2010
November 18, 2010
Note the Chinese government has completely denied any wrongdoing and it is almost impossible to prove the allegations.However the Chinese Origin IP Addresses point to the Chinese origin of the attacks.One of the main reasons for Google leaving China was the cyberattack on Google computers.China has become the 2nd largest economy in the world and a major world power.With growing power comes more responsibility though can't think of any global power taking much of that ( USA till recently believed in preemptive attacks on weaker countries).Growing cyberattacks will lead to increased security and restriction of the Internet which is to the detriment of all countries.Note the development of Networking and Communication Technologies has been a key element of the growing prosperity the world over.
November 18, 2010
India's Fast Growing Economy based on Consumption rather than Exports has made it a Darling for International Fund Managers.When the whole world is suffering from some structural crisis or the other,India seems an like an oasis in the desert.However like a Mirage,the Governance and Regulatory Shortcomings make India look much better than what it is.$90 Billion of Record Foreign Inflows have been invested into India mostly into the booming Stock Market even as Indian Retail investors have fled.The dichotomy is perhaps explained by the problems faced by people on the ground who have a better sense than Fund Managers sitting in their Glass Towers in Singapore,New York and London.Insitutional Investors in India are mostly Compromised or Incompetent in my view herding into the Indian Markets dazed by the positive aspects of the Indian Economy while glossing over the Risks.Crushing Income Disparity where a $2 Billion Home is constructed while 80% of Indians live on less than $2 day,Pervasive Corruption with Billions being Swindled in Telecom and Land Scams,Massive Red Tape and Policy Bankruptcy has been ignored.However these Risks remain as can be seen by the SKS Microfinance Debacle.
November 18, 2010
Toyota is a Leader in Hybrid Vehicles with its iconic Prius the biggest selling Hybrid Car by Far.Toyota has been cautious about the growing rush into the Electric Vehicle Category.It has tied up with the much hyped up US Startup Tesla to introduce an EV RAV4,however its concentrating its energies on the Hybrid Car Market.Note another Japanese Automajor Honda is putting its bet on the Hybrid Segment of the Green Vehicle Market.The Economics of the Electric Vehicle Market as well as its Carbon Footprint is suspect despite all the media hoopla being created around it.While the Competition has increased substantially around both the EV market and its allied Battery Sector,the profits are far off.Hitachi has forecast losses for the next 2-3 years as China and USA compete to create national champions in the EV sector with Obama aiming for a 40% global marketshare .
November 18, 2010
Chicago Climate Exchange the only USA Exchange to allow trading of Carbon Emission Credits has been shut down by its owner ICE.While I am no fan of Carbon Emissions Cap and Trade Policy as it gives rise to Frauds and Misplaced Incentives,the mechanism is one of the popular subsidy tools in combating Global Climate Change.Note Carbon Cap and Trading was on the Policy Agenda of the Obama Administration,however a deadlock in the Senate prevented any move in 2010.The US has been a huge laggard in the global warming fight and with the Republican Ascendancy following the MidTerm Polls,things are set to stay the same.Despite the BP Oil Spill and Record Global Temperatures,US remains blind to its climate obligations.With US reluctance,the Climate Change has been in Cold Storage with little progress expected in Cancun Meet.
November 17, 2010
India's Fast Growing Economy is seeing substantial churn in the Top 10 Rankings for Companies.Coal India which recently did a successful IPO straightaway went from being a Government Owned Private Company to the Top 5 in Market Capitalization Rankings.The Top 10 Rankings are dominated by State Owned Companies known as PSUs in India.Despite Privatization in the 1990s,Government Companies Lead the Rankings.Note the Top 10 Rankings don't have any Private Companies because of the lack of good information about their Financials.Note Most of the Largest Companies in India are related to Banding and Oil/Gas as is the case worldwide.India's Technology Companies like Infosys,TCS and others are still way behind in Revenues compared to the dominant Materials,Fossil Fuel,Industrial and Financial Sectors.However note that the diversity is much greater when you rank the companies by their market capitalization.TCS and Infosys are both amongst the top 5 recovering strongly in 2010 from their 2008 underperformance.You also see a Capital Goods and Telecom Representation in this Top 10 Rankings
November 17, 2010
Giant Chinese Utilities Datang and Huaneng are doing roadshows for the IPOs of their Renewable Energy Arms which would raise more than Billion Dollars Each.Note Green Utilities have become a separate Green Investment Class with lots of Asian and European Utilities already doing an IPO of their Green Subsidiaries or are in the process of doing so.However 2010 has been a bad year for Green Energy Stocks and Green Utilities have been no different.While First Wind Holdings a pure play USA Wind Farm Developer failed to get listed despite lowering its Issue Price,Indian Orient Green Power and Italian Enel Green Power have performed miserably even after listing at a much lowered stock price.Despite the negative sentiment towards Green Utilities mainly due to the Headwinds being faced by Wind Industry in 2010,Green Utilities are one of the safest ways to invest in the Alternative Energy Sector given the nascent highly volatile nature of the industry.
