By Richard Rittorno
JinkoSolar Holding (NYSE:JKS) CEO Chen Kangping said today that China's solar panel manufactures should begin to see a recovery in solar power as soon as this year. Kangping went on to say that "we believe those companies that perform well, including Jinko, will be profitable in the second half of this year," and those remaining Chinese solar companies that can survive the turn in 2013 should be able to print a profit next year.
JKS is now seeing order volume beginning to approach saturation levels for production. This is key for JKS as it puts the company in the driver's seat, and allows it to be more selective on which orders it processes first, allowing for higher profit margins from its larger long-term clients. With China's government shift to power generation projects in solar and other clean energies, Li Hejun, chairman of the China New Energy Chamber of Commerce, is expecting nearly 10 trillion yuan -- or roughly 1.6 trillion U.S. dollars -- in value over the next few years. He went on to say during his speech at the Chinese People's Political Consultative Conference that even though the domestic market (China) is promising and strengthening, the global market in the space continues to be challenging.
When asked during the conference where Chen saw opportunities, he said that the emerging markets of Africa, Middle East, and Southeast Asia are promising. He went on to say there is less competition in these markets and more focused on getting service rather than price. With close to an 85% drop in JKS stock price from 2010's high of $41.75 due to production overcapacity, and now that JKS is looking to emerging markets and the possibility of more consolidation within in these markets, JKS should be able to maintain strong margins as it expands into emerging markets.
Bottom Line: JKS is back on my radar as an early speculative play. There is no rush to jump into this name, and with the stock being listed on the New York Stock Exchange, I'm waiting for an overall U.S. equity market pullback to grab a better entry point in JKS.