- JinkoSolar is a profitable, vertically integrated solar manufacturing company that has room to grow.
- JinkoSolar's stock has been pummeled because of a broader sell-off in the solar market caused by cheap oil.
- At its current share price of $17.42, it trades at a significant discount with a P/E ratio of 6 and Enterprise Value/EBITDA of 6.7.
- However, uncertainty in the oil markets has the potential to continue to depress JinkoSolar's share price.
- JinkoSolar is expanding its business portfolio to include the downstream solar segment.
- JinkoSolar boasts one of the most vertically integrated solar manufacturing value chains in the industry.
- The company has impressive financials and an extremely competitive cost structure.
- The solar market in the APAC region, especially China and Japan, is growing at an impressive pace, and JinkoSolar is looking to make the most of it.
- JinkoSolar is improving its capacity in order to benefit from an improvement in the pricing of solar modules.
- JinkoSolar's valuation is cheap, and its earnings are expected to grow at a rapid pace in the next five years, making a good buy on the drop.
- JinkoSolar has high margins as compared to its peers due to its low-cost manufacturing.
- It is increasing its focus on the solar system development segment.
- JinkoSolar enjoys strong support from the Chinese government and state-owned banks.
- The company reported another profitable quarter as margins and panel prices have stabilized.
- JinkoSolar shares sold off, then rallied on Q3 earnings.
- The first must have been a mistake, as there really wasn't any bad news in the figures or revealed during the CC..
- The market seems favorable for the shares to rally further as the market expands further, prices are stable, trade frictions might be resolved and the company benefits from an increasing.
- JinkoSolar shipment miss appears to result from capacity constraints that were more of a timing issue.
- The Company's gross margins remain top of the class in spite of operating in the lowest cost markets.
- The Company is approaching an YieldCo event which is likely to unlock over half a billion of value in the first half of 2015.
- JinkoSolar had a mixed Q3, beating bottom line but missing top-line expectations.
- JinkoSolar continued to make progress downstream, which now roughly accounts for 25% of net profits.
- JinkoSolar's margins came in weaker than expected because of falling ASPs in China.
- JinkoSolar is the best value play in the solar industry in my view.
- The module business and the downstream business are both doing extremely well.
- Sooner or later the market will recognize Jinko's true value.
JinkoSolar: Strong Performance Masked By Near-Term Concerns
- JinkoSolar delivered strong operating results in Q2 in spite of industry headwinds in its key target markets.
- While the market seems to be concerned about JinkoSolar's margins, we believe the concerns are overplayed.
- JinkoSolar's project business is hiding in the balance sheet in plain sight and the Company's project and module manufacturing trajectory indicates an intrinsic value of $145 a share.
- YieldCos represent innovation, income and price appreciation potential.
- First Solar and Jinko Solar are prime candidates to spin off Yieldcos.
- Macro solar costs are declining while installations and EPS are growing.
JinkoSolar: Newly Formed Partnerships Position Company For Success
- On July 30th, JKS announced that its downstream project development subsidiary, Jinko Power, had received a $225mm investment from CDBI, MGCIF and New Horizon.
- The support and access to capital provided by CDBI, MGCIF and New Horizon will be a valuable resource for the company’s downstream business going forward.
- Overall, the transaction is a net positive for JKS as deleveraging of the balance sheet and accelerated downstream growth offsets the dilution impact.
- JKS is trading at a level significantly below intrinsic value. The company’s stake in Jinko Power by itself is worth more than the current market cap.
- JinkoSolar trades with a lower forward P/E ratio and higher ROE than its peers, which are 5.36 and 16.22%, respectively.
- The growth of the solar industry -- and JinkoSolar specifically -- is impressive. Earnings growth is expected to be above 50% YoY for the next two years.
- Currently, JinkoSolar is diversifying its revenue, both geographically and through different product and service offerings.
- There are several short-term catalysts for JinkoSolar, including a trader who purchased 2,000 August 30 calls for $1.15. Breakeven requires a 13%-plus increase in the next three weeks.
