NEW YORK (TheStreet) -- Yingli Green Energy (YGE - Get Report) was gaining 6.1% to $4.26 after the solar panel maker signed a deal with Shanghai Sailing Capital Management to form a fund for the company's projects in China.
The 1 billion yuan ($161 million) fund will primarily invest in Yingli solar projects through various portfolios. Yingli will contribute 51%of the total capital through installments, though both Yingli and Shanghai Sailing Capital Management will "take an active role" in managing the fund according to the company's press release.
"As a long-term strategic repositioning, this cooperation is a solid step towards our transition from a PV manufacturer to a renewable energy solutions provider," Bryan Li, Executive Director and Chief Strategy Officer of Yingli Green Energy said. "By securing a priority right in investing in Yingli Green Energy's downstream solar projects, we should also be able to seek more sources of investment in solar PV projects, while at the same time minimizing potential risks."
TheStreet Ratings team rates YINGLI GREEN ENERGY HLDGS CO as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate YINGLI GREEN ENERGY HLDGS CO (YGE) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is very high at 6.55 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, YGE has a quick ratio of 0.54, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- The gross profit margin for YINGLI GREEN ENERGY HLDGS CO is currently extremely low, coming in at 12.12%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, YGE's net profit margin of -20.67% significantly underperformed when compared to the industry average.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, YINGLI GREEN ENERGY HLDGS CO's return on equity significantly trails that of both the industry average and the S&P 500.
- This stock has increased by 93.02% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in YGE do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- YINGLI GREEN ENERGY HLDGS CO has improved earnings per share by 35.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, YINGLI GREEN ENERGY HLDGS CO continued to lose money by earning -$2.05 versus -$3.13 in the prior year. This year, the market expects an improvement in earnings (-$0.48 versus -$2.05).
- You can view the full analysis from the report here: YGE Ratings Report