JA Solar Holdings Co., Ltd (JASO) announced that it has supplied photovoltaic (PV) modules totaling 30 megawatts (MW) for solar projects in the U.K. The projects were developed and built by a U.K-based developer of large-scale renewable projects – British Solar Renewables.
British Solar Renewables installed the units at four ground-mounted projects this year. JA Solar − the largest solar-cell producer by capacity – is one of the most cost-efficient solar producers in the world, with a geographically diverse customer base as well as silicon wafer supply agreements in place to feed its production.
JA Solar caters to an increasingly geographically diversified pan-continental customer base, which spans Germany, Italy, the U.S., Spain, India, Korea, China and Japan. The company also effectively uses its low-cost locational advantage in China. A focus on widening its geographical customer base has resulted in incremental international sales.
Europe accounted for 20% and the Americas accounted for about 8% of its total shipments in the second quarter. On the domestic front, JA Solar would stand to gain from the Chinese government boosting its target to 35 gigawatt (GW) of cumulative solar installations by 2015. The company has also made major progress in accessing new markets like Thailand and Australia.
The company now anticipates third quarter deliveries between 450 MW and 470 MW. Although this solar company incurred a loss in the second quarter, it managed to cut its loss both sequentially as well as year over year. The narrower loss came on the heels of higher-than-expected shipments. Strong demand in the high average selling price market of Japan led to the growth. The company also increased its foothold in the high-margin markets of Asia-Pacific, the Middle East and Africa.
Given the industry-wide high inventory level, we believe margins will likely remain depressed. In addition, tepid module demand in Europe, rising competition, wafer dependency, the financial stability of its customers and the oversupply of solar cells may adversely impact performance over the near term.
JA Solar Holdings Co. currently has a Zacks Rank #3 (Hold). Other attractive stocks in the solar space are First Solar Inc. (FSLR), Trina Solar Limited (TSL) and Enphase Energy, Inc. (ENPH), all with a Zacks Rank #2 (Buy).
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