1 Chinese solar power stocks should be careful


The discussion about climate change is heating up. Protests took place around the world on September 19, during which citizens in over a hundred countries put pressure on their national governments to take action against climate change. This is great news for green energy investors.

An engaged public can accelerate the adoption of green energy. It also puts pressure on large companies to use renewable energy. It’s an exciting time to be a renewable energy investor in Asia. Here I would like to take a look at a Chinese solar company that serves the global solar market.

Image source: Getty Images.

But first, let’s take a quick look at the solar market as a whole and understand exactly why this market has so much potential.

Solar power markets and China

Solar is the fastest growing sector in the renewable energy market. The global solar market is now projected to reach $ 422 billion by 2022 and grow at an average annual growth rate (CAGR) of 24.2%.

Asia is driving this growth through demand from both Asian developing countries and larger, developed countries like China.

In just 20 years, China has turned its burgeoning solar industry into a huge sector targeting markets around the world. And that could just be the beginning.

Despite trade tariffs and short-term trade wars, the facts about the installation and cost of solar power are positive. The cost of installing solar panels has decreased by up to 70%. This means that many countries will achieve grid parity when solar energy is as affordable, if not more affordable, than fossil fuels.

In such a climate, solar companies will continue to do well. And there is one company to watch out for in the Chinese market Jinkosolar Holding Co Ltd (NYSE: JKS).

Keep an eye on Jinkosolar

Jinkosolar has had a great 2019 so far. The company’s stock rose over 30% after initial fears about a US solar tariff and is aggressively working to expand its share of the global solar market.

In the results of the second quarter, Jinkosolar reported that its module deliveries abroad increased by 21% compared to the previous year. This is positive news for investors because one of the reasons Jinkosolar is worth watching is its commitment to growing in the international solar markets. The company also saw total sales grow 18%.

Jinkosolar also looks strong in its home market of China. In its results report, the company’s management found that many provinces in China are approaching grid parity. This will make it easier to sell solar panels in China, likely boost Jinkosolar’s domestic sales, and protect the company from all the consequences of international solar tariffs.

The truth is that while tariffs could hurt Jinkosolar’s progress in the short term, it would be stupid for investors to turn away from the company because it has so much long-term potential.

Jinkosolar is still a good choice for investors interested in gaining access to China’s booming solar market, but it still offers growth opportunities across national borders.

Stupid takeaway food

In the coming years, more companies and national governments are likely to switch to renewable energy sources, and this means the already growing solar and renewable energy market is expected to accelerate. The best way for investors to enter this market is to buy renewable energy companies that target the global market.

Jinkosolar is an excellent example of this. Although Jinkosolar already has a strong position in the Chinese market, it continues to expand and is looking for international customers. This will likely be an advantage as the solar market grows in emerging markets in Southeast Asia and Africa.

A version of this article originally appeared on our Fool Asia site. For more coverage like this, go to Fool.hk.en.

This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.

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