ReneSola (NASDAQ: SOL) is a pure downstream player in the solar industry. The company is focused on developing and operating solar projects. The company originated in China and went public in 2008 on NASDAQ, after it was already previously listed on the London AIM exchange.
Our on the ground due diligence, filings review, and communications with local municipalities in Europe indicate that SOL has been vastly misrepresenting its project development pipeline.
Most of SOL’s projects are in Europe, but our research indicates that most of these projects seemingly do not exist. We were able to confirm this in several cases with the local government authorities, which leads us to believe that SOL might have fabricated projects to give the appearance of a better development pipeline and future economics.
Worse yet, SOL continuously categorizes projects as “late-stage”, and close to finalization, that our research shows to be either non-existent or delayed for years.
Even the projects that we could identify were for the most part delayed by years and way behind company projections.
We see similar issues with potentially fabricated and delayed projects in SOL’s US business.
We believe SOL has terrible corporate governance, as evidenced by a seemingly relative of former Chairman Xianshou Li serving on SOL’s board of directors, while being in her 20s and having very limited experience that could justify such a position.
Former chairman Xianshou Li remains SOL’s biggest shareholder but is officially not engaged in management. Our research indicates that Li secretly still exercises substantial control over SOL.
SOL spun off several entities to Li in 2017, these entities are now in substantial legal trouble.
Judgements in China against Li and related entities amount to over 1 billion RMB. These are real judgements that authorities will pursue and collect on.
We believe that the legal difficulties of SOL’s biggest shareholder will cause significant issues for shareholders at some point in the future.
In summary, we believe SOL is a fraudulent company that drastically overrepresents its project pipeline to access the US capital markets. SOL is led by what we believe to be a fraudulent team whose legal difficulties will ultimately also cause problems for SOL public shareholders. We see over 40% downside from current prices.
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