Back to top

Analyst Blog

In a bid to build its position in the Chinese solar market, solar technology company, SunEdison Inc. (SUNE - Analyst Report) announced a strategic alliance with local solar wafer manufacturer, Huantai Group to develop solar power projects in the country.

Under a 5-year agreement, the companies will jointly develop 1.7 GW (gigawatts) of solar projects. SunEdison will supply Huantai with polysilicon from its new South Korea plant for the production of high-quality solar wafers.

We believe that through this partnership SunEdison is attempting to build its position in the Chinese solar market. Moreover, we believe that SunEdison will be able to take advantage of the growth prospects and economic benefits in China.

Founded in 1988, Huantai Group is a forerunner in the Chinese silicon wafer industry and specializes in foundry and cutting of mono-crystalline and polysilicon. Moreover, it is engaged in solar PV, LED sapphire, optoelectronic materials and related businesses.

Huantai’s portfolio of silicon wafers will strengthen SunEdison’s product competencies, which in turn will increase its overall market share, going forward. Moreover, SunEdison’s expansion efforts complement Huantai Group’s strategy to develop new trade relations.

Currently, China is one of the largest and most dynamic markets for solar products. As per media reports, China installed a record 12 GW of solar panels in 2013, making it the world's largest solar market last year, overtaking longtime leader Germany. As reported by Bloomberg, China expects to reach 70 GW of capacity by 2017, up from 20 GW at the end of last year.

We believe that the current agreement is a positive move for SunEdison and is in sync with the company’s strategy. Also, the partnership will help it to emerge as a pure-play solar project developer.

Although SunEdison’s growing exposure to the solar energy market is encouraging, project development requires considerable time and investments. Hence, any delay or inability to sell these projects at desired prices could have an impact on liquidity.

Going forward, increase in debt level and competition from SunPower Corp. (SPWR - Analyst Report) and First Solar Inc. (FSLR - Analyst Report) remain headwinds.

Currently, SunEdison has a Zacks Rank #4 (Sell). Juniper Networks, Inc. (JNPR - Analyst Report) with a Zacks Rank #2 (Buy) is a better-ranked stock and therefore worth considering.
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%