JA Solar Holdings Co. Ltd. (NASDAQ: JASO) is scheduled to release its first-quarter 2010 financial results before the market open on Tuesday, May 11, 2010. Analysts, on average, expect the company to report earnings of 18 cents a share on revenue of $265.31 million. In the year ago period, the company posted a loss of 18 per share on revenue of $33.91 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. After a string of quarterly losses, the company returned to profitability in the third quarter ended September 30, 2009, which has since improved sequentially. JA Solar's revenue too has improved sequentially over the past four reported quarters.
In the preceding fourth quarter, the Shanghai, China-based company reported that its net income rose to RMB 152.53 million or US$22.3 million from RMB148.79 million in the year-ago period. Earnings per American Depositary Shares or ADS were RMB 0.94 or US$0.14, compared with net loss per ADS of RMB 0.68 or US$0.10 in the previous year quarter. Revenue increased 66.2% to RMB 1.6 billion or US$238.4 million, from RMB 979 million or US$143.4 million in the prior-year quarter. Analysts, on average, expected the company to report earnings of $0.11 per share on revenue of $213.51 million.
The company registered its highest ever quarterly shipments of 231MW, up from 61MW in the first quarter of 2009. The company has benefited from strict cost controls. Total operating expenses fell to RMB 88.3 million or US$12.9 million from RMB 130.8 million or US$19.2 million.
In April, the solar cell maker said that it expects first quarter 2010 shipments to exceed 265MW, above the high-end of its previous guidance of 215MW to 225MW.
"During the first quarter, we saw robust demand from existing and new customers. By streamlining the company's existing solar cell manufacturing facility, JA Solar is able to achieve higher than expected production to meet strong customer orders. We also won several new European customers during the quarter, which further diversified our customer base and provides better visibility for the full year," said Peng Fang, CEO of JA Solar.
The solar industry has undergone significant changes in the past few years. The industry suffered heavily during recession as turmoil in the credit market forced financial players to abandon U.S. solar energy projects. The 2008 collapse of top solar financier Lehman Brothers and the freeze-up in the global credit markets drove nearly all banks to halt funding for major new solar projects, forcing the makers of systems that turn sunlight into electricity to cut prices for their products and sending their stocks crashing. The problems of solar companies had been further compounded by an oversupply of polysilicon, a material used in solar panels.
Globally, solar industry depends upon government subsidies and incentives and support to remain competitive. However, recent developments suggest that subsidies will inevitably be reduced or phased out. Evergreen Solar sells bulk of its panels in key European markets like Germany and Spain, where generous federal subsidies ensured high electricity rates for solar energy system. In Germany, Solar subsidies for rooftop-installed solar power will see a one-off cut of 16 percent from July, while most open-field installations will be cut by 15 percent.Support for farmland solar systems is to be scrapped completely, according to media reports.
However, the industry as a whole is likely to benefit from growing attention to global warming, skyrocketing oil prices, cheap financing and technological advances. At the Copenhagen Summit held in December 2009, the five major polluters of the world agreed to take action to reduce CO2 aggressively, with $100B per year pledged to help developing nations adopt green energy technology to cut greenhouse gas. Meanwhile, the US, China, Brazil and India continue to invest heavily in wind and solar energy with China's $454B in the next 5 year period as the most aggressive one. As part of the stimulus bill signed last year, the federal government approved around $60 billion in loan guarantee authority and $30 billion in energy grants for renewable energy and transmission companies. Congress has also granted a 30% renewable-investment tax credit to help expand the development of alternative sources of energy. As of February this year, the industry had gotten Treasury grants worth $81 million. That grant program is scheduled to end Dec. 31. The industry is still hoping that Congress will approve further policies to aid solar.
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.
In terms of stock performance, JA Solar shares have gained 46 percent over the past year.
Full Disclosure: None.
