We maintain our Neutral stance on JA Solar Holdings Co., Ltd. ( JASO - Analyst Report ) , which is one of the most cost-efficient solar cell producers with a geographically diversified customer base. Its customer base spans across Germany, Italy, U.S., Spain, India, Korea, China and Japan. The company effectively uses its locational advantage in China, with Chinese low-cost solar module manufacturers contributing a substantial portion of its revenue.

JA Solar has been able to manufacture high quality, high efficiency products at lower costs in comparison to most of its peers with the help of its technological innovations. Also, in the near term, the company expects to improve its newer generation solar cell technology that will make its solar cells reach commercial efficiency of 20%.

JA Solar meets its capital obligations mainly through low cost borrowings. Moreover, it is capitalizing on its strong balance sheet in funding near-term expansion programs through cash on hand and operating cash flow that helps in maintaining a strong market position.

However, we are concerned 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.

The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.

Based in Ningjin of the Hebei province in the People’s Republic of China, JA Solar manufactures high-performance solar cells. JA Solar’s principal customers are solar module manufacturers who assemble and integrate its products into modules and systems. The company sells primarily to customers in China, Europe and the U.S. The company has also entered into the new markets of Greece, Portugal, France, Italy and South Korea.

The company mainly competes with Suntech Power Holdings Co. Ltd. ( STP - Analyst Report ) .