Weekly Update: Global and Indian solar stocks rally as manufacturing finds its feet
Stock market valuations of major solar global companies have risen significantly in the last two months, beating the respective indices by a significant margin. The share prices of Jinko are up by 61%, Yingli Green Energy by 107%, Sun Power by 40%, Trina Solar by 124%, Renesola by 35% and First Solar by 11%. The share prices for Indian cell manufacturer, IndoSolar, have increased by 73% over the same period. The nadir of valuations that from 2012 are far behind.
- Share prices have been influenced by the fact that module prices have stabilized in the past six to eight months after a two year fall
- The rise in share prices of of Indian manufacturers has been greatly influenced by domestic factors such as the introduction of DCR
- Module prices in India, which had been one of the lowest globally, might actually see an uptrend
The rally in the share prices has been particularly sharp over the last few days. This has largely been driven by the announcement that the US-based Solar Energy Industries Association (SEIA) will issue a proposal to remove anti-dumping duties imposed on Chinese suppliers and that China will remove the retaliatory duties on poly-silicon imports from the US.
Overall, the share prices in the last six to eight months have been influenced by the fact that module prices have stabilized after a rapid two year fall. Also, a large part of the needed consolidation in the industry has already taken place and the increased demand from Japan has been able to absorb a significant part of the excess capacity. Apart from this, new policy targets in China and India have also helped.
The rise in the share prices of the Indian manufacturer, IndoSolar, has been greatly influenced by domestic factors such as the introduction of domestic content requirements (DCR) for an allocation of 375 MW under the National Solar Mission. The stocks might rise further, if anti-dumping duties are announced (unless investors have already priced their expectations in).
The uptrend in these share prices is a very positive development. It means that the industry is expected to return to sustainable, profitable growth. However, it might also mean that prices for modules will not continue to fall as they have during the last years.
Module prices in India, which had been one of the lowest globally, might actually see an uptrend. This has been confirmed to BRIDGE TO INDIA by several EPC companies that have recently closed deals or are in the process of negotiations. The actual landed cost will increase further due to the devaluation of the Indian currency.
Overall, sustainable margins across the value chain are welcome from an industry perspective. BRIDGE TO INDIA believes that price reduction should be driven by technology innovation, scale and fair competition. A stable module pricing regime will also take away the ‘incentive to wait’ for lower prices for developers and end consumers and might encourage sales.
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