JinkoSolar: Great Quarter With Market-Beating Gross Margins
- JinkoSolar delivered another quarter of strong results.
- The earnings shortfall is primarily due to Chinese RMB appreciation that was against secular trends - it is unlikely that this will recur in the near term.
- JinkoSolar's Gross Margins now exceed that of market leader First Solar and the company deserves a valuation upgrade to reflect the lower risk.
- JinkoSolar has a checkered history, but is currently the cost leader in the Chinese solar panel industry.
- The company is diversifying from commodity manufacturing business with a more sustainable project business.
- The earnings momentum is considerable, and the company is likely to beat earnings expectations by a wide margin.
- First Chinese PV manufacturer to achieve profitability, and is the lowest-cost manufacturer among its peers.
- Competitive advantages include: cost control ability and integrated production chain.
- Comprehensive strategy to acquire distressed assets and equipment during the down cycle, allowing the company to expand rapidly and achieve best in-class costs versus its peers.
- With a 2014/2015 PER of 6.3x/5.5x, the stock looks very attractive given the growth prospects of the Solar PV industry.
- Solar industry is hit by upstream oversupply.
- Downstream manufacturers are well placed for growth.
- China shaping up to be leader in demand for new capacity.
- JinkoSolar is trading at less than 3 times 2014 earnings.
- Sooner or later, Mr. Market will have to raise his price.
- Don't be confused by the price, JinkoSolar is one of the best solar companies out there.
- JKS earned $2.80 per undiluted share in the year 2013.
- Yahoo Finance (informed by S&P Capital IQ), among others, has been inaccurately reporting JKS earnings, showing $1.12 in earnings, only 40% of its actual earnings.
- Having been brutalized in part because of faulty reporting, JKS may have a P/E of 6 at the end of Q1.
- With the highest margins and lowest costs among silicon solar panel manufacturers, Jinko deserves a P/E of 15 or 20.
Tue, Jan. 20, 12:40 PM
- Chinese solar plays JinkoSolar (JKS -6.7%), ReneSola (SOL -3.9%), JA Solar (JASO -3.5%), Daqo (DQ -9.3%), and Trina (previously covered) are posting sizable losses. As is Canadian Solar (CSIQ -10%), which depends heavily on its Chinese manufacturing ops.
- The decline comes as WTI crude oil falls by 3.7% to $46.89/barrel, and Henry Hub natural gas falls by 8.6% to $2.86/mmBtu. Also: The Shanghai exchange fell 7.5% on Monday following 3-month ban on new margin trading accounts, before rising 1.8% today. The Nasdaq is currently down 0.3%.
- Saudi Arabia has provided a bit of bad news, stating it's pushing back the completion date for its massive clean energy program (includes $109B worth of solar investments) by 8 years to 2040. Unlike many of its top energy customers, Saudi Arabia depends heavily on oil (suddenly much cheaper) for electricity production.
- U.S. solar stocks are also underperforming, but less dramatically. The Guggenheim Solar ETF (TAN -2.3%) is less than $0.30 away from its 52-week low of $31.77.
- Update: Also potentially hurting: A Chinese government study found 23% of solar panel samples taken from local firms featured glass coating defects that can affect long-term power efficiency. The defects were in products set to be used in China.
Thu, Jan. 8, 1:15 PM
- Deutsche's Vishal Shah, bullish on solar for a long time, asserts the "recent volatility in solar stocks, driven largely by oil price weakness, presents an attractive entry point for investors as we expect 2015 to be a year of stable industry pricing and accelerating volume growth."
- Shah expects solar to see a "balanced supply/demand outlook as strong demand from the US and improving demand from China/other emerging solar markets offsets any potential demand weakness in the UK/Japan."
- He observes oil accounts for just ~5% of global electricity output, and sees both solar project pipelines/margins and module margins rising in 2015. Tariffs against Chinese module vendors are expected to be "completely removed."
- His top picks are SolarCity (SCTY +3.3%), SunEdison (SUNE +4.1%), SunPower (SPWR +6.1%), and Vivint (VSLR +0.3%); the first three are faring quite well today. Yingli (YGE +0.2%), however, has been downgraded to Hold due to balance sheet and financial flexibility concerns.
