ReneSola Plays It Smart

China-based ReneSola Ltd. (SOL) is playing it smart, making its presence felt in the entire solar energy chain.

Earlier today, ReneSola announced the successful commencement of its trial production of the Phase One of its polysilicon manufacturing facility located in China’s Sichuan province. The 3,000 MT polysilicon plant with two phases of 1,500 MT annualized capacity each, is slated to reach mechanical completion in September 2009.

With the inclusion of polysilicon in its product portfolio, the company’s strategy to be present in the entire solar chain was more or less completed.

In its short life span since 2005, the company started with producing high cost monocrystalline wafers only. However, since the third quarter of 2007 it branched out to manufacturing, volume accretive multicrystalline wafers also.

Not satisfied with this, the company in May 2009 acquired Wuxi Jiacheng Solar Energy Technology Company, Ltd, or JC Solar. JC Solar was a solar cell and module manufacturer located in Yixing, Jiangsu Province, China.

Through the acquisition, ReneSola extended its presence in solar cell modules. At the time of acquisition, JC Solar had an annual cell production capacity of 25MW and an annual module production capacity of 50MW as of May 31, 2009.  ReneSola plans to extend its annual module manufacturing capacity to 100MW during fiscal 2009. SOL’s move to enter into the whole solar chain will have a beneficial effect on its cost structure.

However, near term pricing pressures and inventory charges will affect performance in the short term. We maintain our HOLD recommendation on SOL.

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