November 16, 2010
Corruption in India has taken a widely virulent and blatant form with scams popping up almost everyday.Greed is Good has become the motto for India's Role Models in Sport and Military as well.India's Politicians are Leading the protagonists with Realty being the Main Theme.Note Real Estate companies in India are notorious for corruption with the sector being avoided by Fund Managers.India's Southern State of Karnataka is known for its IT Industry with capital Bangalore famous as a Knowledge Hub.However the Politicians of that State have made it the Corruption Capital with Bangalore equally famous for Land Grabbing and Real Estate Scams by Bureaucrats and Politicians.While Districts in the State have been made famous by Robber Mining Barons,the capital is famous for Realty Shenanigans.
November 16, 2010
India's Relations with its Neighbours in South Asia has mostly been strained despite sharing a common history and culture.While China and Pakistan remains India's topmost concerns with 4 wars being fought with these 2 countries in the last 65 years,the other smaller neighbours have not always been too friendly.However things seem to be improving with Bangladesh which is completely encircled by India on 3 sides.Bangladesh has viewed Big Brother India with suspicion despite India playing a crucial role in Bangladesh's Liberation from Pakistan during 1971.However the Bonhomie since 1971 was lost as subsequent military rulers and the BNP ruled coalition viewed India as an adversary.However the coming back to power of Shiekh Hasina led AWP has put India and Bangladesh on a new level.The reasons behind India-Bangladesh closeness are due to
November 16, 2010
Valuation
MOIL has a Net Worth of Rs 1860 crores and a NAV of around Rs 110/share.The Company will probably earn around Rs 700 crore this fiscal year after doing Rs 465 crores last year (which was a bad year for the industry).Operating Cash Flow has been generally higher than the Net Profit leading to improved cash position over the last 4 years.The Capital Requirements of the Business is quite low leading to high Return Metrics.If the Government sells the 20% stake at Rs 1500 crore that would give the company a market cap of Rs 7500 crore.Taking out the Rs 1700 crore in cash would make the company be valued at 3.2x BV and 8-9x P/E.This is a substantial discount to Global Mining Companies.
Summary
Like Coal India Limited,MOIL looks like a very safe commodity investment at a cheap valuation.With growing Indian Demand,MOIL can hardly miss continuing on a steady 10-15% earnings growth over the next 4-5 years.If the commodity prices flare up again like 2008 due to QE2,then MOIL provides a big upside as well.Its a good investment for investors looking to invest in safe mining plays.With government ownership,the typical Indian management risk is also greatly mitigated.
November 16, 2010
India has a huge potential in Solar Energy Generation which is being strongly supported by the Federal Government under the JNNSM Scheme and by individual States […]
November 16, 2010
India has seen a rash of junk IPO offerings in the past year due to the strong bullish conditions.Most of these IPOs have managed to raise money based on stock market shenanigans by Market "Operators".More than 50% of these micro cap IPO junk has given negative returns but the flow seems unabated as India has become an IPO Pump and Dump Heaven.Aster Silicates,Tarapur Transformers,Prakash Steelage,Sea TV are some of the microcap junk that I have written about earlier.R.R.P Constructions joins the infamous bandwagon trying to sucker money from retail investors.The Company is expensively prices,slow growing (compared to other construction peers),has management that you would not want to trust a dollar with,high debt and still wants you to pay ~25x P/E.There are many better opportunities in the Construction and Infrastructure Space in India right now for example Tecpro Systems and VA Tech Wabag.Here are some R.R.P Construction stock negatives gleaned from its DRHP as I could not find any positive about the company.
November 15, 2010
Green Buildings are a huge multibillion dollar industry but from an investor's point of view the information and investment avenues about this very important Green Sector remains surprisingly scare.Most of the investment options in Green Buildings remains confined to huge conglomerates like Johnson Controls,Honeywell,Schnieder Electric,Siemens and a few small startups like Serious Materials.Most of the information about Green Buildings can be gleaned from the US Green Buidling Council and EPA.Interest in Green Buildings started in the 1970s and still remains a niche concept despite huge strides in the 21st Century.Certifications like LEED has brought awareness about Green Buildings but they still occupy a remote corner in the Green Investor's mind.In the Green Building Series,I will try to explain the concept of Green Buildings.For a start here is the Definition of a Green Building also known as a Sustainable Building.
