Leading global manufacturer of solar products, ReneSola Ltd. (SOL), revised its guidance for the third quarter of 2011. The company, stricken by weak demand precipitated by an industry-wide oversupply glut, revised downwards its shipments and revenue forecasts for the third quarter of 2011.
ReneSola cut its solar wafer and module shipments to a range of 320 MW to 330 MW, compared to the previous guidance of 330 MW to 350 MW. Similarly revenues are expected in the range of $185 million to $195 million, compared to the previous guidance of $220 million to $240 million.
Gross profit margin as a result is now expected to be in the range of 5.5% to 6.5%, compared to the previous guidance range of 6% to 8%. Overall the company expects a net loss for the quarter in the range of $7.5 million to $8.5 million.
ReneSola will report its unaudited financial results for the third quarter of 2011 on Wednesday, November 23, 2011. The Zacks Consensus Estimate for the third quarter of 2011 currently stands at a loss of 13 cents.
ReneSola enjoys a geographically diversified customer base, ongoing expansion programs, a subsidy program in China, and improving operating dynamics. Despite relatively weak capital markets and a challenging solar market, the company is confident of its long-term prospects.
Going forward, the company expects to benefit from its Virtus wafer technology, increasing in-house polysilicon production and its strong leadership position in wafer production to capitalize on new opportunities.
However, the near-term valuation of the company will be adversely impacted by tepid module demand in Europe, subsidy roll-back in Germany, rising competition, credit risk from its customers and the company’s high research and development expenses. The company presently retains a short-term Zacks #3 Rank (Hold). We have a long-term Neutral recommendation on the stock.
ReneSola, based in China, is a leading global manufacturer of solar wafers and producer of solar power products. Capitalizing on proprietary technologies, economies of scale, low-cost production capabilities and technological innovations and know-how, ReneSola leverages its in-house virgin polysilicon, solar cell and module production capabilities to provide its customers with high-quality, cost-competitive solar wafer products and processing services.
The company’s global network of suppliers and customers includes some of the leading manufacturers of solar cells and modules. The company competes with LDK Solar Co. Ltd. (LDK) and Trina Solar Limited (TSL) among others.
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