ReneSola (SOL, Financial) is a solar PV company that I looked at in my recent piece here and I am bullish on the stock. The company is positioned to make the best of opportunities that are going to unfurl going forward, the most promising being the rising demand for solar and renewable energy emerging markets in India and China. The company has improved upon revenues, shipment and gross margin year-over-year.
Beyond its core Solar PV business which I looked at in my previous piece, I will be looking at the LED opportunities since the company is diversifying into LED lighting market.
LED lighting market potential
LED’s are projected to gain market share from all other lighting sources going forward. According to a new report by LEDinside, the global LED lighting market is slated to breach $25 billion dollars mark and its market penetration will increase to 31% in 2015 as the overall lighting market grows to $82.1 billion.
In addition, according to a separate report from McKinsey & Company, the global LED lighting market is expected to grow at a CAGR of 34% between the years 2010-2016, and is expected to slow-down to 16% during 2016-2020, reaching a market size of $94 billion by 2020. This, in terms of market share represents 60% of lighting market.
Europe is the leading market for LED lighting, commanding 28% of global market share. This is followed by emerging markets and China with a market share of 28% and 21%, respectively. USA and Japan constitute 19% and 9%, respectively.
The demand in emerging markets is poised to grow at a rapid clip, as a result of rapid population growth, favorable government policies and an abundance of private-sector LED lighting projects.Ă‚
Move into LED lighting
ReneSola is present in all the important and leading market regions as far as the LED lighting market is concerned, by way of its solar business. As the manufacturing base of most LED lighting producers, China boasts a complete LED supply chain and many cost advantages, and ReneSola is also a China-based company.
The Solar PV Company recently launched a range of LED bulb products with a new composite coating material. These offer a combination of cost effectiveness with outstanding installation performance. Moreover, ReneSola LED lighting tubes feature a range of configuration and cap design options, and these are now available worldwide.
ReneSola is also pressing ahead to obtain necessary certifications across different continents for its LED products, including LED bulbs and spotlights. The first batch of LED lighting products was shipped to customers in January, with additional shipments starting from March, this year.
For the European and North American markets, the company launched its LED High Bay featuring high brightness SMD chips. CB certification was obtained in late February this year, and the product will be available for commercial scale sale soon.
To boost the prospects, ReneSola showcased LED Product Line at Lightfair International 2015, which is the world's largest annual architectural and commercial lighting trade show and conference.
Cross selling to existing customers
ReneSola’s customer base for renewable energy products in the fourth-quarter stood at 2,546 and the growth has also been by adding smaller customers. According to prepared remarks of Chief Executive Officer, Mr. Xianshou Li:
“This is a client pool that we expect to create new cross-selling opportunities for our products and services.”
Final words
ReneSola is currently trading at $1.7 mark and is relatively cheap. The solar and LED lighting industries are poised to grow going forward. ReneSola’s move into the LED lighting market will fuel growth of top and bottom lines.
Despite the poor performance of the stock during the past year, I would still recommend it as a strong buy.
