Why JinkoSolar Fell Today

Motley Fool
08/22
  • President Trump made comments slamming the solar and wind industries today.
  • These comments have increased the prospects on further restrictions for solar projects, even beyond the removal of tax credits earlier this year.
  • Jinko has a high dividend, but its results are highly volatile.

Shares of JinkoSolar (JKS -4.12%) fell hard on Thursday along with the rest of the solar sector, with Jinko down as much as 6.2% before recovering to a 4.3% decline on the day.

The entire solar sector took a hit today, perhaps due to marketwide uncertainty over interest rates and inflation, which tends to heavily affect solar stocks. However, the bulk of the declines were likely due to comments by President Trump, who threatened to stop any solar project approvals in the U.S. going forward.

"We will not approve wind or farmer destroying Solar"

In a post on his social media platform Truth Social, President Trump posted on Wednesday:

Any State that has built and relied on WINDMILLS and SOLAR for power are seeing RECORD BREAKING INCREASES IN ELECTRICITY AND ENERGY COSTS. THE SCAM OF THE CENTURY! We will not approve wind or farmer destroying Solar. The days of stupidity are over in the USA!!! MAGA

Although the post was made yesterday, it appears major news publications picked up on the potential consequences today. Additionally, JinkoSolar rival Canadian Solar (CSIQ -18.55%) posted worse-than-expected earnings today, highlighting a potential slowdown in Chinese solar deployments in the second half relative to the surge seen in the first half. Jinko is listed on the New York Stock Exchange but is a Chinese company with a base of operations in China and a significant amount of its sales going to Chinese projects.

However, Jinko also sells into the U.S., with 5% of its first-quarter module sales going into the U.S., and a 2GW module manufacturing facility up and running in the U.S. as well.

Image source: Getty Images.

Is Jinko worth a look for value investors?

If there were a ban on new solar projects, there are certainly risks to Jinko's U.S. sales and perhaps a risk of stranded capacity for its manufacturing operations in the U.S. too -- though modules from that facility could potentially be sold to other countries in the Western Hemisphere.

Given its relatively low U.S. exposure today, Jinko's stock may appear tempting on this downturn, especially with its sky-high 5.5% dividend yield. However, investors should be aware it can be a very cyclical and low-margin business, with its first-quarter revenue down some 40% relative to the prior year, and its profits swinging to losses. So despite the seemingly cheap valuation, Jinko makes for a risky play at this point.

免責聲明:投資有風險,本文並非投資建議,以上內容不應被視為任何金融產品的購買或出售要約、建議或邀請,作者或其他用戶的任何相關討論、評論或帖子也不應被視為此類內容。本文僅供一般參考,不考慮您的個人投資目標、財務狀況或需求。TTM對信息的準確性和完整性不承擔任何責任或保證,投資者應自行研究並在投資前尋求專業建議。

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