Roth Capital Upgrades JinkoSolar Holdings: What You Need To Know About UFLPA

Zinger Key Points
  • Roth Capital said the release of JinkoSolar's panels under the UFLPA law is a boon for the company, and will aid in margin expansion.
  • From June to November of last year, more than 1,000 shipments of solar panels accumulated at U.S. ports under the UFLPA.

U.S. Customs and Border Protection released a significant shipment of solar panels for sale in the U.S. market, after initially holding them under the Uyghur Forced Labor Prevention Act (UFLPA).

According to ROTH Capital Partners managing director Philip Shen, the UFLPA release is going to be a boon for JinkoSolar Holdings Co. Ltd JKS, as it will lift the overwhelming policy risks that challenge the company.

The JinkoSolar Analyst: Shen upgraded JinkoSolar from a Neutral to a Buy rating

in a recently published industry note. He also raised the price target from $50 to $70.

See Also: Chinese Solar Companies Dodge Sanctions

Some Background: Reuters reported that in 2022, from June to November, more than 1,000 shipments of solar modules valued at hundreds of millions of dollars accumulated at U.S. ports as a result of a law prohibiting imports from China's Xinjiang region.

The UFLPA imposes the burden of proof on buyers to demonstrate that goods imported from China's Xinjiang region weren't manufactured with slave labor.

To comply, companies must provide a detailed distribution network chart, complete lists of all employees at their facilities, and evidence that laborers were not subjected to forced labor conditions.

According to ROTH Capital, as much as 3 GW has been held by U.S. Customs since the law was passed. According to Shen, as much as 9 GW to 12 GW of solar modules could be barred from entering US markets by the end of the year.

ROTH Capital says the release of the panels will benefit the U.S. utility-scale solar sector. It warned that U.S. Customs may now shift its attention away from the top solar component importers.

As the UFLPA risk diminishes for the company, ROTH Capital turns to JinkoSolar’s outlook, to which ROTH says it sees potential margin expansion for the company as the price of Polysilicon — the material in which the solar panels are made of — has fallen by more than 42% in roughly 60 days.

“Post [third-quarter] results, we had already increased our estimates a fair amount. Given the poly price collapse, we see upside potential to margins ahead and plan to update our model following JKS's upcoming Q4 results,” ROTH said in a note to investors Wednesday.

Image: Shutterstock

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