Thursday, February 24, 2011

ReneSola Ltd. (NYSE: SOL): Q4 Earnings Preview 2010

ReneSola Ltd. (NYSE: SOL) is scheduled to release fourth-quarter earnings before the market open on Tuesday, March 1, 2011. Analysts, on average, expect the company to report earnings of 69 cents per share on revenue of $365.67 million. In the year-ago period, the company posted a loss of 23 cents per share on revenue of $179.88 million.

Renesola Ltd., together with its subsidiaries, engages in the manufacture and sale of solar wafers and solar power products. The Company possess a global network of suppliers and customers that include some of the global manufacturers of solar cells and modules.

In the preceding third quarter, the Jiashan, China-based company's net income was $60.11 million or $0.35 per share, compared to a loss of $10.17 million or $0.07 per share last year. On a per-ADS basis, net income was $0.70 versus a loss of $0.14 a year ago. Net revenues for the three months soared to $358.70 million from $140.95 million a year earlier. Analysts, on average, expected the company to report earnings of $0.52 per share on revenue of $319.33 million.

At its last earnings call in November, the company raised its guidance reflecting robust market demand for solar products and expects total solar wafer and module shipments to be in the range of 310 MW to 330 MW, revenues to be in the range of US$340 million to US$360 million and gross profit margin to be between 30% to 32%.

For full year 2010, solar wafer and module shipments are expected to be in the range of 1.13 GW to 1.15 GW. For the full year 2011, the company expects solar wafer and module shipments to be in the range of 1.6 GW to 1.7 GW, representing an increase of 42% to 48% year-over-year.

Recently, the company announced that it has developed a new multicrystalline wafer, the Virtus Wafer, which improves solar cell efficiency. The Virtus Wafer, which has been endorsed by several leading global solar cell manufacturers, achieves an average cell conversion efficiency rate of 17.5%, more than 1% higher than the industry-standard cell conversion efficiency rate for cells using multicrystalline wafers. ReneSola intends to commence pilot production of the Virtus Wafer in the first half of 2011.

2010 continued the significant growth of the solar market throughout the country with new markets in China and the USA advancing their demand for solar panels. Solar industry as a whole has benefited from continued strong demand thanks to growing awareness about global warming, skyrocketing oil prices, cheap financing and technological advances. Companies involved in the production of semiconductors used in solar panels have enjoyed a positive quarter. Many have experienced rising shipments over the last few quarters, resulting in a sequence of record quarters. The world is becoming increasingly environmentally conscious. Both commercial and private demand for solar power is rising. Solar options are becoming more attractive as more governments provide better options for buildings producing solar power to feed into and out of the grid as required.

Last month, US President Barack Obama in his State of the Union address called for 80 percent of the nation's electricity to come from clean sources by 2035. Meanwhile, Senator Bernie Sanders submitted a bill to congress titled the "10 Million Solar Roofs and 10 Million Gallons of Solar Hot Water Act". This bill is expected to spur alternative energy growth and create green jobs.

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. More than 90 percent of domestic Chinese manufacturers sell their products overseas currently, especially in Europe, where the solar electricity industry is more mature.

Full Disclosure: None.
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