We think the shares of JinkoSolar (NYSE:JKS) can make a comeback after the COVID-19 induced selloff that will stump solar market growth and ASPs this year.
But the Chinese market, the biggest in the world, is likely to make a comeback towards the end of the year and the present shake-out ultimately favors Tier-1 players like JinkoSolar.
Then there are the secular tailwinds of the ever more favorable economics of solar power versus other sources of electricity production, the increasing viability of energy storage, and the opportunity that countries will invest themselves out of the COVID economic slump through green new deals.
There was a time when polysilicon, the crucial ingredient for producing silicon based solar panels, was expensive due to capacity shortages and alternative technologies for solar panels like First Solar's (FSLR) CdTe based thin film technology used to have a cost advantage (albeit not a conversion efficiency advantage) over companies like JinkoSolar which produced silicon based panels.
But those days are gone, and JinkoSolar is now the biggest solar producer in the world and a cost and technology leader. However, the pandemic has a negative influence on the sector and that's clearly visible with the shares falling steeply, and they have yet to recover:
Nevertheless, we think there are several reasons for seeing a bright future for the company. First up, a number of general trends creating a favorable background for the industry as a whole:
- Solar energy has reached an inflection point in much of the world where it undercuts alternative sources of electricity production on price.
- Combined with energy storage, which is also plummeting in price, the intermittency problem can be greatly reduced.
- Climate change and health effects of fine particle pollution make alternative sources of energy more urgent.
- Numerous countries could embark on a green
