“Falling oil prices don’t affect the photovoltaic growth.” This is a strong statement by JinkoSolar’s (JKS, Financial) CEO made just after the company posted strong results in the recently reported fourth quarter, also ending fiscal 2014 on a strong note. This clearly reflects the confidence that a Chinese PV company has after performing in an outstanding way. Further, the Chinese company’s growth momentum is showing no signs of fading away; in fact, it is expecting a better performance in fiscal 2015.
Management is confident about the efforts and accomplishments that the company achieved in 2014 and with industry-leading technology, global presence and deep relationship with financial institutions, JinkoSolar looks well positioned for a solid performance in the future.
All set for growth
JinkoSolar definitely has room for growth. The latest achievements by the PV company clearly indicates strong operational excellence under the camp. The lower oil pricing is a grave situation for many of the companies, but PV companies such as JinkoSolar are having a roller coaster ride on the back of it as it is shifting the customers from oil to solar usage lately. In fact the impact can be seen in the recently reported quarters.
However, the company’s performance towards the end was a little shaky due to the cold winter and slower grid connection process. But the company is putting efforts to get over this weakness and is expecting to make it up during the first half of 2015 by connecting 360 MW of projects.
The Chinese PV company is now focusing on various aspects to extend its market presence. The company has undertaken diversification strategy to stay competitive in the market. As a result of these efforts, JinkoSolar is expecting that its market presence will grow by 15% to 20% even in the soft oil pricing environment. The lower oil prices are also a matter of concern to JinkoSolar as it is the main component used for transportation rather than power generation in most of the key solar markets. Any recovery in the oil prices will also add to JinkoSolar glory in the upcoming quarters.
Smart strategies
Under the diversification strategy, JinkoSolar is also diversifying its production capacity across the globe by establishing overseas production facilities for both cells and modules especially in the markets that are ignorant of the recent solar trade disputes. With this initiative, JinkoSolar is expected to be a leading solar supplier in key solar markets.
Moving on, JinkoSolar is also stretching its reach in different market segments to improve its profitability. With its high quality, cost-leading products and robust sales and marketing strategies, JinkoSolar continues to attract new customers. It is also putting efforts to stretch its reach in other industrial, commercial and residential segments. It is seeing faster growth in emerging markets such as Chile than China, USA and UK. It is aligning its efforts to achieve better results as it is seeing some bright opportunities in the solar markets of Japan and India. Besides this, it is also making good inroads in new markets including Turkey, the Middle East, Brazil and other Central American and Asia-Pacific markets.
PV industry outlook for 2015
According to the recent studies and research carried out by the analysts, the PV industry is expected to grow between 16% and 25%, which is a good sign. The industry is expected to reach production of 53 GW to 57 GW. On the other hand, many companies are expected to undertake mergers and acquisition to strengthen their market presence. All these signs are indicating strengthening recovery in the solar industry in 2015; this recovery may be fragile, but the momentum it is taking with it is extremely profitable for companies such as JinkoSolar.
Conclusion
Moving to the fundamentals, the stock is cheap with a trailing P/E of 10.16 and the forward P/E of 6.68 is indicating decent earnings growth in the near term. Further, a profit margin of 6.75% is also expected to attract investors to the stock in future. Considering all these points, investors definitely should pick JinkoSolar now as its prospects look strong.
