Stock price index: Solar stocks significantly underperformed the broader market in June. The Guggenheim Solar ETF (TAN) decreased 8.2% vs. the S&P 500 and Dow down 0.6% and 1.5%, respectively. The general investor sentiment around the solar industry is very negative due to the shocking policy change in China. Pricing is on the decline. Polysilicon pricing appears to have hit $12/kg which represents a drop of >40% YTD. Correspondingly, GCL-Poly, Daqo, and Wacker stocks dropped 15%, 22%, and 33% in June, respectively. The wafer pricing has dropped to RMB3.3/wafer from RMB4.2/wafer at SNEC in late May. Jinko, FirstSolar, Canadian Solar and LONGi dropped 9%, 20%, 22%, and 25% in June, respectively. On the inverter side, Enphase increased 16% due to its acquisition of SunPower’s microinverter business, SolarEdge and SMA stocks dropped 13% and 32%.
We have seen several announcements from Heliene, Itek Energy, Mission Solar, Seraphim, Solaria, SolarTech Universal, Sunpower, Suniva, SunSpark and Tesla/Panasonic.
JinkoSolar (JKS) was the first mover among Asian solar manufacturers to announce a new USA plant. Most recently, Hanwha Q Cells Korea Corporation announced that it will build a solar PV module manufacturing facility in Whitfield County, Georgia.
Construction will commence in 2018, and the facility is scheduled to be completed in 2019. However, given the steep price decline of poly and wafer in China, it may be cheaper to pay the tariff than build the manufacturing in the USA.
With the JunQ earnings season coming, we expect more company announcements on how strategy will alter with the policy change in China.
Jesse Pichel, Roth Capital Partners