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ReneSola (SOL) Sells 10 Solar Rooftop DG Projects in China

Zacks Equity Research

Solar project developer ReneSola Ltd. SOL announced that it has inked an agreement to sell two project companies that include 10 rooftop distributed generation (DG) projects with 12.3 megawatt (MW) capacity to Far East Horizon Company Ltd’s subsidiary — Shanghai Hongzuo New Energy Company. The companies that will be divested are Ningbo Qixu New Energy Company, Ltd. and Taizhou Dehong New Energy Technology Company, Ltd.

Prospect of DG Projects

ReneSola’s growth is strongly supported by its DG projects in China. Although utility-scale solar continues to dominate the solar market in China, distributed solar is also witnessing rapid growth. The company aims to globally connect nearly 361.6 MW of DG and grid-parity projects through 2019-2020. Per National Energy Administration (NEA), the Government of China has recently announced its decision to offer subsidies worth $247.4 million to centralized solar power projects in 2019.

Per the latest announcement, 3,921 large-scale China solar projects with a total installed capacity of 22.79 gigawatts (GW) will be eligible for these subsidies. The government plans to allocate subsidies worth approximately $109 million for rooftop power projects.

We believethat this fund will enable the company to rapidly develop new DG projects in China. Apart from domestic market, the company continues to pursue opportunities around the world. ReneSola expects that the recent agreement will enable it to demonstrate its ability to develop and monetize projects.

Global Footprint

ReneSola continues to benefit from a steady flow of contracts from domestic and international customers. The company is currently expanding its business in the international markets of Vietnam, Canada, Poland, Hungary, France, Spain and Turkey. Also, it is actively pursuing opportunities in new markets that include South Korea and India.

The company is investing in small scale DG projects in Hungary. ReneSola’s latest pipeline has more than 67 micro projects, each with a size of 0.5 MW, bringing the total capacity to approximately 33.6 MW. All of these projects are expected to connect to the grid in 2019. Such favorable projections and investment plans are expected to help ReneSola achieve long-term goals in DG projects.

Price Movement

 

Year to date, ReneSola’s shares have gained 11.8% compared with the industry’sgrowth of 78.5%.

Zacks Ranks & Key Picks

ReneSola currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks  #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the same industry are Canadian Solar Inc. CSIQ. Azure Power Global Ltd. AZRE and First Solar, Inc. FSLR, each carrying a Zacks Rank #2 (Buy).

Canadian Solar delivered an average positive surprise of 51.66% in the last four quarters. The company’s long-term earnings growth is pegged at 32%.

Azure Power Global delivered an average positive surprise of 75.14% in the trailing four quarters. For 2019, earnings estimates for the company rose 123.08% on a year-over-year basis to 29 cents per share.

For 2019, earnings estimates for First Solar rose 77.21% on a year-over-year basis to $2.41 per share. The company’s long-term earnings growth is pegged at 23.30%.

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