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ReneSola to Get $50.9M Funding

Zacks Equity Research

ReneSola Ltd. (SOL) has entered into an agreement with China Development Bank to take a 15-year loan worth approximately $50.9 million. The company’s main objective for taking this loan is to expand and strengthen its Chinese operations.

China Development Bank continues to support the Chinese solar power product manufacturers and service providers in terms of disbursing loans and providing financial assistance. In Jan 2013, another photovoltaic (:PV) products manufacturer LDK Solar Co., Ltd. (LDK) got a lending-approval of $69.8 million from China Development Bank to improve its Mahong polysilicon facility.

U.S. solar markets are gradually becoming less lucrative for the Chinese solar module manufacturers. The U.S. Department of Commerce (:DOC) adopted countervailing duties of 15.24% and anti-dumping duties of effectively 25.96%. The U.S. DOC rolled out these tariffs to constrict the supply of the Chinese solar-products in the U.S. and encourage domestic players to tap the growing renewable U.S. market. These steps will take a severe toll on the Chinese solar power product manufacturers businesses in North America.

Currently, most of the Chinese solar product manufacturers are busy searching new markets. Most of solar product manufacturers, including ReneSola, intend to increase their presence in China and tap the domestic prospects due to the higher demand of solar modules. A solar product manufacturer JinkoSolar Holding Co. Ltd (JKS) has already delivered its first batch of the 100 kilowatt peak (kWp) rooftop solar PV power generation system to Eaton Electric Co., Ltd, a subsidiary of Eaton Corporation plc (ETN), in Shenzhen, China.

ReneSola has already experienced strong performance from China during fourth-quarter 2012. Its net revenue increased 63.3% year over year to $306.5 million and total solar product shipments rose 33.9% sequentially to 713.2 megawatts. Improvement in the performance was primarily backed by higher demand for solar modules, in particular from China, and increasing competitiveness of solar power as a power source.

It is evident from ReneSola’s recent activities and transactions that it is currently in an expansion mode. Apart from increasing its presence in China, the company continues to spread its operations in Asian, European and Middle East markets. To reinforce its business functions in the Asia Pacific, Middle East and Africa region, the company established its sales office in Singapore with its local subsidiary ReneSola Singapore Pte., Ltd and set up a Japanese subsidiary, ReneSola Japan Ltd., in Oct 2012.

As of Dec 31, 2012, ReneSola had cash and cash equivalents plus restricted cash of $268.1 million and net cash inflow from operating activities was $25.8 million in fourth-quarter 2012.

In addition to the external funding, the company’s strong financial status enables it to spend more in its global operations along with the installation of sophisticated manufacturing techniques to minimize solar module manufacturing costs, which will subsequently improve forthcoming margins.

China-based ReneSola is a leading global manufacturer of solar wafers and a producer of solar power products. The company possesses a global network of suppliers and customers. ReneSola currently has a Zacks Rank #2 (Buy).

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