First Solar, Inc.
FSLR
recently announced that the company has concluded the sale of its solar development platform in Japan to PAG Real Assets. The sale of the 293-megawatt-direct current (MWdc) solar platform is in sync with First Solar’s intent to focus on its long-term strategic plans in the solar module arena.
Subject to regulatory approvals, the transaction is anticipated to reach completion in the second half of 2022.
Rationale Behind the Sale
The sale of the solar development platform follows FSLR’s long-term commitment to focusing solely on the solar module manufacturing business. With this aim, in May 2022, First Solar entered into a definitive agreement to divest two of its solar assets in Japan to PAG Real Assets. The deal involved the aforementioned solar platform, coupled with a solar operation and maintenance platform that boasts a capacity of 665 MWdc.
Also, with effect from 2021-end, the company aligned its business structure with its long-term strategic plans, with the module business remaining the only reportable segment. Additionally, following the latest divestment, First Solar intends to continue pursuing module sales opportunities in Japan.
With the divestment, the company is likely to recycle its investments further in the solar module manufacturing business. This, in turn, may boost its revenue generation prospects amid the rising solar project development worldwide to curtail dependence on fossil fuels.
Growth Prospects
The solar market entails phenomenal growth trajectory as nations strive to become more environmentally friendly and increase the usage of renewable sources to fulfill their energy demand. The global solar photovoltaic module market is likely to expand at a CAGR of 7.4% over the 2021-2030 period, per projections from Allied Market Research.
Such growth projections entail abundant opportunities for companies like First Solar, which already enjoys a lucrative position in the solar module market with its new Series 6 module. Solar companies that can reap the multitude of gains from the expanding solar module market are
Canadian Solar
CSIQ
is a vertically integrated manufacturer of silicon ingots, wafers, cells, solar modules (panels) and custom-designed solar power applications. It has shipped around 3.6 gigawatts (GW) of modules to more than 70 countries in the first quarter. For the second quarter of 2022, it expects total module shipments between 4.9 GW and 5.1 GW.
The Zacks Consensus Estimate for Canadian Solar’s 2022 earnings suggests a growth rate of 41.2% from the prior-year reported figure. CSIQ shares have rallied 1.3% in the past six months.
SolarEdge
’s
SEDG
smart solar modules are integrated with power optimizers, enabling faster residential installations, simplified logistics and easier servicing. In the second quarter of 2022, SolarEdge expects revenues in the range of $710-$740 million.
The long-term earnings growth rate of SEDG is pegged at 28.6%. Shares of SolarEdge have returned 2.3% in the past year.
JinkoSolar
JKS
is one of the largest and most innovative solar module manufacturers in the world. Its new series of ultra-efficient Tiger Neo modules boasts capabilities that make it one of the most proficient solar modules in the market to date. JinkoSolar expects its annual mono wafer, solar cell and solar module production capacity to reach 55.0 GW, 55.0 GW (including 32.9 GW N-type cells) and 60.0 GW, respectively, by the end of 2022.
The Zacks Consensus Estimate for JinkoSolar’s 2022 sales suggests a growth rate of 52.9% from the prior-year reported figure. JKS has appreciated 13.2% in the past year.
Price Movement
In the past year, shares of First Solar have dropped 25.3% compared with the
industry
’s fall of 29.5%.
Image Source: Zacks Investment Research
Zacks Rank
First Solar currently carries a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
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