HOUSTON - TOYO Co., Ltd (Nasdaq: TOYO), a global solar solutions provider, has announced the acquisition of Solar Plus Technology Texas LLC, a move that will significantly bolster its manufacturing capabilities in the United States. The company, through its subsidiary TOYO Solar LLC, has taken over 100% of membership interests in the Houston-based facility, marking a strategic expansion of its operations in the U.S. market.
The acquired facility, which encompasses over half a million square feet, is poised to support an initial solar module production capacity of 2.5 gigawatts, with plans to scale up to 6.5 gigawatts by 2029. The first phase of production is expected to roll out by mid-2025, starting with 1 gigawatt and ramping up to the full 2.5 gigawatts by year's end.
This development aligns with TOYO's mission to meet the growing demand for American-made solar panels and to provide secure, sustainable energy solutions. Chairman and CEO Mr. Junsei Ryu emphasized the acquisition's importance in establishing a U.S. manufacturing footprint, complementing TOYO's existing production in Vietnam and Ethiopia.
TOYO Holdings LLC, a wholly-owned subsidiary, will make a capital contribution of $19.96 million to TOYO Solar LLC to fund the construction of the manufacturing site's first phase. Mr. Ryu expressed confidence that the expansion would enhance TOYO's competitive edge and deliver comprehensive solar technology solutions to the U.S. market.
TOYO's broader strategy involves becoming a full-service provider across the solar power supply chain, from upstream wafer and silicon production to downstream photovoltaic module assembly. This acquisition is expected to address supply bottlenecks, meet local content requirements for U.S. solar projects, and leverage the established customer relationships and brand recognition of Vietnam Sunergy, a Tier 1 Bloomberg NEF solar manufacturer.
The press release statement also included forward-looking statements regarding the company's growth expectations and construction plans. However, such statements involve assumptions and are subject to various risks and uncertainties that could cause actual results to differ materially from projections.
This strategic acquisition is a clear indication of TOYO's commitment to expanding its global solar supply chain and its focus on serving the U.S. market with competitive and technologically advanced solutions. The information provided is based on a press release statement from TOYO Co., Ltd.
In other recent news, TOYO Co., Ltd has revised its business performance projections for 2024 and provided preliminary financial guidance for 2025. Despite slight decreases in 2024 cell shipments, largely due to decreased deliveries to U.S. customers, the company anticipates a net income of around $10 million for the year. Looking forward, TOYO expects significant growth in 2025, with solar cell shipments projected to increase to 3.5 GW, fueled by strong demand from utility-scale customers and output from a new manufacturing facility in Ethiopia.
TOYO has also announced the establishment of a new 2 GW solar cell manufacturing facility in Ethiopia and the appointment of Liang "Simon" Shi as its new President. The Ethiopian facility, representing a $60 million investment, aligns with TOYO's objective to reduce its carbon footprint. Shi, with extensive experience in strategic investments and business development, will contribute to TOYO's expansion in the United States and other key markets.
These recent developments highlight TOYO's commitment to the renewable energy sector. The company is poised to produce high-quality solar cells at competitive scales and costs, while also planning a new module facility in the United States. However, TOYO cautions that these forward-looking statements are subject to change based on various factors.
InvestingPro Insights
TOYO's strategic acquisition of Solar Plus Technology Texas LLC comes at a critical juncture for the company, as revealed by recent InvestingPro data. With a market capitalization of $135.14 million, TOYO is currently trading at a low P/E ratio of 3.97, suggesting that the market may be undervaluing the company's earnings potential. This could be particularly significant given the company's expansion plans in the U.S. solar market.
However, InvestingPro Tips highlight some challenges TOYO faces. The company is "quickly burning through cash," which could be a concern as it embarks on this capital-intensive expansion. Additionally, TOYO "suffers from weak gross profit margins," with the latest data showing a gross profit margin of 21.59% for the last twelve months as of Q2 2024. This metric will be crucial to monitor as the company scales up its U.S. operations.
On a positive note, TOYO remains profitable, with an operating income of $36.2 million over the same period. This profitability could provide some financial cushion as the company invests in its new Houston facility.
Investors should be aware that TOYO's stock "has taken a big hit over the last six months," with a price total return of -67.85% during that period. This volatility aligns with another InvestingPro Tip indicating that the stock "generally trades with high price volatility."
For those interested in a deeper analysis, InvestingPro offers 11 additional tips for TOYO, providing a more comprehensive view of the company's financial health and market position.
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