We have maintained our long-term Neutral recommendation on one
of the most cost-efficient solar manufacturers,
JA Solar Holdings Company Ltd.
), on Oct 8, 2013.
Why the Reiteration?
JA Solar − the largest solar-cell producer by capacity - has a
geographically diverse customer base as well as silicon wafer
supply agreements in place to feed its production.
JA Solar caters to an increasingly geographically diversified
pan-continental customer base, which spans Germany, Italy, the
U.S., Spain, India, Korea, China and Japan. The company also
effectively uses its low-cost locational advantage in China. A
consistent focus on widening its geographical customer base has
resulted in incremental international sales.
In the domestic market, JA Solar would stand to gain from the
Chinese government boosting its target to 35 gigawatt (GW) of
cumulative solar installations by 2015. The company has also made
major progress in accessing new markets like Thailand and
The company now anticipates third quarter deliveries between 450
megawatt (MW) and 470 MW. Although the company incurred a loss in
the second quarter, it managed to cut its loss both sequentially
as well as year over year. The narrower loss came on the heels of
higher-than-expected shipments. Strong demand in the high average
selling price market of Japan led to the growth. The company also
increased its foothold in the high-margin markets of
Asia-Pacific, the Middle East and Africa.
On the flip side, given the industry-wide high inventory level,
we believe margins will likely go downhill from here. In
addition, tepid module demand in Europe, rising competition,
wafer dependency, the financial stability of its customers and
the oversupply of solar cells may adversely impact performance
over the near term.
Other Stocks to Consider
JA Solar Holdings Co. currently has a Zacks Rank #2 (Buy). Other
attractive stocks in the solar space are
LDK Solar Co., Ltd.
). While SunPower and ReneSola hold a Zacks Rank #1 (Strong Buy),
LDK sports a Zacks Rank #2.
JA SOLAR HOLDGS (JASO): Free Stock Analysis
LDK SOLAR CO (LDK): Free Stock Analysis
RENESOLA LT-ADR (SOL): Free Stock Analysis
SUNPOWER CORP-A (SPWR): Free Stock Analysis
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