Wednesday, November 17, 2010

Yingli Green Energy (NYSE: YGE): Q3 Earnings Preview

Yingli Green Energy Holding Co. Ltd. (NYSE: YGE) is scheduled to release its third-quarter earnings before the opening bell on Friday, November 19, 2010. Analysts, on average, expect the company to report earnings of 34 cents per share on revenue of $465.55 million. In the year ago period, the company reported earnings of 12 cents cents per share on revenue of $325.98 million.

Yingli Green Energy Holding Company Limited is a vertically integrated photovoltaic (PV) product manufacturer. The Company designs, manufactures and sells PV modules, and designs, assembles, sells and installs PV systems.

In the preceding second-quarter, the Baoding, China based company's net income was $32.1 million, or 21 cents per share, compared to a loss of $57.6 million, or 44 cents a share, in the year-earlier quarter. On an adjusted basis, the company earned 25 cents per share in the latest quarter. Revenue surged 81 percent to $398.1 million. Analysts, on average, expected the company to report earnings of 19 cents per share on revenue of $371.13 million. 

The company expects a mid-20% increase in shipments quarter over quarter in the third quarter of 2010, in line with its previous estimates. With better than expected average selling price and improving operating efficiency of its new 400 MW production lines, the company is confident in achieving a 31% to 32% gross margin in the third quarter of 2010, compared to the previous estimated range of 28% to 30%. Based on the strong performance in the first three quarters of 2010 and more clear visibility for the fourth quarter, the company expects its gross margin for 2010 to reach 31% to 32%, compared to the previous estimated range of 28% to 30%.

The company expects to increase conversion efficiency of its mono-crystalline cell to 20% in 2012 and 22% in 2015. Yingli expects to increasemulti-crystalline cell conversion efficiency to 17.5% in 2011, 18% in 2012 and 20% in 2015.

Yingli Americas expects to exit 2010 with an approximately 10% market share and anticipates achieving a similar or better level in 2011. 

As of October 30, 2010, the company had secured 575 MW of purchase under legally binding sales contracts. The company expects to increase this figure to 1,000 MW by the end of this year. Majority of these sales contracts require prepayment from customers. Benefited from the robust demand from major solar market, the company sees a flattish trend of average selling price in the fourth quarter of 2010, and expects a stable level in the first half of 2011 and a moderate decrease in the second half of 2011. For the geographies of shipments in 2011, the Company expects to increase shipments to new and emerging markets, such as South Europe, U.S., and China.

Meanwhile, the company has now secured more than 60% of its expected polysilicon needs for 2011 through long-term contracts and in-house polysilicon production, and expects to increase this figure to approximately 70% by the end of this year.

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 stock currently trades at a forward P/E  (fye Dec 31, 2011) of 7.46 and PEG Ratio (5 yr expected) of 0.37. In terms of stock performance, Yingli Green shares have lost nearly 30% since the beginning of the year.

Full Disclosure: None.
Related Posts with Thumbnails

Wikinvest Wire