(CapitalWatch, Oct. 11, New York) Solar stocks surged Monday, with Daqo New Energy Corp. shining the most among Chinese polysilicon companies as Jefferies analysts forecast 25% growth in solar projects.
Daqo (NYSE: DQ) reached $62.67 per share by midday, at a 12% jump, boosted by reports of Jefferies Financial's rating Daqo a "buy" with a $139.1 price target. While lowered from the previous $146.50 per share, the new target implies a 148% upside from Friday's close. Daqo has been quite volatile over the past few months, its stock hitting $90 per share during the July IPO of its operating subsidiary on the STAR Market in Shanghai and tumbling to $45 per share in mid-August.
Indeed, Chinese solar stocks have waivered significantly over the past half-year as headwinds in the industry periodically overpower the tailwinds. Thus, companies continue to face the supply chain constraints, and Jefferies echoed earlier reports saying poly supply will remain low next year.
Meanwhile, the tariff issue still hangs in the air. In mid-August, a group of U.S. solar manufacturers have filed with the U.S. Department of Commerce requesting the Chinese firms manufacturing in Malaysia, Vietnam, and Thailand to be taxed for their U.S. imports as Chinese manufacturers would be. The American Solar Manufacturers Against Chinese Circumvention claimed their rivals in China were "unlawfully circumventing" tariffs. The Section 201 tariffs on imported cells and modules imposed by the Trump administration will expire in February 2022 and it's tough to predict further action. The strong demand in the U.S. solar market has turned the tariffs counterproductive, adding to the cost and supply constraints, as Greentech Media explained in a July report.
And lastly, some Chinese panel shipments were held up by the U.S. Customs and Border Protection in relation to the alleged human rights violations in Xinjiang. After Washington added Hoshine Silicon Industry Co. to its sanctioned entities list on the grounds that "the subject entities are engaging in or enabling activities contrary to U.S. foreign policy interests," related companies had warned of delay risks.
Year-to-date, Daqo was the best-performing company among China-related solar stocks, today trading about level with early January. As to others, the stock in JinkoSolar Holding (NYSE: JKS) jumped 7% intraday, to $50.63 per share. JKS is up 39% in the past half-year but still down 21% year-to-date.
JinkoSolar is following Daqo to a home listing, having received a green light to file for an IPO on Shanghai's high-tech board. Now trading at about the recently-lowered price target from Roth Capital, JKS may yet surge if it sees a similar welcome at home that Daqo's subsidiary enjoyed in July.
Shares in ReneSola Ltd. (NYSE: SOL) traded 6% higher intraday, at $6.69 apiece. SOL stock has lost 33% of its market value in the past half-year. ReneSola has been aggressively expanding in Europe, and while its Q2 revenue dropped, earnings beat analysts' estimates. Zacks Equity Research has just upgraded SOL to a "strong buy" based on earnings estimates.
Canadian Solar Inc. (Nasdaq: CSIQ) rose 6% to $34.99 per share, down 19% from six months ago and also 33% down year-to-date. The company recently sold its 1.4 GWh project in California, retaining a 20% stake and a long-term servicing contract. The plant is expected to reach commercial operation by the summer of 2022 and has already signed projects with Edison (NYSE: EIX) and PG&E Corp. (NYSE: PCG).
Last week, Citigroup lowered its target on CSIQ to $51 from $57 per share, maintaining a "buy."