On Jun 27, 2013, we have maintained our Neutral recommendation on JA Solar Holdings Company Ltd. (JASO) − the largest solar-cell producer by capacity. JA Solar retains a Zacks Rank #3 (Hold).
Why the Reiteration?
JA Solar caters to a geographically diversified pan-continental customer base, which spans across Germany, Italy, the U.S., Spain, India, Korea, China and Japan. The company also effectively uses its locational advantage in China, with Chinese low-cost solar module manufacturers contributing a substantial portion of its revenues. A consistent focus on widening its geographical customer base has resulted in incremental international sales.
The company now sees its second quarter 2013 deliveries to exceed its projected deliveries of 410 megawatt (MW) to 430 MW. It is worth mentioning that during the first quarter, JA Solar managed to narrow the loss on a sequential basis backed by strong shipments that also exceeded the company’s forecast.
Chinese solar product manufacturers, like JASO, LDK Solar Co. Ltd. (LDK) and Suntech Power Holdings Co. Ltd. (STP), are currently facing the impact of anti-dumping duties being imposed in the U.S. The company also saw declining revenues for six consecutive quarters due to poor demand and a global supply glut of wafer and module that resulted in dipping average selling prices.
The solar module space has consequently recovered since the end of last year with demand rising in the U.S. and Japan. We believe the recovery in the solar5 space will take another year or so with JA Solar expecting to return to profitability by the first half of 2014.
Other Stock to Consider
A promising company in the space, JinkoSolar Holding Co. Ltd. (JKS) looks attractive with a Zacks Rank #2 (Buy).
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