Emerging Solar Markets Remain Key for JinkoSolar (JKS); Roth Capital Affirms at 'Neutral'
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Roth Capital affirms JinkoSolar (NYSE: JKS) at Neutral with a price target of $18 following Q2 results on Thursday.
Analyst Philip Shen offered the following overall thoughts on the numbers, noting that management sees emerging solar markets as key moving forward:
JKS delivered external shipment volumes near the midpoint of guidance, while margins were a bit lower-than-expected as tariffs on increased U.S. shipments impacted costs. Despite challenging industry conditions, management remains cautiously optimistic on margins through the back half with module margins expected to be in a range of 15-17% vs. Q1 of 18%. Electricity margins (largely cashless) are expected to be in a range of 60-65% for Q3. Management attributed the relatively healthy margin outlook to an improving cost structure (~10% lower by YE'16) and stabilizing ASPs in Q4 vs. Q3 (a view shared by SOL on its recent earnings call).
JKS indicated that H2 ASPs could be supported by increasing demand in India, Japan, and LATAM, while China demand could rebound in Q4 as developers rush to complete projects by YE. For 2017, management believes emerging solar markets could drive ~10GW of new demand, while the top three countries—China, Japan, and the U.S.—remain flat. We are less optimistic on 2017 growth as we believe the U.S. and Japan are likely to meaningfully contract, though management believes greater-than-expected demand from emerging regions such as Abu Dhabi, Dubai, South Africa, Mexico, and certain South Eastern Asian countries is possible and could provide upside to 2017 demand.
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