October 4th, 2022 | 10:58 CEST
JinkoSolar, TubeSolar, Encavis - Shares for the energy turnaround
Table of contents:
JinkoSolar - Margin pressure
On August 26, JinkoSolar, one of the largest solar panel manufacturers in the world, presented its quarterly figures. The group described demand from Europe in particular as strong. Shipments to China also increased significantly YOY. Accordingly, sales climbed significantly to USD 2.81 billion, exceeding analysts' expectations. Unfortunately, not in profit, which turned into a loss. The Company cited rising raw material costs as the reason. These are pushing margins into negative territory. In total, the Company delivered a capacity of 10,532 megawatts in the second quarter.
Since mid-September, JinkoSolar has been working with startup Raptor Maps to improve the performance of its solar panels. It involves monitoring solar modules and automatically checking corresponding warranty claims, which minimizes both costs and downtime. The price war is taking place at all levels, and the end customers, as well as the tradespeople, are paying attention to a low price because there are no longer such great differences in quality. However, this also means that the smaller solar module manufacturers are gradually disappearing. In the end, large producers like JinkoSolar will prevail.
The stock broke out to the upside in mid-June and has been very volatile ever since. The upward trend is intact and will only be broken with closing prices below USD 35.41. At the moment, one share certificate costs USD 55.39. Looking at the analysts' comments, most of them are positive. The average price target is USD 66.44, with the upper end at USD 94.42 and the lower end at USD 35.00. Q3 numbers are due on November 29. Then we will see if raw material costs could be contained.
TubeSolar - Production to start this year
TubeSolar has recognized the problems of conventional solar panels and has dedicated itself to optimization. To this end, the Augsburg-based company has acquired the patents that enable the simple encapsulation of flexible photovoltaic strips in a glass tube from Osram and Ledvance. With this agri-photovoltaic technology, it is possible to continue using agricultural land for growing food while also producing solar power. The tube system, which is significantly lighter than conventional solar panels, is built up to 8m above the arable land. As a result, light and water continue to get through to the plants, while at the same time, the partial shading reduces the need for water. The circular tubes are self-cleaning and protect plants from weather phenomena such as hail or heavy rain.
On September 1, the Company announced plans to build an agri-photovoltaic system over a large-scale hop-growing area in Bavaria in the spring of 2023. The pilot plant is to cover 1 hectare. The pilot plant is well chosen because the Hallertau region is home to Germany's largest hop-growing area, covering 16,000 hectares. Bavarian Economics and Energy Minister Hubert Aiwanger was also present at the project presentation. He said: "This second pillar is becoming increasingly important for farmers. PV systems and agriculture have a common future." Political support was already visible in 2020 when the Company received a grant of EUR 10.8 million.
TubeSolar is now on the verge of series production. The first modules are to be produced as early as this November. A capacity of 250 megawatts is to be reached by 2025. The Company also has its sights set on other business areas. Possible areas of application include industrial, commercial and residential roofs, but also facades. Here, it is possible to combine green roofs with a photovoltaic system, which was practically impossible until now. The Company has managed to carry out a successful capital increase in a challenging market environment. 900,000 shares were issued at EUR 5.20. In total, the Company raised EUR 4.68 million. The share price is currently EUR 4, resulting in a market capitalization of EUR 51.6 million. The 15% stake in Ascent Solar alone is worth USD 22.5 million.
Encavis - Profiting from the energy shortage
Encavis is a producer of electricity from renewable sources. To this end, the Hamburg-based company acquires and operates solar and onshore wind farms in Europe. There are 212 solar farms and 97 wind farms with an installed capacity of almost 3.3 gigawatts. By 2025, the Company plans to add 15 to 20 new parks per year to its existing portfolio. In this way, they aim to add capacity at a rate of 200-300 megawatts per year. In addition, the Company offers technical support for solar and wind plants, as well as asset management for institutional investors in the renewable energy sector.
In other words, the Company is buying from manufacturers who are under margin pressure and is earning splendidly as a result. This is also evident in the half-year figures released on August 15. Compared to the previous year, 17% more electricity was generated - a total of 1,694-gigawatt hours. On the other hand, sales revenues climbed directly by 40% to EUR 226.4 million. EBIT was EUR 109.8 million, an increase of 60%. In the course of this, the management also directly raised the outlook for 2022. Due to the promising developments, the MDAX-listed company was also promoted to the STOXX Europe 600 on September 19.
The next quarterly figures are to follow on November 15. At the end of August, the Company secured a 26-megawatt solar park in the UK that is ready for construction. This is intended to expand the British PPA solar park portfolio. Since September, there have been three buy recommendations with price targets between EUR 21.50 and 30.00. Currently, the share price is EUR 18.67. The general conditions remain favorable in the near future, as energy will remain scarce in Europe.
The manufacturers of solar panels and wind turbines are under a lot of margin pressure. This can be seen in JinkoSolar, which had to report losses despite high sales. TubeSolar's situation is different, as the Company has an innovative edge and is therefore not under as much pressure due to the lack of competition. If the step to mass production succeeds, the share should be on the watch list. On the other hand, wind and solar park operators are experiencing golden times. Encavis was even able to increase its forecast.
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