Monday, November 8, 2010

JA Solar (NASDAQ: JASO): Q3 Earnings Preview

JA Solar Holdings Co. Ltd. (NASDAQ: JASO) is scheduled to release its third-quarter 2010 financial results before the opening bell on Tuesday, November 9, 2010. Analysts, on average, expect the company to report earnings of 34 cents a share on revenue of $453.75 million. In the year ago period, the company reported earnings of 10 cents per share on revenue of $193.26 million.

JA Solar Holdings Co., Ltd., through its subsidiaries, engages in the design, manufacture, and marketing of high-performance solar cells. It offers monocrystalline and multicrystalline solar cells. The company sells its products to solar module manufacturers who assemble and integrate solar cells into modules and systems that convert sunlight into electricity for power generation. 

In the preceding fourth quarter, the Shanghai, China-based company's net income was $28.9 million, or 18 cents per American Depositary share, compared to a loss of $28.5 million, or 18 cents per share, in the prior-year quarter. On an adjusted basis, the company earned 27 cents per share in the latest quarter. Revenue surged to $351.2 million from $88.6 million. Analysts, on average, expected the company to report earnings of 24 cents per share on revenue of $303.81 million. Gross margins increased to 23.1 percent in the second quarter, from 22.9 percent reported in the first quarter of 2010. 

Recently, JA Solar Holdings Co., Ltd., (NASDAQ: JASO) raised its third quarter shipment guidance, citing strong customer orders and higher than anticipated production. The company expects its third quarter 2010 shipments to exceed 410 MW, above its previous shipment guidance of 375MW given on Aug. 10, 2010. The new guidance represents approximately 31.8 percent higher shipment compared with second quarter 2010 shipment of 311MW, and approximately 131.6 percent growth over third quarter 2009 shipment of 177MW. 

For fiscal 2010, JA Solar expects shipments to range over 1.35 GW.

Early in October, the company signed strategic supply agreements with BP Solar to provide a total of more than 185 MWs of mono-crystalline and multi-crystalline solar cells in 2
010 and through 2011. As per the terms of the deal, JA Solar will supply BP Solar with more than 100 MW in 2011, beginning in the first quarter. 

In September, the company signed a financial partnership Agreement with the Shanghai branch of China Development Bank, a government policy bank solely owned by China's central government. Under the terms of the agreement, China Development Bank will provide up to RMB 30 Billion of credit facilities and financing to JA Solar to support JA Solar's long-term growth and corporate development plans. 

Solar industry as a whole has benefited from continues strong demand due to growing awareness about global warming, skyrocketing oil prices, cheap financing and technological advances. Thanks to better cost advantages, Chinese solar module maker have grabbed more market share from their international competitors. Local solar companies have also benefited from China's well-developed supply chain, cheap electricity, supportive policies and even low environmental standards. The company's wafer processing cost in the second quarter was $0.31 per watt. The company has continued to work towards its goal of reducing the wafer conversion cost to as low as $0.25 per watt over the next six quarters. 

In terms of stock performance, JA Solar shares have gained nearly 52 percent over the past year.

Full Disclosure: None.
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