JA Solar Holdings Co., Ltd. (JASO) has signed an agreement to supply approximately 21 MW of solar products to Huanghe Hydropower Development Co., Ltd. by September 2011.
Huanghe Hydropower, a subsidiary of China Power Investment Corporation, is a large-scale integrated energy company engaged mainly in the development, construction, production and operation of power plants, production of silicon and solar power equipment and the production and selling of aluminum products. China Power Investment Corporation is a comprehensive energy group integrating industries of power, coal, aluminium, railway and port.
Recently, JA Solar entered into a definitive agreement to acquire 100% ownership interest in Silver Age Holdings Limited for $180 million. Silver Age Holdings Limited is a British Virgin Islands company that owns 100% of Solar Silicon Valley Electronic Science and Technology Co., Ltd., a leading producer of solar wafers based in China.
Post acquisition, JA Solar's internal wafer capacity will increase to approximately 785MW. The transaction is expected to close in the third quarter of 2011.
China is well positioned to become a multi-gigawatt photovoltaic market and one of the most important solar markets in the world. It is increasingly turning to renewable sources to power its future energy requirements, which will necessitate rapid growth in the solar sector. JA Solar hopes to jump on the bandwagon by developing long-term relationships with independent power producers at an early stage.
JA Solar is one of the most cost-efficient solar producers with a geographically-diversified customer base. It is steadily expanding its customer base worldwide and experiencing strong growth in several geographic end markets including, U.S., Canada, Italy, Japan, Australia, China and India.
In the near term, however, apprehensions over tepid module demand in Europe, margin blues, rising competition, wafer dependency, the financial stability of its customers and the oversupply of solar cells in the market will restrain the valuation of the company. JA Solar presently retains a short-term Zacks #4 Rank (Sell) that corresponds with our long-term Underperform recommendation on the stock.
JA Solar is expected to release its second quarter results on August 18, 2011. Recently, it announced its preliminary un-audited financial results for the second quarter of 2011. In the quarter, the company faced changes in solar subsidy regulations in key markets like Italy. The company also suffered slower-than-expected growth in market demand in Germany. It expects gross margin to be in a negative low single-digit range.
JA Solar Holdings is a leading manufacturer of high-performance solar power products. The company sells its products to solar manufacturers worldwide, who assemble and integrate solar cells into modules and systems that convert sunlight into electricity for residential, commercial, and utility-scale power generation. The company mainly competes with Suntech Power Holdings Co. Ltd. (STP).
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