NEW YORK, NY--(Marketwire - Mar 29, 2013) - Chinese solar equities have experienced a sharp decline in recent weeks as Suntech Power's recent bankruptcy has raised concerns that other Chinese manufacturers may be over-leveraged. Ticker Spy's Chinese Solar Stocks Index (CHSOL) has fallen over 35 percent in the past month. Research Driven Investing examines investing opportunities in the Chinese Solar Industry and provides equity research on JA Solar Holdings Co., Ltd. (NASDAQ: JASO) and Yingli Green Energy Hold. Co. Ltd. (NYSE: YGE).
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The China Daily recently reported that the China Banking Regulatory Commission (CBRC) has warned banks to "pay close attention to the credit risks in key industries affected by the economic downturn and hit by overcapacity woes." In an attempt to protect themselves from risks associated with the solar industry Chen Yuan, chairman of China Development Bank, has stated his bank will begin to curb new loans to solar panel manufacturers.
"There clearly will be pressure on other Chinese stocks with heavily leveraged balance sheets and non-existent cash flows," said Gamco's Gabelli Green Fund, David Smith, by e-mail March 22nd according to Bloomberg. "The outlook also is strained by Suntech continuing its production. Suntech probably will have to discount their panels more to sell them, putting downward pressure on market pricing."
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JA Solar sells its products to solar manufacturers worldwide, who assemble and integrate solar cells into modules and systems that convert sunlight into electricity for residential, commercial, and utility-scale power generation. The company reported a net loss of RMB 1.7 billion ($275.8 million) for the full year 2012. Shares of JA Solar have fallen roughly.
Yingli Green Energy's manufacturing covers the entire photovoltaic value chain, from the production of polysilicon through ingot casting and wafering, to solar cell production and module assembly. Yingli Green Energy currently maintains a balanced vertically integrated production capacity of 2,450 MW per year at its production facilities. Shares of the company have declined roughly 25 percent over the past month.
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