Yingli might decide the fate of Global Module Supply Chain in near future
June 9, 2015Rooftop Solar Update for Major Markets – Q1 2015
June 12, 2015JA Solar is a highly undervalued stock. The company has strong growth potentials and has targets to ship almost 4 GW of solar products in 2015. The CEO of the company has taken advantage of this undervaluation and has made a bid to buy out the company for $489 million that is $9.69 per ADS. The current market capitalisation value stands at $445 million and the stock is trading at ~$8.8. I don’t think it’s a value proposition for a company, with good fundamentals. JASO is yet to decide if it should accept the offer.
Why I think the company is undervalued
The stock is trading at ~$8.8 currently. The stock surged 12% following this announcement. If the company was listed on Hong Kong stock exchange it would not be trading this cheap. In contrast First Solar (FSLR) and SunPower (SPWR) being US companies are trading at ~$50 and $30 respectively with market cap values ranging between $4-5 billion. JA Solar is expanding capacity, growing its downstream project business, reducing costs and increasing its shipments. JASO has large production capacity which will benefit the company in getting large gigawatt sized orders in the industry. It manufactures high quality products at low cost. The company has proven its potential from being a pure play solar cell supplier to being a major module, cell and OEM supplier.
What happens post this acquisition
The CEO of the company has taken advantage of the low valuation of the company and made an offer which does no justice to the company’s worth. If the acquisition happens and the stock gets listed on the HK or other Chinese stock exchange, it would not be trading at such low valuations and the CEO would be making big bucks. Currently he holds about 15.6% in the company. In my opinion the offer is really undervalued and the company should make a pass. The company has high potentials and should wait for better prospective.