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Stocks of JinkoSolar, JA Solar, Daqo, ReneSola Plunge on New Regulations by China

Following the Solar Management Plan by Beijing, Roth Capital downgraded China's solar companies, sending their stocks plummeting Monday.

Anna Vodopyanova
    Jun 04, 2018 1:51 PM  PT
Stocks of JinkoSolar, JA Solar, Daqo, ReneSola Plunge on New Regulations by China

Solar power companies JinkoSolar Holding Co. Ltd. (NYSE: JKS), JA Solar Holdings Co. Ltd. (Nasdaq: JASO), Daqo New Energy Corp. (NYSE: DQ), and ReneSola Inc. (NYSE: SOL) saw their stocks slide Monday after Chinese regulators unexpectedly suspended construction of new solar panel farms and cut subsidies to the industry.

In response to the Solar Management Plan that Beijing released on Friday, Roth Capital analyst Philip Shen downgraded JinkoSolar, JA Solar, and ReneSola to "sell" and Daqo to "neutral." 

Shen said the consequences of the plan will result in a "massive" net oversupply of cell capacity and its impact will last through 2019. Shen cut the price target of JinkoSolar to $12 per share from $19, JA Solar's to $5.80 per share from $6.70, and Daqo's to $48 per share from $75, according TheStreet.com.

As a result, JinkoSolar lost more than 9 percent on Monday, closing at $13.77 per share; JA Solar fell 4 cents to $7.12 per ADS; Daqo tanked nearly 21 percent at $41.80 per ADS; and ReneSola dropped 8 percent to $2.33 per share.

China's state planner said on Friday that the country does not have current plans to build solar power stations this year. In 2018, China will give 10 gigawatts solar capacity allowance to distributed solar power projects, the National Development and Reform Commission said in a statement.

Beijing will also further cut clean energy cashback subsidies on new solar energy suppliers by 0.05 yuan ($0.0078) to 0.32 yuan per kilowatt hour (kWh) from May 31.

In a joint notice, China's National Development and Reform Commission, Ministry of Finance, and National Energy Administration said that "the pace of technological progress and cost reduction have accelerated significantly" and the new measures were aimed "to promote the healthy and sustainable development of the photovoltaic industry, improve the quality of development, and accelerate the subsidy retreat."

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The stocks of JinkoSolar, JA Solar, Daqo, and ReneSola fell after new regulations were announced by Beijing.

(Source: Thomson Reuters Eikon)

(Reuters contributed to this article)

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