November 15, 2010
White-box vendors now sell through market stalls and mom- and-pop retailers in India, Russia, the Middle East and Africa and Latin America, where the operators don’t own the channel, Milanesi said.
November 15, 2010
Solar Energy in India represents one of the best Energy opportunities in the 21st Century.However the growth at least in the initial stages will be geographically unequal.This is due to the fact that Solar Power requires strong government support and subsidy currently.Without a proactive administration which smooths out the process of setting up a solar plant,growth of solar energy is almost impossible.The Indian Federal Government has already given it a strong push targeting 1000 MW by 2013 and 20 GW by 2022 under the JNSSM.While the Subsidy Program is facing some initial hurdles due to debt financing and aggressive project bidding,the long term secular growth story remains good.Some states have also been aggressive in supporting solar energy namely the western states of Gujarat and Rajasthan.
November 15, 2010
India's 150 MW Solar Allocation to PV Technology has seen overbidding upto 10 times and the winners will be decided based upon the discounting on the Rs 17.91/Kwh (40c/KwH).The discounting promises to be clearly be irrational and loss making as Large Conglomerates and Integrated Solar Companies fight with each other to win projects at any cost.Feed in Tariffs across the world has only worked out well where there is no discounting or bidding mechanism.In case of bidding,especially in immature nascent markets,the winners of the projects end up as the losers.Renewable Energy also ends up on the losing side as many of these projects are not completed or have to be restructured defeating the entire purpose of the Subsidy Scheme.India's Solar Energy Sector promises to be one of the biggest energy opportunities in the 21st Century.However this will require a very smart subsidy strategy by the government
November 15, 2010
First Solar,the US based Cadmium Tellurium (Cd-Te) is the lowest cost panel producer in the world today if you don't include any penalty for low efficiency.Even if you penalize the Cd-Te Technology for its lower efficiency vis-a-vis the higher efficiency crystalline technology,First Solar is clearly the leader with a core cost of 74c/watt.The company has a roadmap of reducing the cost to 52c/watt by 2014 and given its track record it seems quite achievable.In Cd-Te,some new competitors have claimed even lower costs than First Solar but they have yet to prove it in large scale production.General Electric,Abound Solar are some of the other Cd-Te players which are planning commercial production in a year or two.But with around 2 GW of capacity,they will have a lot of catching up to do.
November 14, 2010
IREO,a new Real Estate Company which is making waves in India's National Capital Region (NCR) with glitzy projects has now come under the tax scanner for illegal fund inflows from tax havens of Mauritius and Cyprus.It is alleged that black money from India has been roundtripped through these tax havens in the guise of Private Equity Money.It is an open secret that Black Money from India finds its way back to India through tax havens in the form of foreign investment when it just a roughtripping of domestic money.The figure quoted is around $1.5 billion of illegal money pouring into 26 companies associated with IREO.The company came into focus during the Commonwealth Scam and is linked to an Opposition Party leader.As usual their are denials,media circus and the whole thing will end as it does all the time with Nothing Happening.
November 14, 2010
The South Korean government is the most aggressive administration when it comes to establishing a Green Economy of the future.The Koreans have established the biggest Green Stimulus as a percentage and are following it up with massive investment in different parts of the Green Economy.Korean Chaebols LG,Hyundai,Samsung,Daewoo,Posco,SK Energy,Hanwha have taken the cue from their home country in charting out an ambitious roadmap in solar,wind,green vehicles.Hyundai has ramped up investment in the Solar Energy sector tying up with Glass Giant Saint Gobain,while LG and Samsung are going it alone putting up facilities to produce crystalline solar panels.Hanwha has bought a big Chinese solar panel producer while Daewoo is setting up WTF facilities.
November 13, 2010
However Solar Capacity in the Industry has increased rapidly particularly in Taiwan and China.Besides Semiconductor and LCD Heavyweights like AUO and TSMC have made huge investments into Solar Production.Korean Companies are too making a strong entry into the already crowded segment.Despite some capacity build in the wafer and module parts of the supply chain,Taiwan remains largely a cell producer.Compared to the integrated Chinese producers like Trina,Yingli,LDK and others,Taiwanese Solar Makers are vulnerable to sharp price cuts.They depend on European customers who are largely uncompetitive and would face huge pressures with the decline in the German market.Chinese producers have much lower costs due to their vertical integration which currenly most Taiwanese lack except Motech.Taiwanese Cell Capacity is set to increase manifold next year from the current 5 GW.Most of the Tier 2 Cell Producers would be running empty while even Tier 1 players will see a sharp decrease from this year.