- Other major gainers: FSLR +3.9%. JKS +6%. ENPH +5.4%. CSIQ +3.7%. RGSE +5.2%. TERP +3.2%.
- SunEdison announced today it has bought new wind turbines that will allow it to build up to 1.6GW of wind projects that qualify for U.S. tax credits. The purchase follows the company's $2.4B deal to buy project developer First Wind.
- ETFs: TAN, KWT
Tue, Jan. 6, 2:47 PM
- The broad Monday selloff in solar names that accompanied WTI crude's plunge towards $50/barrel has been followed by major Tuesday losses (TAN -2%) as WTI falls by another $2.34 to $47.70/barrel.
- Brent crude is down by $2.44 to $50.67/barrel, and Henry Hub natural gas is up by $0.03 to $2.91/mmBtu (still down sharply over the last few months). The Nasdaq is down 1%.
- 3%+ decliners: SUNE -5.9%. SPWR -4.3%. JKS -5.8%. DQ -9.4%. VSLR -4.6%. YGE -4.4%. HSOL -4.5%. ENPH -7.6%. CSUN -8.8%. TSL -3.4%. ASTI -10.2%. CSIQ -3.9%.
- SA author Short/Long Trader sees a buying opportunity. Though admitting a "historic connection" exists between oil prices and renewable investment, the author sees little impact on rising solar demand from low oil prices going forward.
- Trina, Canadian Solar, and JA Solar (JASO -1.4%) are Short/Long's favorite picks, given their low valuations - all three have P/Es below 10 - and generally healthy fundamentals.
Mon, Jan. 5, 1:18 PM
- WTI crude is down by $2.36 to $50.33/barrel, and briefly fell below $50/barrel for the first time since '09. Brent crude is down $3.18 to $53.24/barrel. Solar stocks, no stranger to getting hit hard by crude's decline, are seeing more pain (TAN -2.1%).
- U.S. solar firms First Solar (FSLR -5.5%), SolarCity (SCTY -5.9%), SunPower (SPWR -4.6%), SunEdison (SUNE -6%), and TerraForm (TERP -4.4%) are especially hard-hit. But other names are also underperforming: CSIQ -3.6%. DQ -5.1%. CSUN -4.2%. JKS -2.8%. SOL -3.5%. The S&P is down 1.8%.
- A reminder: Oil accounts for only ~1% of U.S. electricity production, and transmission/distribution costs often have a bigger impact on electricity prices than energy input costs.
- Industry news: 1) Canadian Solar has completed selling two 10MW Ontario plants to renewable energy investment firm RET. 2) Hanwha (HSOL +0.9%) has struck a deal to supply 80MW of modules for a Chilean solar plant. 3) China Sunergy has won a 30MW solar module contract from an Indian solar park builder.
Dec. 31, 2014, 1:43 PM
- Given recent government comments about supporting M&A (along with various policy incentives) to strengthen the Chinese solar industry, Brean thinks smaller firms could be snapped up, thereby providing a stronger supply/demand and pricing environment for bigger names.
- Trina (TSL +7.9%), JA Solar (JASO +3%), Yingli (YGE +1.8%), JinkoSolar (JKS +4%), and Daqo (DQ +4.7%) are higher on a quiet New Year's Eve trading day. Trina might also be getting a lift from announcing it has set a new record (324.4Wp) for "power output from a high efficiency multi-crystalline silicon PV module." The accomplishment follows the development of a solar cell with 20.76% efficiency.
- This year has seen debt-laden LDK Solar (OTCPK:LDKYQ) strike a restructuring deal and get moved to the pink sheets; shares are currently at $0.08. Last year, Suntech's Wuxi, China unit filed for bankruptcy and was later sold to solar cell maker Shunfeng Photovoltaic.
- Last week: Chinese solar firms reportedly looking to build overseas plants
Dec. 26, 2014, 5:16 PM
- Taiwanese solar industry sources tell Digitimes leading Chinese solar module vendors "have plans to set up overseas production lines to avoid US antitrust taxation."
