Leading manufacturer of high-performance solar cells and solar
JA Solar Holdings Co. Ltd
) announced that it has acquired Silver Age Holdings Limited in
exchange for 30.9 million of its shares.
Silver Age Holdings Limited is a British Virgin Islands based
company that owns 100% of wafer manufacturer Solar Silicon Valley
Electronic Science and Technology Co., Ltd. ('Solar Silicon
Located in the Yanjiao Economic & Technology Development
Zone in Langfang City, Hebei Province, China, Solar Silicon Valley
operates a wafer production facility with an annual production
capacity of 485MW. Solar Silicon Valley also manufactures quartz
crucibles and its cutting-edge technology can be used to provide
high quality wafer substrates for JA Solar's own high-efficiency
solar cell products.
The transaction will help JA Solar in achieving its objective of
optimizing its cost structure through selective vertical
integration. The acquisition would guarantee a stable supply of
low-cost wafers increasing the company's internal wafer capacity
and aiding gross margins.
The acquisition is expected to improve JA Solar's leadership
position and enable it to meet strong global demand for
high-quality and high-efficiency solar products. JA Solar and Solar
Silicon Valley are also expected to benefit from synergies arising
from economies of scale, raw material sourcing efficiencies as well
as operational optimization.
Based in Ningjin of the Hebei province in the People's Republic
of China, JA Solar Holdings Co. Ltd. is a leading manufacturer of
high-performance solar power products. The company sells its
products to solar manufacturers worldwide, who assemble and
integrate solar cells into modules and systems that convert
sunlight into electricity for residential, commercial and
utility-scale power generation.
JA Solar is one of the most cost-efficient solar producers in
the world, with a geographically diverse customer base as well as
silicon wafer supply agreements in place to feed its production.
Positive factors include ongoing expansion programs, improving
operating efficiencies, rising margins and higher conversion
JA Solar is steadily expanding its customer base worldwide. It
is experiencing strong growth in several geographic end markets
including U.S., Canada, Italy, Japan, Australia, China and
Looking forward, JA Solar expects third quarterly solar cell and
module shipments in the range of approximately 310 MW-330 MW.
However, faced with subsidy cutbacks in key markets like Germany
and Italy, the company trimmed its fiscal 2011 shipment outlook to
1.6 GW from the earlier forecast of 1.8 GW.
Thus, we currently have a long-term 'Underperform'
recommendation on JA Solar. In the near term, apprehensions over
tepid module demand in Europe, rising competition, wafer
dependency, questionable financial stability of its customers and
an oversupply of solar cells in the market will restrain the
valuation of the company. The stock, in consort with its peer
China Sunergy Co. Ltd.
), retains a Zacks #5 Rank (Strong Sell rating).
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