November 13, 2010
Siemens has planned to increase its Environmental Revenues to Euro 40 Billions by 2014 which is quite a big jump considering the large base.GE is its biggest competitor which is also rapidly increasing investment and research into Renewable Energy.Areva,ABB,Samsung,LG,Hyundai,Toshiba,Sharp,Panasonic,Mitsubishi are other industrial giants looking to rapidly increase revenue from Clean Technology.Siemens has a definite technological and incumbent advantages however the competition is quite formidable.Siemens has made important wins recently in the field of high speed railways,new generation high voltage DC electricity transmission,offshore wind etc.But it lacks size and scale in the fields of nuclear and solar energy and has little presence in the area of Energy Storage as well.While Siemens has bought Soliel in the Solar Thermal field,it lacks a Solar PV product portfolio.Siemens however remains a good long term safe green investment in a volatile cleantech sector.
November 13, 2010
Solar Energy Future Growth has been vastly underestimated by policy makers and analysts but private companies are recognized the huge potential.India's JNNSM Policy which is meant to jumpstart India's Solar Energy has drawn huge interest from both domestic and foreign companies.The number of Solar Companies in India are growing at a rapid pace attracted by the huge opportunity.While starting troubles like project financing of debt etc are present,the long term growth potential of Solar Energy in India is tremendous.Global Industrial Giants like GE,Siemens have already established or in the process of investing huge sums of money to capitalize on this Green Trend.Now French Giant Areva has joined them.Note Areva is the global leader in nuclear equipment technology and is not known for its prowess in Solar and Wind Energy.However the company is making a play in Solar Thermal Technology where it hopes to use its existing skills and knowledge.Areva had acquired US startup Ausra which had fallen on hard times earlier.However Areva has not won too many Solar Thermal Projects in the recent past.However things may change starting with India
November 13, 2010
Australia has shortlisted 8 projects with 4 Solar PV and 4 Solar Thermal Projects for its Solar Flagship Program which will be decided in 2011.BP Solar with 150 MW and Suntech/Infigen with 195 MW are on the shortlist.The other 2 companies are energy utilities which are proposing to use Cd-Te Panels ( I think from First Solar).Note both of these energy utilities are small and might face problems in fund raising and execution.The firms shortlisted for the Solar Thermal Projects don't inspire much confidence either.The selection procedure and how the subsidy will be disbursed has ran into controversy with accusations of bias and partiality.WA has not gotten any projects while Queensland province has gotten most of the projects.The firms shortlisted have also come under fire as they don't have much experience.Not much information on how the firms were shortlisted but these companies are definitely not the best or cheapest by a big margin.Australia has generally made a mess of promoting renewable energy with New South Wales cutting feed in tariffs sharply after giving an overly generous subsidy.The Solar Flagship Program looks like an expensive mistake in the making if it comes to fruition.
November 13, 2010
Solar PV Technology have made a huge advance in the last 2-3 years leading to a demand explosion with more than 100% growth forecast this year.Crystalline PV Technology as well as Thin Film Technology like CIGs and CdTe have reduced their costs drastically.While Solar PV still requires generous government subsidies for their growth,grid parity has come very close.Solar PV Technology has become economically competitive in parts of Italy where a unique combination of high electricity rates and sunshine have made Solar PV Technology very attractive.Costs are being reduced at more than 10% per year which would make Solar PV competitive in 2-3 years in most parts of the world.However mainstream and reputed forecasters and companies like Boston Consulting Group remain blind and ignorant to this.BCG in a recent report has said that biofuels and Concentrated Solar Thermal (CSP) Technology will become competitive.I have issues with both of these technologies.
November 13, 2010
India's Stock Market remains a heaven for Pump and Dump Operators of IPOs.Despite some high quality IPOs in recent times like Coal India,the majority of the IPOs being done are by fly by night operators and promoters.Their is little justification for the valuation and the subscription numbers.But it is a lucrative trade for shady operators who easily manage to manipulate small cap IPOs leaving huge losses for retail investors.The stock market regulator SEBI strangely remains asleep at the wheel despite some blatant pump and dump issues.More than 50% of the IPOs in the Indian stock market over the past year are below their issue prices.But there has been no investigation and prosecution over these white collar crimes just seem gentle scolding.Like the totally infamous and ineffectual SEC of the US Stock Market,SEBI looks more and more like a toothless tiger.Despite some laudable reforms in favor of retail investors,it needs to act more quickly and reform much more.
