Solar crowns new panel leader as Jinko expands at wrong time

JinkoSolar Holding Co. is poised to become the latest solar-industry leader to learn coming in first doesn’t always make you a winner.

Jinko had 6.5 gigawatts of panel-production capacity at the end of the third quarter, and said full-year 2016 shipments may be as high as 6.7 gigawatts. That means the No. 3 solar company is poised to vault to the top of the list, surpassing Trina Solar Ltd. and Canadian Solar Inc., the two biggest suppliers by shipments in 2015. None of these companies have set dates to release 2016 results.

While panel sales are slowing in the established markets like China, the declines may be offset by gains in emerging markets, said Brad Meikle, a San Francisco-based analyst at Craig-Hallum Capital Group.

“For the last eight years, analysts have continually underestimated the potential of new markets,” he said in an interview. “Right now, we’re at the crossover where non-OECD countries are becoming a greater portion than OECD countries.”

Those markets may justify Jinko’s investment in manufacturing. “Jinko is doing the right thing,” he said. “The industry is turning the corner.”

The company still faces significant debt, including about $480 million due next year. “They borrowed a lot of money to pay for new factories that could soon become obsolete,” BNEF’s Chase said. “It’s what happened to Yingli, it’s what happened to LDK, and it was a contributing factor to what happened to Suntech.”

“For Jinko, they have to believe that their cost reductions outweigh the disadvantages of taking on more debt to build new factories amid the oversupply,” she said. “That’s been dubious for many of these companies.”

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