JinkoSolar Holding Co., Ltd.’s (JKS Quick QuoteJKS ) subsidiary Jinko Solar Co recently inked a long-term deal to buy more than 70,000 tons of polysilicon from Wacker Chemie AG during the September 2021-December 2026 period. Per the terms, purchase price will be based on the one prevalent in the market, and the latter will supply from its production sites in Germany and the United States.
Rationale Behind the Deal
Thanks to the COVID-19 pandemic, a shortage in supply of polysilicon along with a rise in the price of the same continues to hamper solar module manufacturers like JinkoSolar. Since polysilicon is the key material in the production of solar cells and modules, a smooth supply of the same is essential for a manufacturing company.
To tackle the supply-shortage situation and enhance its manufacturing capacity, JinkoSolar signed the latest agreement. With similar aim in view, another subsidiary of the company ShangraoJinkoSolar Industry announced its plan to invest approximately $74 million in Inner Mongolia Xinte Silicon Materials, a unit of Xinte Energy, in June 2021. The investment will be used for the construction of a high-purity polysilicon production line with an annual capacity of 100,000 tons.
Surely such initiatives of JinkoSolar will help it stabilize the silicon material supply, thereby reducing supply-chain volatility and expanding its footprint in the global solar market.
Per a Research and Markets report, the global solar energy market is projected to reach $223.3 billion by 2026, seeing a CAGR of 20.5% during the 2019-2026 forecast period. JinkoSolar and other solar players are investing heavily in research and development (R&D) to produce high efficiency modules for widening their presence in the growing global solar market. JinkoSolar’s investment of $59.6 million in R&D activities during 2020 allowed it to successfully enhance the conversion efficiency of its high-efficiency solar module.
Similarly, FirstSolar (FSLR Quick QuoteFSLR ) invested $93.7 million in R&D activities last year to boost the performance and lower the cost of its solar modules. Another solar panel manufacturer SunPower Corporation (SPWR Quick QuoteSPWR ) spent $22.4 million on R&D activities in the same period to develop its high-efficiency solar panels. Canadian Solar (CSIQ Quick QuoteCSIQ ) , another prominent solar module manufacturer, invested $45.2 million in R&D activities in 2020 for further development of its high-efficiency, multi-crystalline and mono-crystalline modules.
Price Performance and Zacks Rank
In the past three months, shares of JinkoSolar, currently a Zacks Rank #5 (Strong Sell) player, have gained 10%, outperforming the industry’s 8% growth.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Three Months Price Performance
Image Source: Zacks Investment Research