November 13, 2010
4) Parking Fights - Most of Indian cities are unplanned without any parking for most houses.This leads to a huge problem in terms of illegal parking.Even Legal Parking sees fights between neighbours leading to fights and sometimes even deaths.With thousands and millions of car hitting the roads every day and month,the problem is growing even more acute.No solution in sight as Indian politicians happily line up their pockets in corruption scams.
Summary
India's Transport Policy is a total mess with no solution in sight.Public Transport is not given enough money or resources to make a difference while Indian auto companies are making huge profits.Construction of the recent Metro Railway to Delhi's satellite city of Gurgaon has already been filled to capacity not reducing the pressure on the main highways which remain chock a block with cars 24 hours a day.India needs to massively invest in public infrastructure and dis-incentivize private modes of infrastructure like cars through congestion and fuel taxes.
November 4, 2010
AUO is investing massively in Solar Energy to build a multi Gigawatt capacity in partnership with US Solar Efficiency Leader Sunpower.Not only is AUO building a huge factory in JV with Sunpower in Malaysia,it has also made plans to set up a 2 GW Solar Crystalline Solar Cell Fab in Taiwan.This will be a 50:50 mix of multi and monocrystalline technology.Note the solar market despite seeing a massive 100% jump in solar demand in 2010 faces a huge supply overhang from a number of new large players.TSMC,Samsung,Hyundai,Saint Gobain,BYD are just some of the heavyweights ramping up their solar expansion plans.AUO faces a tough time in this crowded market which already has Chinese incumbents establishing gigawatt capacities.A new player needs to differentiate himself in the increasingly commodity market that solar modules have become.
November 4, 2010
In my previous missive I had opined that the US Solar Energy Policies were misguided as President Obama visited a Solyndra Factory and the US Department […]
November 4, 2010
India's Cricketing Icons are considered as role models by majority of the youth.India's cricketers like Sunil Gavaskar,Kapil Dev are revered in the country due to the huge popularity of the game.However India's recent cricketing league IPL has been found to another massive corruption scam.No jail terms as usual but a lot of political turmoil and media jumping around.India's top ministers have been indirectly implicated but nothing has happened as usual.Now it has been found that India's top former cricketers are also a part of this Greed Fest.Sunil Gavaskar,arguably India's best known batsman has got caught in a controversy.He has demeaned himself by asking for a huge payment that he was promised to be a member of the governing council of the corruption tainted IPL.Any upright person would have totally disassociated himself with the whole corruption game.By asking for a huge sum for his services,even this cricketing icon has fallen.India has very few role models left.
October 30, 2010
The US Wind Industry has been facing headwinds since the beginning of 2010 due to a confluence of adverse factors.This has continued till the 3rd quarter of 2010 with AWEA reporting just 395 MW of capacity installation and a 72% fall in wind capacity since the beginning of 2010.This is a drastic fall and the main reason for the Wind Industry falling into a coma is the legislative lethargy of the US Government.Despite lots of noise,no climate change or energy legislation has passed the Congress and Senate leading to the moribund state of the US Wind Industry.Note China and Europe are pressing full throttle on Green Industry Growth with a climate laggard like UK also taking a leadership in the offshore wind industry.China will continue its strong wind growth in 2010 installing around 50% of the overall global capacity.Its Wind Companies like Sinovel,Goldwind and Ming Yang are now trying to penetrate foreign markets while US Wind Turbine makers like Clipper have sold themselves unable to survive independently.
October 30, 2010
Planned Czech Solar FIT cuts will heavily favor subsidies to Small Distributed Rooftop Installations
Czech has seen the biggest Solar Growth Explosion compared to its size powered by extremely generous feed in tariffs.This has made Czech one of the top solar installers in the world and led to a huge public backlash.The Czech government has responded by proposing to bust the Solar Energy Bubble by drastically cutting down the Feed in Tariffs.The administration is also trying to reign in the ballooning subsidies from existing solar plants by imposing taxes on solar plants and carbon credits.This is being done as the Czech consumers face a 15-25% increase in electricity prices next year.The country had little option as its very badly designed tariffs had led to a situation where Czech Industry faced the prospect of becoming uncompetitive.