ReneSola LtdSOL has signed a framework agreement with an affiliate of Beijing Enterprises Clean Energy Group ("Beijing Enterprises Clean Energy") Limited for developing rooftop solar projects of 335 megawatts in China.
Details of the Agreement
The projects will be based in the Hebei, Shandong, Fujian, Shanxi and Jiangsu Provinces of China.
As per the deal, ReneSola will be responsible for engineering, procurement and construction of the projects, while Beijing Enterprises Clean Energy will provide financing during construction. The projects are expected to be completed by Jun 30, 2017 and ReneSola will sell them to Beijing Enterprises Clean Energy upon completion.
This agreement is in line with ReneSola's positive outlook for rooftop solar distributed generation projects in China. Moreover, it is a strategic fit for ReneSola's long-term strategy of shifting business toward project development and LED distribution.
Shares of ReneSola lost 64% in the last one year, underperforming the Zacks categorized Solar industry's loss of 59.6%.
The primary reason for this underperformance could be the U.S. Department of Commerce's imposition of anti-dumping duties and anti-subsidy rates on the import of Chinese solar panels, which has adversely impacted ReneSola's revenues since all of the company's production facilities are located in China.
Solar Industry Outlook
Throughout last year, the solar industry has grappled with challenges like declining solar panel prices, weaker power plant contracting activity and increasing regulatory stringency. The industry-wide downturn was owing to a looming glut of solar panels. As solar players continued to step up production in an effort to seize a higher market share, panel supply outweighed demand significantly.
Strong project build-up in the U.S. in anticipation of the Dec 2016 expiration of the solar investment tax credit (which was eventually extended) also played a major role in curbing activity in this space as developers now have more time to build their projects.
Further, the unexpected victory of Donald Trump in the Presidential election does not bode well for the renewable energy space. The President-elect has not only vowed to revive the coal industry but has even called climate change a "Chinese Hoax".
ReneSola carries a Zacks Rank #5 (Strong Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
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