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Recent Changes Might Help ReneSola Overcome Financial Hurdles

Mar. 08, 2021 5:55 PM ETEmeren Group Ltd (SOL)3 Comments
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  • ReneSola's profitability has significantly increased, with a cutoff in its manufacturing business since 2017; there was a slow recovery trend amidst the pandemic in the second quarter of 2020.
  • The company changed its main business and management team, resulting in better financial results.
  • Benefiting from three key improvements, ReneSola has attracted more investments and continued to expand into the global market.
  • The company encounters multiple risks, including financial institutions' indictments, COVID-19-related threats, geographical uncertainties and changing interest rates.

ReneSola (NYSE:SOL) has signed a Memorandum of Understanding with Eiffel Investment Group – an asset management firm that, as of January 6, 2021, managed EUR 3 billion. This agreement might have accelerated ReneSola's projects in Europe. The two have also agreed to launch a 1 GW joint venture, in which the solar project developer will hold 51% shares.

Founded in 2005, ReneSola is a company specializing in producing monocrystalline and polycrystalline silicon pieces. In 2008, the firm went public on the NYSE.

Financial analysis

ReneSola's profitability has fluctuated during recent years. It was majorly affected by global policies, business strategies of major players in the field and, of course, the COVID-19 pandemic. The company showed negative net profit – with a lack of government support partly to blame – back in 2016. For instance, the National Development and Reform Commission (NDRC) reduced feed-in tariffs (FITs) for utility-scale solar plants, which lowered the selling prices in the solar industry. Moreover, former US President Donald Trump also paid less attention to renewable energy development, further escalating pressure on its financial condition.

The turning point came after 2017. That was when the firm quit the manufacturing businesses as it came with overcapacity and lower profits. This cutoff vastly improved ReneSola's net profits. By giving up the market pie in the manufacturing sector, the solar project developer has shown a rising annual gross profit since 2017.

However, the adverse impacts of COVID-19 dragged down the company's profitability in the first quarter of 2020. There was a decrease of 348.44% in gross margin compared with the previous quarter. The subsequent increase was due to module sales in Minnesota and small-scale projects in Hungary.

A turnaround attempt

Founded in 2005, ReneSola did not make considerable profits in its first ten years. More recently, it even had negative earnings in

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EqualOcean is an investment research firm and information service provider focusing on China's Technology, Automotive and Consumer Internet sectors. With unique research and due diligence methodology, we provide tailored insights into a wide range of Chinese equities, empowering our clients' value-added decisions. Founded in 2014, EqualOcean is headquartered in Beijing and has offices in Shanghai, Shenzhen and New York.For more information, contact us at contact@equalocean.com.

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Comments (3)

Fact check. In the article Yumin Liu's career experience is mentioned as Enron, UT, and H&S. I was puzzled ithat there was no mention of the last 9 years he spent working with global solar development for Canadian Solar (CSIQ) and a subsidiary before becoming CEO of Renesola.
Please explain.
09 Mar. 2021
It'll bounce back just as fast as it was panick sold in the last month. The fundamentals are strong. It is not impacted by the tariffs. And it'll account for a sizeable share of the $200 GW solar installations this year. That will generate high-yield revenue forever into the future. What's to complain about?
Kloss profile picture
@pddy It may be a buy at some point - after the market is done subtracting value into low single digits - solar and wind are expected to generate 80% of electricity by 2035 globally so SOL will benefit more from growth in time.
IMO it will look exactly the same as before, for a long time big nothing and in a year or two or who knows when it will just jump 1000% again the way it did recently. Grow a beard with patience though lol.
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