- Believing a large gap exists between U.S. solar demand and what U.S. and European module makers can supply - trade group SEIA forecasts U.S. installations will rise from 6.5GW in 2014 to 8.5GW in 2015 and nearly 12GW in 2016 - some Chinese firms reportedly "plan to set up overseas module and cell production lines with an estimated total annual capacity of 2GWp."
- The report comes after the DOC made final decisions to impose new tariffs on Chinese module makers, and thereby close a loophole that allowed the companies to avoid 2012 tariffs (still in place) by using non-Chinese cells. The ITC is expected to rule on the DOC's move by Jan. 20.
- Chinese module vendors: TSL, YGE, SOL, JKS, HSOL, JASO
Dec. 17, 2014, 4:37 AM
- The Commerce Department is hiking import duties on solar energy equipment from China and Taiwan, closing a loophole that had allowed Chinese manufacturers to avoid tariffs and sell at illegally low prices in the U.S.
- Steep anti-dumping duties will now placed on imports of most solar panels made in China and solar cells from Taiwan, likely raising the cost of solar energy at a time of falling oil prices.
- Related tickers: FSLR, SPWR, SUNE, SCTY, CSIQ, SOL, YGE, DQ, ENPH, TSL, JASO, RGSE, JKS, CSUN, VSLR, HSOL , STP, OTC:MIDIL
Dec. 12, 2014, 7:26 AM| Comment!
Dec. 8, 2014, 1:34 PM
- WTI crude oil has fallen 3.7% to $63.42/barrel today, after Morgan Stanley cut its 2015 oil forecast. Henry Hub natural gas is down 4.7% to $3.62/MMBtu.
- Solar stocks, already battered by crude's recent plunge, are joining oil/gas firms in selling off (TAN -2.6%). The Nasdaq is down 0.8%. FSLR -3.8%. SPWR -5.4%. SUNE -4.4%. SOL -6.8%. HSOL -5.9%. JKS -6.4%. YGE -4.3%.
- Industry news: 1) Hanwha is merging its U.S.-listed unit with its Q Cells unit. 2) Trina has bought a 28% stake in Chinese equipment leasing firm Shuntai for $50M to "expand its financing channels" for both its downstream and module ops. 3) Canada has joined the list of countries probing Chinese module vendors for anti-dumping violations.
Dec. 5, 2014, 2:35 PM
- Recently bludgeoned in tandem with plunging oil prices and a broad selloff in anything energy-related, Chinese solar stocks are finishing the week on a high note.
- Notable gainers: JKS +3.5%. DQ +7.3%. JASO +4.9%. TSL +4.5%. YGE +2.5%. Canadian Solar (CSIQ +5.7%), which depends heavily on its Chinese manufacturing ops, is also faring well.
- Many solar bulls have been busy arguing the link between oil prices and solar demand is very limited. WTI crude has fallen to $66.14/barrel today.
- Earlier: SolarCity rallies following CEO's CNBC appearance
Dec. 1, 2014, 12:15 PM
- With the Nasdaq down 1.3%, solar stocks are adding to the steep Friday losses they saw after OPEC declined to cut production, sparking a huge selloff in oil prices and anything energy/commodity-related. Oil prices have bounced a little today, but WTI crude is still only around $68/barrel.
- Solar bulls have noted oil only accounts for a small percentage of global electricity production, and that solar stocks have already seen plenty of pain this year. The Guggenheim Solar ETF (TAN -5.2%) is now down 34% from a March high of $51.07.
- Major decliners: FSLR -6.3%. SPWR -8.4%. SCTY -6%. SUNE -6.4%. SOL -12.8%.JKS -8.1%. CSUN -8.5%. CSIQ -9.3%. DQ -10.3%. VSLR -7.2%. TSL -7.8%. YGE -9.4%. RGSE -7.4%. HSOL -9.5%. TERP -5.8%. JASO -5.2%.
