JA Solar Changing of the Guard

Chinese solar-cell manufacturer JA Solar Holdings Co., Ltd. (JASO - Analyst Report) witnessed a changing of guard on the last day of the quarter.

On Tuesday, June 30, JASO reshuffled its executive management team to gear up for the turbulent period in the future more effectively. JASO’s co-founder and Chairman of the Board, Baofang Jin, is the new executive chairman. Mr. Jin is the chairman and chief executive officer of Jinglong Group, JA Solar's largest shareholder, since 2003.

Secretary of the board of directors, Jian Xie, is the new Vice President of Sales as well as the acting chief operating officer. Former Vice President of Sales Ray Wilson has become the managing director of European operations. Also, Daniel Lui will leave his current position as the Chief Strategy Officer to become the Managing Director of US Operations.

However, Samuel Yang will continue to function as the CEO although the COO and director, Dr. Elmer Hsu, has been relieved of his position.

Cash-rich JASO is one of the most cost efficient solar producers, with an increasingly geographically diversified customer base.  However, tepid module demand in Europe, rising inventory level, falling ASPs, shrinking customer base and the company’s high R&D expenses may affect performance over the near-term.

JASO is trading at a slight discount in terms of P/B and P/S multiple of 1.18, compared to industry figures of 1.44 and 1.21. However, with the strong focus of the Obama Administration on alternative energy, there is ample opportunity for the share price of JASO to appreciate significantly with forward P/E multiple expansions.

With a higher ROE and ROA figures of 1.5% and 1% against not-very-meaningful industry numbers, JASO spiked almost 7% over the past month and warrants premium multiples against its peers. Accordingly we maintain our BUY recommendation on JASO.