JA Solar Holdings Company Ltd (JASO) entered into a two-year strategic partnership with Jabil Circuit Inc. (JBL). Jabil Circuit is a leading global electronic product solutions, company headquartered in St. Petersburg, Florida.
The partnership is in-line with JA Solar’s long-term strategy to partner with leading US-based companies in order to enter the rapidly growing US market. By leveraging Jabil’s expertise and experience in solar module manufacturing and strong global presence, the company expects to improve its cost structure and expand its solar footprint into strategically important markets like US.
Under the partnership framework, JA Solar expects to supply Jabil with up to 400MW of solar cells over the two year period. JA Solar will also supply certified module designs to Jabil for the manufacturing of up to 200MW per year of modules. Further JA Solar intends to provide solar cells and additionally grant Jabil the right to manufacture its portfolio of modules. Jabil would manufacture the modules at its facilities in Mexico, Poland and China. The companies will further collaborate on marketing and selling modules to customers, especially in the U.S. Module production by Jabil is expected to commence in the third quarter of 2011.
Based in Ningjin of the Hebei province in the People’s Republic of China, JA Solar Holdings Co. Ltd. is a leading manufacturer of high-performance solar power products. The company sells its products to solar manufacturers worldwide, who assemble and integrate solar cells into modules and systems that convert sunlight into electricity for residential, commercial, and utility-scale power generation.
JA Solar is one of the most cost-efficient solar producers in the world, with a geographically diverse customer base as well as silicon wafer supply agreements in place to feed its production. Positive factors include ongoing expansion programs, improving operating efficiencies, rising margins and higher conversion efficiency.
JA Solar is steadily expanding its customer base worldwide, with strong growth in several geographic end markets including, U.S., Canada, Italy, Japan, Australia, China and India. The company had already signed supply agreements with multiple customers to meet 2011 product demand that exceeds 2 GW, and has received prepayments associated with these supply agreements, further improving its future order visibility.
In the near term, however, apprehensions over the tepid module demand in Europe, rising competition, wafer dependency, the financial stability of its customers and the oversupply of solar cells in the market will restrain the valuation of the company.
JA Solar presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
However, in the near term, we would advise investors to accumulate its short-term Zacks #1 Rank (Strong Buy rating) peers like JinkoSolar Holding Co. Ltd. (JKS) and SunPower Corporation (SPWRA).
JA SOLAR HOLDGS (JASO): Free Stock Analysis Report
JABIL CIRCUIT (JBL): Free Stock Analysis Report
JINKOSOLAR HLDG (JKS): Free Stock Analysis Report
SUNPOWER CORP-A (SPWRA): Free Stock Analysis Report
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