ReneSola Ltd. (SOL) has entered into an agreement with BIG SOLAR S.A. (BIG SOLAR) for the shipment of 100 megawatts (“MW”) of its high-efficiency Virtus modules. Per the deal, the company will ship its modules in the coming one year directly to BIG SOLAR.
BIG SOLAR S.A. is an established company in the Greek photovoltaic sector. The branded equipment offered by BIG SOLAR includes panels, inverters, monitoring systems and telemetry that are imported directly from the respective photovoltaic (PV) companies, without the mediation of resellers or retailers.
Virtus modules represent the highest technological advancement in quasi-mono solar wafers and modules. They have the ability to improve the average conversion efficiency of conventional multi crystalline wafers from 16.5% to more than 18.2% that is equal to or more than the efficiency of monocrystalline modules. Other features include easy installation and handling, Mechanical Load Capability of up to 5400 Pa and fulfillment of International Electrotechnical Commission (“IEC”) standards. It consumes much less energy and has lower manufacturing costs in comparison to monocrystalline modules that automatically helps in both reducing the overall investment in photovoltaic systems and thereby improving the rate of return on investment.
With this deal, the company also revised its guidance for total solar wafer and module shipments. For the first half of 2012, the company expects them to be close to 1 gigawatt (“GW”). Currently, it expects its total solar wafer and module shipments to be in the range of 2.2 GW to 2.4 GW as compared to the previously guided range of 1.8 GW to 2.0GW.
The company expects to release its second quarter 2012 results on August 3, 2012. The Zacks Consensus Estimates for second quarter 2012 and fiscal year 2012 are currently at a loss of 32 cents per share and $1.23 per share, respectively.
ReneSola is a leading global manufacturer of solar wafers and solar modules. We believe that this deal will help the company in achieving its guidance. In addition to adding to the company’s strong position in key solar markets like Greece, the deal will also boost global sales.
Year to date, the company has delivered 40 MW of high-efficiency Virtus modules to Greece. Moreover, thanks to technological advancements and commercialization of ReneSola’s high-efficiency Virtus modules, which have an average power generation of 255W, the company’s business is spread out globally. In September 2011, Enerparc, a leading Engineering, Procurement and Construction company in Germany, revealed that it also utilizes 27.5 MW of ReneSola’s standard Multi and Virtus high-efficiency modules for its large-scale solar power plant in Gahro, Germany.
ReneSola Ltd. focuses on improving its operating efficiencies and generating material cost savings through its vertically-integrated production structure and the newly introduced diamond-steel wire production process.
However, we are concerned about the tepid demand for solar products in Europe (especially Germany), rising competition, credit risk from its customers, oversupply of solar wafer & modules in the market, and the company’s high research and development expenses. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Some of its main competitors include LDK Solar Co. Ltd. (LDK) and MEMC Electronic Materials Inc. (WFR).
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