One Chinese Solar Stock to Keep on Your Radar
JA Solar Holdings Co. Ltd. (ADR) (NASDAQ: JASO) is a China-based company, engaged in the manufacturing of high-performance solar cells. The company is involved in the production and selling of monocrystalline and multicrystalline solar cells. The company operates primarily through its subsidiaries. The company focuses on the long-term solar energy industry development. It has built two solar manufacturing facilities in China.
JA Solar, last month, announced the acquisition of 100% of the shares of Shanghai Jinglong Solar Technology Co. Ltd. from Ningjin Jinglong PV Investment Co. Ltd. The acquisition will enable JA Solar to expand its manufacturing operation to better support customers’ growing requirements. The transaction is valued at $29.3 million.
Last month, JA Solar also entered into two supply agreements. The first of these agreements was with MEMC Electronic Materials Inc. (NYSE: WFR). Under the agreement, the company will provide MEMC with high performance solar modules beginning in the current quarter and going through 2012. The partnership will greatly enhance JA Solar’s position in the solar value chain, according to the company’s CEO, Dr. Peng Fang.
The other agreement, signed by the company last month, was with Solar-Fabrik AG. Under the terms of the agreement between the two companies, JA Solar will supply Solar-Fabrik with approximately 70MW of photovoltaic products.
Also last month, JA Solar signed strategic agreements with Innovalight. Under the agreement, the two companies will co-develop solar cells with conversion efficiencies exceeding 20%.
Shares of JA Solar have seen a lot of interest from investors in the last one month, following the series of agreements signed by the company. Since July 7, JASO has gained 15.35%.
JA Solar announced its second-quarter financial results, last week. The company reported second-quarter revenue of $351 million, up 25% on a sequential basis. The company’s second-quarter gross margin was 23.1%, up from 22.9% reported in the first quarter of 2010. The company reported second-quarter operating income of $53.4 million and net income of $28.9 million.
The company’s strong second-quarter results and a bullish outlook, however, have not impressed the market much. Since reporting the second-quarter financial results and business outlook last week, shares of JA Solar are down 10.81%. Year-to-date, the shares are up 2.81%, in-line with the broader market. The shares are currently trading 10-day and 20-day moving averages, which indicates that investors are bearish. The shares have a support level at $5.47 and a resistance level at $6.19.
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