The Zacks Analyst Blog Highlights: Citigroup, Leucadia National, Blackstone Group LP, Wells Fargo and JA Solar Holdings

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Jul 06, 2011, 09:30 ET

CHICAGO, July 6, 2011 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Citigroup Inc. (NYSE: C), Leucadia National Corp. (NYSE: LUK), Blackstone Group LP (NYSE: BX), Wells Fargo & Co. (NYSE: WFC) and JA Solar Holdings Co., Ltd. (Nasdaq: JASO).

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Here are highlights from Tuesday's Analyst Blog:

Citi Rebrands CitiFinancial

Citigroup Inc.'s (NYSE: C) U.S. consumer finance unit is now OneMain Financial. Last Friday, Citigroup completed the rebranding of its entire U.S. full service network of 1,300 stores from CitiFinancial. The rebranding plan was announced last December.

The rebranding gives the company an identity that better suits its image and activity. Moreover, the company stated that the OneMain name reflects a localized business model and commitment to customers.

Citi was in a bad shape during the financial crisis and had to take resort to government bailout to remain afloat. The company has been executing a number of strategic reengineering efforts. It has designated CitiCorp as its core operating unit and Citi Holdings as its non-core unit.

Citi intends to dispose of its non-core operations and CitiFinancial happens to be a part of this unit. We see the change in name as a preparatory step toward achieving that end.

According to a Wall Street Journal report, Citi is in talks with a bidding group for the sale of OneMain. The company is said to be negotiating with the private-equity investment firm Centerbridge Capital Partners LLC and Leucadia National Corp. (NYSE: LUK).

Bidders of Citi's unit also include a group comprising Blackstone Group LP (NYSE: BX). Issues are said to have aroused regarding the financing of loans in the absence of Citi's balance sheet help.

Citi has already sold a number of its non-core operations. Another biggie, Wells Fargo & Co. (NYSE: WFC) has also disposed of its non-bank consumer-finance network as part of its restructuring initiatives.

Citigroup's long-term strategy to shrink non-core assets and increase its fee-based business mix would also improve its valuation over time. The divestiture of Citi Holdings, its legacy problem assets portfolio, is also on track.

This run-off will ultimately reduce the company's risk profile and free up capital that it continues to invest in its core businesses. Citi Holdings' assets declined 33% year over year to $337 billion at the end of first quarter 2011. Its assets accounted for approximately 17% of total Citigroup assets as of the end of the first quarter.

However, we think that solid earnings at the company would remain elusive until its revenues experience a decent growth. Regulatory issues and sluggish economic recovery also remain concerns. Yet, its core business, Citicorp, remains attractive. International business is gaining momentum and should support its earnings.

Shares of Citi currently retain the Zacks #3 Rank, which translates into a short-term Hold rating. The company also has a Neutral recommendation from us.

JA Solar to Buy Silver Age Holdings

JA Solar Holdings Co., Ltd. (Nasdaq: JASO) has entered into a definitive agreement to acquire 100% ownership interest in Silver Age Holdings Limited for $180 million in stock. The acquisition aims to increase production of a key panel component.

As consideration, JA Solar will issue 30.901 million ordinary shares at a price of US$5.825 per share. This represents the 45-day volume-weighted average price of JA Solar's American Depositary Shares ('ADS') trading on the NASDAQ Global Market and approximately a 5% premium to the last closing price of the ADSs prior to this announcement. Each ADS of JA Solar represents one ordinary share.

Silver Age Holdings Limited is a British Virgin Islands company that owns 100% of Solar Silicon Valley Electronic Science and Technology Co., Ltd. ('Solar Silicon Valley'). Silver Age Holdings Limited is 70% owned by Jinglong Group and the remaining 30% owned by an independent third party shareholder.

Located in the Yanjiao Economic & Technology Development Zone in Langfang City, Hebei Province, Solar Silicon Valley operates a wafer production facility with an annual production capacity of 485MW. Solar Silicon Valley also manufactures quartz crucibles and its cutting-edge technology can be used to provide high quality wafer substrates for JA Solar's own high-efficiency solar cell products. The consideration for acquisition is approximately 2.6 times the audited net income of Solar Silicon Valley for 2010.

The transaction will help JA Solar in achieving its objective of optimizing its cost structure through selective vertical integration. The acquisition would guarantee a stable supply of low-cost wafers increasing the company's internal wafer capacity to approximately 785MW. This enhanced internal wafer capacity will allow the company to improve gross margins and benefit from vertical integration as wafer costs constitute a significant part of its total cost of manufacturing solar cells.

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