The sun is going down on this company and it will be painful.
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JKS - Jinko Solar - Company Profile
JinkoSolar Holding Co., Ltd., together with its subsidiaries, engages in the design, development, production, and marketing of photovoltaic products in the People's Republic of China and internationally. It offers solar modules, solar cells, silicon ingots, silicon wafers, and recovered silicon materials. The company sells its products to distributors, project developers, and system integrators under the JinkoSolar brand, as well as on an original equipment manufacturer basis. JinkoSolar Holding Co., Ltd. was founded in 2006 and is based in Shangrao, the People's Republic of China. Company description from FinViz.com.
Expected earnings Dec 6th, unconfirmed.
Declining demand for certain types of solar panels, new requirements in China, new rules in China and an excess of supply in the market is depressing Jinko shares.
Of the last five analyst actions, 2 have been a cut back to hold and 3 have been a cut to sell. Axiom cut them to sell with a $10 price target.
To make matters worse, on Sept 27th, the company announced an "at the market" offering of $100 million in stock. That represents about 5 million shares in addition to their 27 million shares outstanding. At the market means the selling broker will simply sell the shares into the market at a time and pace of their own choosing. Average daily volume is about 800,000 so assuming they sold 100,000 shares per day it would take 50 trading days of continuous selling pressure.
Over the last month the consensus earnings estimates for the full year have declined from $1.99 to 77 cents. Estimates for the quarter have declined from 41 cents to 17 cents. Axiom said estimates should turn negative for Q4 and remain negative all the way through 2019.
Unfortunately, the outlook is so negative the put options are very high. This will be a stock only position.
Sell short JKS shares, currently $22.69, initial stop loss $24.25.
Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps more than $1.00 at the market open.