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May 28, 2015JA Solar – A Good Bet
Tier 1 Chinese solar panel maker JA Solar is copying the trend of its peers Trina and Jinko Solar in expanding its solar cell and module capacity in non-Chinese locations in Asia, to keep up with the growing demand for solar panels globally. Estimates for 2015 demand range from 53-57 GW this year, which is a growth of 16-25% over last year as per major forecaster. China is expected to lead the way with a projected target of 17.8 GW and the country is well on its way with 5 GW of solar capacity installed in quarter 1 alone.
JA Solar to expand in Malaysia
Other markets in SE Asia, Japan and India are also expected to show strong growth this year while USA should be more than 6 GW this year, as the country ramps up capacity in anticipation of the end of the federal tax credit at the end of 2016. JA Solar is planning to set up a 400 MW solar cell plant in Malaysia. It will build its solar factory along the likes of Hanwha Q-Cells, First Solar, Foxconn and Trina Solar. Malaysia has become a regional solar manufacturing hub due to its 15 year tax holiday offered to high tech manufacturing.
JV with india’s Essel Group
JA Solar has also tied up a JV with India’s Essel Group. This business group has major plans of expanding in renewable energy and smart city solutions. The Essel group is also present as a solar developer having won some power plants in solar auctions conducted by the state and central government. The JV will set up a 500 MW solar cell and module plant, with an investment of $200 million out of which around 15-20% will be the equity infusions. Note other Chinese solar panel companies such as Trina Solar are also looking to set up manufacturing in India, given that the country has plans to ramp up annual solar capacity to 10000 MW a year up from 1000 MW a year.
JA Solar Q1 Results
JA Solar also saw decent gross margins of 16% in the current quarter though, shipments went down to around 600 MW. JA Solar will have to ramp up capacity big time in the second half of the year, in order to meet its 3.6-4 GW of shipment targets. With around 1300 done in the first half of the year, the second half will need to see almost a 100% growth over the first half of the year.
JA Solar is a good bet on the solar panel manufacturing growth around the world, given its profitability, large scale and low valuation. The company also makes high efficiency cells as compared to its peers and is increasing its marketing network around the world.