ReneSola Ups Q1 Guidance, Expects Module Price Drop To Help
Zacks Investment Research | Jun 07, 2018 10:05PM ET
ReneSola Ltd. (NYSE:SOL) recently raised its revenue guidance for the first quarter of 2018. ReneSola currently expects revenues in the range of $40-$45 million compared with the previously anticipated range of $30-$35 million. It also expects solar module prices to drop significantly in the second half of the year, which will boost returns from its overseas as well as domestic projects.
Reasons Behind the Guidance Raise
There were multiple reasons that led the company to raise its first quarter guidance. This could be attributed to ReneSola’s existing solar-powered projects that continue to receive the entitled subsidies from government. Its future projects are also anticipated to draw benefits in the second half of 2018, led by a significant decline in prices for equipment and construction. Going forward, the company is quite confident of its growth, which witnessed business momentum since its manufacturing business divestiture.
ReneSola entered into an equity investment agreement valued at $31.4 million in May, with a strategic partner. This led to significant capital infusion in the company, further enabling ReneSola to execute its downstream project development plan in China.
ReneSola’s DG-based projects are mainly deployed in the eastern provinces of China, which is usually characterized by high electricity prices. The company thus expects to benefit significantly from lower equipment cost and stable electrical rates along with declines in module prices.
Long-Term Plans
During the beginning of the first quarter of 2018, ReneSola had a robust solar power project pipeline of around 1.1 gigawatts (GW). Going forward, the company strongly emphasizes its downstream strategy execution and seeks opportunities in small-scale solar projects in diversified regions.
Further, ReneSola’s growth is very strongly driven by its China DG projects. Although utility-scale solar continues to dominate the Chinese solar market, distributed solar is also witnessing rapid growth. As per a report by the National Development and Reform Submission, China connected 7.7GW of DG projects in the first quarter, which grew 217% on year-over-year basis. Such favorable growth patterns will most likely aid ReneSola to achieve its long-term goals.
Price Movement
ReneSola’s stock has lost 4.9% in a year compared with the Original post
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