Why JinkoSolar Holding Co., Ltd. Shares Went Dim Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of JinkoSolar Holding Co., Ltd. (NYSE: JKS  ) fell nearly 10% Thursday following at least two cautious reports on the broader solar sector.

So what: JinkoSolar certainly wasn't the only solar stock falling today. Yingli Green Energy (NYSE: YGE  ) , for example, fell nearly 6%, while SunPower (NASDAQ: SPWR  ) and Canadian Solar (NASDAQ: CSIQ  ) closed down 4% and 6%, respectively.

The culprit appears to be a number of negative reports on the solar sector, including one from Bloomberg stating the Indian government found evidence that more than 20 foreign companies had sold solar equipment in India for as little as half the cost as in their home markets, and undercut local prices by as much as a third. As a result, India is mulling whether to impose tarriffs on solar imports from the U.S., China, Taiwan, and Malaysia.

In addition, a report from analysts at Deutsche Bank today questions whether existing targets for Chinese installation forecasts were far too optimistic because there isn't enough available financing for the projects. Specifically, the report says, demand in China has declined from around 6 GW in Q4 to 1 GW in the most-recent quarter, and should only rebound in the second quarter to around 3 GW to 4 GW. Altogether in 2014, Deutsche cautions solar demand in China might potentially only be in the 8 GW range.

Now what: That's a big reduction from the revised 11.5 GW forecast two weeks ago by analysts at Credit Suisse, so it's certainly possible one or the other could be off base. However, I still believe the trends in solar so far this year are undeniably positive, and demand over the long term appears to remain intact. As a result, I don't think investors who liked the solar sector before should be running for the hills today.

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Read/Post Comments (6) | Recommend This Article (6)

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  • Report this Comment On May 15, 2014, at 6:33 PM, Waldo wrote:

    I hold no confidence in anything Credit Suisse has to say. Heads firmly placed up own Arsches. CSIQ will blow the doors off ER tomorrow and guidance for the rest of the year will be very strong. BTW, thanks to panic selling today, bought 6700 very cheap shares today. See you in the 50 s!

  • Report this Comment On May 15, 2014, at 7:32 PM, DalePlourde wrote:

    I also have little confidence in Deutche banks comments, lowering estimates for solar targets. For reasons including key indicator solar companies who have reported so far have increased shipment guidance for 2014 and/or increased capacity production. Hanwha solar said yesterday they are increasing production capacity for the rest of 2014 and into 2015 to meet increasing demand. I don't know where Deutche is getting their info. as the facts don't support their outlook the demand for solar is steady and growing especially as the cost of implementing/using solar is at or close to grid parity. There are so many countries now increasing their solar capacity for economic, environmental and energy diversification reasons ie. Japan, Saudi Arabia, US, China ect. I am long Jinko, and Trina in particular. I have a position in Trina, but am looking for another good right entry point in either Sunpower, Jinko or Trina. Will pay close attention to Jinko and Trina's calls.

  • Report this Comment On May 15, 2014, at 8:18 PM, DalePlourde wrote:

    Fundamentally the positive trends for solar are strong, people just need to focus on the fundamentals of the sector or company they buy rather than day to day volatility. As well if you believe in a sector and/or company stay with it. Personally I see a bright outlook for solar globally. In Nov. 2011 when Saudi Arabia a leading oil nation announced 100 billion to be spent on solar development I knew the energy paradigm was changing. This is just the beginning for solar and renewables.

  • Report this Comment On May 15, 2014, at 10:04 PM, integrityiskey wrote:

    Re: India: this nation upped it's Solar Pv target by 30% to 1100MW earlier this year, they need the advanced module tech. that Trina and Jinko for example have, they are not going to keep top solar companies from bidding on contracts they need them to meet their solar targets. Re: 8MW target suggested by Deutsche Bank, very dubious which companies and countries are they talking too. Jinko and Trina have both reiterated their full year guidance, Jinko just did about 10 days ago. As well China's National Energy Administration reiterated their 14.05 MW 2014 target last month, people can find these facts all online. As well China's has very robust long-term goal of 50GW by 2020, they think they can reach sooner. China has a serious pollution issue, they are trying to counter via non-fossil fuel options and they wish to be energy independent meaning wish for less oil imports, they are doing all possible to reach their targets. I am long the solar industry globally, Trina, Sunpower, and Jinko are all good options for various reasons.

  • Report this Comment On May 15, 2014, at 10:13 PM, integrityiskey wrote:

    China is also now talking with green tech heavy weight Sweden to increase their renewables implementation inc. solar. They installed 12GW in 2013 from only 3GW in 2012. Sure there will be some challenges but to suggest especially when key Chinese companies have reiterated their full year guidance, that China will only reach a 8MW target makes no reasonable sense, based on real facts. If China actually states they are reducing their 14MW 2014 target which they haven't as mentioned they have reiterated it, then investors should listen. But one really wonders where some analysts get their information or for whom they are really working.

  • Report this Comment On May 15, 2014, at 10:19 PM, king4life wrote:

    Deutche was correct Both HSOL and JASO had terrible sales in China in Q1. Both said wait until the 2nd half. India's threat is a joke, their home grown products are way inferior, but never underestimate of the Government. Then there is the June decision on the US to put tariffs on Taiwan, where some China firms backed door products to get around the China tariffs.

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