Yingli Green Energy’s (NYSE:YGE) revenue stream is largely dependent on Europe and the United States. Last year, Europe and the US accounted for about 61% and 15% of revenues, respectively. The recent subsidy cut-backs in many EU countries like Germany and the weak economy have dented demand for Yingli’s products, leading to a dismal Q2 performance. Yingli reported a net loss of $90.2 Million, on revenues of $488.5 Million. Gross margins were also weak at 4.6%.  The recently initiated anti-dumping investigation in Europe and the imposition of countervailing tariffs in the United States are also expected to further hamper Yingli’s revenue stream and profitability in these markets.
As its European and American woes mount, Yingli is being forced to reshape its strategy, focusing on more sustainable markets where solar power penetration is low, government support is still strong and solar resources are plentiful.
According to European Photovoltaic Industry Association (EPIA), cumulative solar installations in China stood at around 3GW in 2011. Solar irradiance, a measure of the intensity of sunlight of a region, is a widely used to measure solar resources of a regions. China receives significantly better rates of solar irradiance compared to Europe, making solar energy a more viable proposition.
The Chinese government has also been a strong proponent of solar power, providing a slew of incentives including feed- in-tariffs and subsidies for solar power projects under its Golden Sun Program. The government has set an ambitious target of achieving over 40GW of solar power by 2015.
Yingli’s has over 14 years of experience in PV manufacturing markets, besides its network of retail and servicing outlets across China should hold it in good stead in catering to the growing demand.
Other Emerging Markets Beckon
Markets like India, South Africa and Brazil will provide Yingli with new avenues for growth.
The Indian government has set a target of deploying 20 GW of solar power by 2022, which translates to a capacity growth of about 40% every year. 
Brazil has also begun to provide incentives for solar installations, offering discounts of up to 80% for transmission and distribution fees for solar power plants. 
Malaysia initiated feed-in-tariff policies in 2011, which could spur growth in this market.
We believe that Yingli will be in a fairly good position to cater to these price sensitive markets, since it uses polysilicon based solar panels which increasingly offer a better price to efficiency trade-off compared to thin film competitors.
We currently have a price estimate of $2.16 for Yingli Green Energy, which represents an upside of about 20% from its current market price.