Leading pure-play solar cell company, JA Solar Holdings Company Ltd. (JASO) signed multiple supply agreements with several customers to provide over 500MW of mono-crystalline and multi-crystalline solar cells. Under the terms of the agreements, JA Solar will supply these customers with solar cells beginning in January 2011 through December 2011. These supply agreements entail prepayments for committed solar cell delivery in 2011.
JA Solar caters to a geographically-diversified pan-continental customer base, which spans across Germany, Italy, U.S., Spain, India, Korea, China and Japan. The company also effectively uses its location advantage in China with Chinese low-cost solar module manufacturers contributing a substantial portion of its revenue.
JA Solar is fast spreading its sales network to different parts of the globe. In the second quarter of 2010, sales to international customers expanded to 46% of total revenues, an increase of 10% from the first quarter of 2010. JA Solar’s second-quarter 2010 shipments of 311 MW was the highest in the company’s history.
JA Solar raised its shipments guidance for fiscal 2010 to over 1.35 GW from its prior guidance of 1 GW. Shipments in the third quarter of 2010 are expected to be approximately 375 MW.
JA Solar is one of the most cost-efficient solar producers; to add to it silicon wafer supply agreements are in place to further boost its production. Positive factors include ongoing expansion programs, subsidy program in China, improving operating efficiencies, rising margins, and higher conversion efficiency.
However, JA Solar may face headwinds in the near-term over module margins and in our view fares lower to solar peers who delve into solar systems. Thus we maintain our long-term Neutral recommendation on the Zacks #3 (Hold) Rank stock. In the near-term we would advise investors to focus on Zacks #1 (Strong Buy) Rank peers like China Sunergy Co. Ltd. (CSUN), JinkoSolar Holding Co. Ltd. (JKS), and LDK Solar Co. Ltd. (LDK).