Nov. 28, 2014, 10:55 AM
- Solar stocks are getting hit hard (TAN -5.1%) after OPEC opted against cutting oil production, leading crude prices to plunge below $70/barrel and sparking huge selloffs in energy/commodity stocks. Fuel cell stocks aren't faring much better.
- Solar decliners: FSLR -6.8%. SPWR -6%. SUNE -5.7%. SCTY -2.9%. CSIQ -10.7%. SOL -9.1%. YGE -7.3%. DQ -7.2%. ENPH -6.8%. TSL -6.9%. JASO -7.5%. RGSE -3.9%. JKS -6.9%. CSUN -3.5%. VSLR -3.7%. HSOL -3.8%.
- Fuel cell decliners: BLDP -6.1%. FCEL -4.5%. PLUG -2.3%. HYGS -5.3%.
Nov. 24, 2014, 7:46 AM
Nov. 21, 2014, 6:45 PM
- Ethanol and other biofuel groups are declaring victory, as the EPA today said a decision to finalize blending requirements for 2014 - first proposed more than a year ago - has been delayed.
- The delay gives hope to ethanol producers that the EPA will rethink how it proposes the annual biofuels levels; the draft 2014 biofuels levels were much lower than the ethanol industry wanted.
- Oil company lobbyists opposed to the law say the idea of setting a retroactive quota shows the EPA is incapable of managing the program; the American Fuel & Petrochemical Manufacturers, which represents energy companies, plans to sue the EPA for failing to issue the 2014 requirements.
- Ethanol stocks: ADM, GPRE, GEVO, MEOH, SZYM, REX, CDTI, REGI, FF, AMRS, ANDE
- Related refining stocks: VLO, HFC, MPC, TSO, WNR, ALJ, PSX, PBF, DK, NTI, ALDW
- Related coal stocks: BTU, WLT, CNX, ACI, ANR, YZC, ARLP, AHGP, NRP, PVG, PVA, OXF, CLD, WLB, SCOK
- Related solar stocks: JASO, SPWR, TSL, FSLR, CSIQ, YGE, EMKR, SOL, JKS, CSUN, SCTY, RGSE, SUNE, HSOL, DQ, ASTI, OTCQB:SOPW
- ETFs: XLE, ERX, VDE, OIH, ERY, DIG, DUG, IYE, FENY, PXJ, RYE, FXN, DDG, FUE, KOL, TAN
Nov. 21, 2014, 1:50 PM
- Down 3% yesterday after posting mixed Q3 results and reiterating its full-year module shipment guidance, JinkoSolar (NYSE:JKS) is shooting higher today. Volume (2.8M shares) is already above a 3-month average of 2.1M.
- SA author The Panoramic View remains bullish, citing Jinko's industry-leading manufacturing costs, growing downstream solar ops (1.8GW pipeline, with 461MW of projects expected to be connected in Q4), and low forward P/E (5.2 going into today).
Nov. 21, 2014, 10:28 AM
- The EPA will abandon its proposed rule setting renewable fuel targets for 2014, with an announcement to come today, according to a Bloomberg report.
- Ethanol stocks: PEIX, GPRE, GEVO, MEOH, SZYM, REX, CDTI, REGI, FF, AMRS, ANDE, FUE
- Related refining stocks: VLO, HFC, MPC, TSO, WNR, ALJ, PSX, PBF, DK, NTI, ALDW
- Related coal stocks: BTU, WLT, CNX, ACI, ANR, YZC, ARLP, AHGP, NRP, PVR, PVG, PVA, OXF, CLD, WLB, SCOK, KOL
- Related solar stocks: JASO, SPWR, TSL, FSLR, CSIQ, YGE, EMKR, SOL, JKS, CSUN, SCTY, RGSE, SUNE, HSOL, DQ, OTCPK:DSTI, ASTI, OTCQB:SPIR, OTCQB:SOPW
- ETFs: XLE, ERX, VDE, OIH, ERY, DIG, DUG, IYE, FENY, PXJ, RYE, FXN, DDG, FUE, KOL, TAN
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