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JinkoSolar Enters Mongolian Market with 12.7MW Solar modules

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JinkoSolar Holding Company Limited (JKS - Free Report) recently announced that it has supplied 12.7 mega-watts (MW) of photovoltaic (PV) modules to Hitachi Systems, Ltd. These modules will be installed in a solar power plant owned by Farmdo Corporation in Ulan Bator, Mongolia.

Notably, the power plant is the country's first utility scale solar plant and is anticipated to come online from November 2017.

Details of the Deal

Per the deal, JinkoSolar sold its high efficiency PERC modules having a capacity of 12.7 MW along with custom built 36-cell and 48-cell dual glass modules to Farmdo. Notably, PERC or Passivated Emmiter Rear Contact technology, boosts solar power generation of PV modules.

Approximately, 40% of the project fees are expected to be funded using a government subsidy, aided by the Japanese Ministry of the Environment.

Will this Deal Benefit JinkoSolar?

It is worth noting, that apart from its strong forte in the domestic front, JinkoSolar enjoys a widespread overseas customer base in countries like the United States, Japan, Chile, South Africa, India, Mexico, Brazil, Italy, Spain, France and Belgium. Interestingly, the latest deal with Hitachi marks the company’s first shipment to Mongolia. This solar plant spread across 28 hectares of Mongolia’s resource abundant land will make it an ideal location for developing the local economy through solar power generation.

Notably, the total potential of Mongolian renewable energy including wind, solar, geothermal, and hydro resources is estimated by the National Renewable Energy Laboratory (NREL) of the United States Department of Energy to be as high as 2,600 GW. According to NREL, the nation’s solar energy potential is 1,500 GW. Naturally, solar module providers like JinkoSolar will try to expand its base to make most of the still untapped solar industry in this country and the latest deal is one such instance.

Our View

Alternative energy sources have been the primary target of utility service providers due to rising concerns regarding the consumption of fossil fuel and the subsequent carbon emissions. To make most of the situation, each day more utilities are shifting their focus to generation of alternative energy.

In fact, solar energy has emerged as the most popular one among all other alternative energy providers owing to its easy availability and declining price of solar panels. According to the U.S. Energy Information Administration (EIA), the nation’s utility-scale solar power capacity will reach 31 gigawatts (GW) by the end of 2018 compared with 22 GW in 2016.

The international market for solar power is also expanding rapidly. Per a report from GTM Research, the global solar market will hit 85 GW in 2017, nearly doubling the installed capacity of 2014.

Thanks to Jinkosolar’s higher conversion efficient modules, the company has been receiving regular contracts from various clients over the last few months. To this end, its Canadian subsidiary received an order last month, to supply 17 MW solar PV modules to Borea Construction ULC for the construction of the Brooks Solar Project located in Brooks, Alberta, Canada. (Read more: JinkoSolar to Supply Solar Modules to Brooks Solar Project)

Additionally, the company is currently undergoing a competitive bidding to enter into additional projects managed by Hitachi Systems, the construction for which are expected to begin next year.

No doubt to make most of the current scenario, other solar companies like Canadian Solar, Inc. (CSIQ - Free Report) , and Yingli Green Energy Holding Company Limited are also enhancing their overseas base.

Price Movement

JinkoSolar has outperformed the industry in the last 12 months. The company’s shares gained 39.3%, compared with the industry’s increase of 5.4%. This outperformance may have been led by strong deman witnessed for its conversion efficient solar PV modules.

Zacks Rank & Key Picks

JinkoSolar currently carries a Zacks Rank #5 (Strong Sell). A better-ranked stock from the same space is JA Solar Holdings, Co., Ltd. that sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

JA Solar delivered an average surprise of 716.7% in the trailing four quarters. Its 2017 current quarter estimates have risen by 6000% to 61 cents per share in the last 90 days.

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