The best that can be said about last Friday’s IPO of JinkoSolar Holdings Co. Ltd. (NYSE: JKS) is that it attracted only lukewarm interest. Even that may be an overstatement for a stock that priced at the low end of its range, $11 per share, and closed for the day at $11.01.
Jinko’s shares are trading down today as the solar wafer makers are taking their lumps. Yingli Green Energy Holding Co. Ltd. (NYSE: YGE) is down about 8%, LDK Solar Co. Ltd. (NYSE: LDK) is down more than 4% and Trina Solar Ltd. (NYSE: TSL) is off more than 9%. Jinko is outperforming all these, down a bit more than 2% so far.
Investors are being very cautious about solar PV’s outlook for the rest of this year. The falling euro, the coming drop in German subsidies for solar power and increasing competition at the low end of the market are all weighing on share prices.
Like virtually every IPO for every other solar wafer maker, Jinko plans to use the money to expand its manufacturing capacity. But is that the best thing to do with the money as there is some concern about demand going forward? There’s no question that manufacturing solar wafers, cells and modules is capital intensive, and scaling up this industry may take longer than most investors are willing to wait.
Governments have stepped in, either with direct investments or with subsidies that make the cost of power generation from alternative sources more competitive with fossil fuel-generated power. Trouble is the government has a lot more demands on its revenues. Credit is still tight, there are concerns that more government subsidies will not be renewed amid calls for lower spending and lackluster recent IPOs are cooling venture appetite for big projects.
Out of a random selection of 24 alternative energy companies, 10 are at least 50% off their 52-week highs; another eight are 20%-49% lower; and just one, a Chinese battery maker, is in positive territory. It doesn’t appear that investors are expecting much good news from the alternative energy sector in the foreseeable future.
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