JA Solar Holdings Co. Ltd (JASO) announced loss per American Depositary Share (EPADS) of 22 cents in its second quarter of 2011, which came way below the Zacks Consensus Estimate of a 3-cent loss. In the year-ago quarter the company clocked earnings per ADS of 19 cents.
Quarterly Performance
JA Solar’s revenues in the reported quarter were $413 million, ahead of the Zacks Consensus Estimate of $408 million and year-ago quarterly revenue of $368.3 million. Revenues were, however, lower compared to $563.7 million in the first quarter of 2011.
In the reported quarter JA Solar’s total shipments were 401MW, compared with shipments of 451MW in the first quarter of 2011, representing a sequential decrease of 11.1%. However, year-over-year shipments grew 28.9% from 311MW.
JA Solar’s gross loss in the second quarter of 2011 was $11.1 million, compared with a gross profit of $97.5 million in the first quarter of 2011 and gross profit of $85.3 million in the second quarter of 2010.
Total operating expenses in the second quarter of 2011 were $20.1 million, compared with $13.1 million in the first quarter of 2011 and $29.1 million in the second quarter of 2010. Total operating expenses represented 4.9% of net revenue in the second quarter of 2011, compared with 2.3% in the first quarter of 2011 and 7.9% in the second quarter of 2010.
Operating loss in the second quarter of 2011 was $31.3 million, compared with operating income of $84.4 million in the first quarter of 2011 and operating income of $56.2 million in the second quarter of 2010. Overall the company incurred a net loss of $35.4 million versus net income of $28.9 million in the year-ago period.
Financial Condition
JA Solar at the end of the reported quarter had cash and cash equivalents of ($616.9 million and total working capital of $872.4 million. The company's total long-term borrowings were $632.9 million. The aggregate face value of convertible bonds outstanding, due 2013, was $228.2 million as on June 30, 2011.
Outlook
Looking forward, JA Solar expects third quarterly module shipments in the range of approximately 450 MW–470 MW. However, faced with subsidy cutbacks in key markets like Germany and Italy, the company trimmed its fiscal 2011 shipment outlook to 1.8 GW from the earlier forecast of 2.2 GW.
Thus we currently have a long-term Underperform recommendation on JA Solar. In the near-term, apprehensions over the tepid module demand in Europe, rising competition, wafer dependency, financial stability of its customers and oversupply of solar cells in the market will restrain the valuation of the company. Thus, for the short-term, in line with its peer ReneSola Ltd. (SOL), we assign a Zacks #4 Rank, (Sell rating) to the stock.
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