain (at ML) within the near future.

What information are we hoping might be made available:
1. information on ingot pulling in the USA to create US-based customers for REC poly: where, when and how this will be built and how it will be financed.
>> I would like to see this date set to a year ahead as it should be realistic to get this done in one year if a diligent ingot manufacturing partner is on-board. I would not be surprised to see NorSun be this partner (see below for rationale). Another wild possibility is that the ingot and wafer can be skipped completely using 1366 technologies approach: silane straight to wafer, but this seems unlikely given the statements in REC's Q3 presentation (see above).
2. Information on backers of VP and customers for cells and modules.
>> It is unclear who the VP backers might be, but it seems fairly likely that they must be a solid outfit with financing in place. One possibility is established module manufacturers. Another distinct possibility is a Norwegian involvement in financing through the Bjørseth company complex and/or Røkke's Aker Horizons (perhaps a joint venture between the two - expertise from Scatec, funds from Aker). The Bjørseth complex definitely has expertise in cells and modules manufacturing dating back several decades. Tesla might be a customer (or a financial backer - unlikely).
3. Political support for PV supply chain in USA and financial incentives / support (to the industry and/or individual companies).
>> It will be very interesting to see what caliber of political dignitary turns up and whether any concrete policy is presented.

What we know about NorSun:
* They supply Panasonic with wafers and Panasonic used to make the cells that went into the Tesla roof tile. But Panasonic is no longer involved in manufacturing these cells for Tesla.
* It is almost certain that NorSun will be supplying Violet Power with wafers from Norway - at least initially (as Violet has stated that they will be supplied by a northern european wafer manufacturer).
* Norsun has managed to compete with China from Norway where labour costs are high, so they should also do well in the USA, as long as they have cheap power and poly, which they definitely do at ML. "Markedet for solenergi er veldig sterkt, og vi ser på flere muligheter for å utvikle Norsun videre, sier styreleder John Andersen i Norsun." "Styrelederen forteller at Norsuns kunder i dag etterspør mer enn selskapet klarer å produsere. Derfor er Norsun avhengig av å øke produksjonen, også utover 1 GW, for å forbli en relevant leverandør for disse kundene." https://finansavisen.no/nyheter/industri/2020/11/10/7586275/norsun-vil-utfordre-kina
* One of NorSun's biggest shareholders is Scatec Holding Company which holds huge values through its ownership of Scatec Solar (hold in excess of 6 billion kroner worth of Scatec Solar stock), so there should be the financial firepower to support an expansion of Norsun in the USA.
* Norsun took 12 months to go from groundbreaking in Årdal to the production of the first ingot (back in 2007-2008). There is little reason why they could not repeat the feat at the industrial park in Moses Lake which has a lot of essential infrastructure already in place (water, waste water management, power, etc). So developments may occur very fast.
* Norsun are specialists in wafer for n-type cells which is the type that Panasonic produces and Violet Power intends to use in their product.
* Norsun is one of the few PV ingot pullers with a non-chinese background (Norwegian Crystals is another). Take a look at slide 23 from Q3 presentation: I don't think the companies mentioned on this slide are just random coincidence. And notice that the leaders of both Norsun and Norwegian Crystals have both been interviewed in Finansavisen in October about connections to Violet Power, and whereas Gøran Bye (CEO of Norwegian Crystals) says "vi kjenner til Violet Power og deres prosjekt, og jeg kjenner også Charlie Gay godt, men vi har ikke noe kontrakt med dem nå", John Andresen from Scatec/Norsun does not deny a link. Reread this article and you will see the light: https://finansavisen.no/nyheter/industri/2020/10/01/7572653/norsun-i-dialog-med-ny-rec-nabo

In summary:
* Norwegian companies have deep and long standing expertise in the whole PV chain through the Bjørseth company complex and both they and Røkke have the will and means to finance large new investments in this industrial space.
* There are already concrete business links between VP and Norsun
* It makes **no sense** for a pure cell/module manufacturer to locate in ML without ingot and wafer production at the same location and REC has said in clear text that "REC Silicon & Violet Power to build out US solar supply chain, including ingot/wafer located in the United States"
* Norsun has world-class technical expertise in building and running an ingot and wafer facility. Such expertise takes a long time to build up and is not something Violet Power is going to want to learn from scatch by itself.
* Finance for building should be available from Alf Bjørseths Scatec complex (deep pockets thanks to Scatec Solar share price rise), possibly with US loans and grants from the state or federal level.
* There are deep historical links between Norsun and REC Silicon. For someone like Alf Bjørseth, it must be a kind of dream to round off your career by building a fully vertically integrated PV supply chain (raw silicon-to-module) in one location with his past and present companies involved. Apparently, he likes to think big: «Tenk stort, Ivar, tenk stort!» sa solgründer Alf Bjørseth til meg, da jeg for noen år siden ledet et havvindselskap delvis eid av hans investeringsselskap Scatec. https://www.tu.no/artikler/den-norske-solbransjen-kan-bli-like-stor-som-norges-tredje-storste-eksportindustri-br/459327

Here is a prediction: there are concrete plans for building ingot pulling facilities at ML and I say Norsun is going to provide the expertise and maybe also some of the finances. But, ultimately it does not matter which company it is, as long as 1. the company is competent, 2. it happens soon and 3. on US soil. When it happens, REC share price should finally begin to reflect the replacement cost of its facilities at ML + Butte + 15% Yulin (with option to increase to 49%) minus debt and other liabilities i.e. well over 50 kroner per share.

Saddle up for a ride into the wild-west sun on groundbreaking day in ML!
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare
DjTao
14.01.2021 kl 10:02 1244

Excellent! CEO of Scatec Raymond Carlsen used to be CEO of Aker Subsea so he knows Røkke and Aker very well.
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare

Another great post by you. Thank you for your contribution. Love reading your posts. One red day, a week of red days, or even months of red days mean nothing when there is so much potential within one company. The future is set in stone, now all that remains is for time to pass and for REC to blossom in this new, green world.
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare

Thanks, I enjoy your posts too. Keep the signal-to-noise ratio on the forum up.
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare

One needs conviction in order to commit to a large investment and hold it regardless of share price mouvement.
That conviction can only come from an overview of all possible future scenarios, their effect on the company's value, and the probabilities of them occurring.
In the case of REC, the probability of the positive scenarios is now as close to 100% as you will ever get.
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare
Sirbalo
14.01.2021 kl 10:52 883

ja man kommer ikke nærmere en dette... VP har sagt de vil bygge istede for å lease, og de kommer til å ta hele produksjonen fra ML, og dette er nå siste ukene de har sagt dette... man kommer jo ikke mer sikkert frem til at ML SKAL opp å gå,... det vil si kursen SKAL laaangt opp.
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare

Actually, I need to correct myself here, it can get closer to 100%: when it becomes 100%, but then it is too late to make a great investment.
Redigert 18.01.2021 kl 22:13 Du må logge inn for å svare