Thursday, February 18, 2010


Investment Thesis

• JA solar is the largest and lowest-cost pure-play cell manufacturer, which should allow it to gain further market share at the expense of European and Taiwanese producers.

• The company is looking to produce high efficiency solar cells by late 2010, with volume ramp in 2011, which will be a key differentiator from the peers.

• JA Solar is transforming its business model by manufacturing “white label”
modules and selective internal wafering. We expect accretion to RoE
and EPS as a result.

• We think the worst is behind JA Solar. The rate of cell ASP declines is
moderating and shipment growth is accelerating due to strong price
elasticity. This should result in a strong positive inflection in revenues and

Key Value Drivers

• Cell / Module shipments.
• Cell / Module ASP
• Raw material cost (i.e., wafer cost)
• Hi efficiency product
• Integration into wafer making

Potential Catalysts

• Gain market shares from EU competitors through low pricing strategy
• Faster ramp-up of high efficiency cell
• Further improvement of cost structure
• Buying back CBs at low market price

Key Risks

• Currency dynamics
• Failure to win new international customers
• Inability to renegotiate wafer price
• Slower demand recovery in its large end markets
• Slower module capacity ramp-up

ful report here
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