The U.S. Department of Commerce ("DOC") announced its final
decision on levying anti-dumping taxes on the import of solar
products of China-based manufacturer
JA Solar Holdings Co., Ltd.
). The directives as per the U.S. government entail an anti-dumping
duty of 25.96% and a countervailing duty of 15.24% on crystalline
silicon photovoltaic (PV) cells produced and exported by JA
However, the cells manufactured in third-world countries and
assembled to solar modules in China will be exempted from this
tariff policy. The U.S. International Trade Commission ("ITC") is
expected to arrive at a decision on or before November 23,
The DOC in May 2012 had made a preliminary announcement of
imposing a tariff rate of 31.18% on the import of PV cells and
modules. With the import tariff, price of solar inputs in the U.S
market will go up causing domestic energy companies to switch to
indigenous renewable product manufacturers. This pro-economic
policy will help accentuate the growth prospects of the U.S.
renewable based companies.
The US government's recent take on canceling subsidies to
Chinese based firms could hurt the company's operations and
financials. This will be compounded by the imposition of tariff
rates which would substantially hamper JA Solar's export interests
in the United States. Moreover, continual economic depression in
Europe will hinder JA Solar's near-term top line.
Nonetheless, pressure from the environmental regulatory
authorities would lead to increasing switch to renewable energy
sources in the U.S. in the future causing demand to pick up.
Despite the imposition of tariffs, potential upside in demand for
solar products in the US could partially provide a relief to JA
Solar's financials. Besides, we anticipate solar generation to
catch up fast in the Chinese market which will further enhance the
company's long-term development goals.
The company, for the third quarter 2012, estimates total cell
and module shipments in the range of 350 Megawatt (MW) to 370 MW.
For 2012, the revised cell and module export volumes are projected
to be between 1.5 Gigawatt (GW) and 1.8 GW, down from the prior
forecast of 1.8 GW to 2.0 GW.
The Zacks Consensus Estimates for the third quarter and full
year 2012 are currently pegged at a loss of 20 cents per share and
a loss of 87 cents per share, respectively. The company has a Zacks
#3 Rank (Hold rating).
One of its closest peers, Wuxi-based
Suntech Power Holdings Company Ltd.
) will also face temporary reduction in its operational solar cell
capacity to 1.8 Gigawatt ("GW") although module and wafer capacity
will remain at 2.4GW and 1.6GW, respectively. The company will
leverage its strength on global supply chain to manage volatile
demand and trade protectionism.
Based in Shanghai, the People's Republic of China, JA Solar and
its subsidiaries are engaged in the development, production,
marketing, and sale of PV solar cells and solar power products that
converts sunlight into electricity worldwide.
JA SOLAR HOLDGS (JASO): Free Stock Analysis
SUNTECH PWR HLD (STP): Free Stock Analysis
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