JinkoSolar Holding Co. Ltd. (JKS) reported its third quarter 2012 results. Adjusted loss per American Depositary Share (“ADS”) was 20 cents, narrower than the Zacks Consensus Estimate of a loss of 73 cents. Loss was also well below the year-ago adjusted loss per ADS of $1.62.
Each “ADS” represents four ordinary shares. Adjusted loss per share was 5 cents versus a loss of 41 cents per share in the year-ago quarter.
Including the expenses related to the issuance of the company's convertible senior notes, changes in the fair value of the convertible senior notes and capped call options, interest expenses on the convertible senior notes, and the exchange gains on the convertible senior notes and capped call options, GAAP loss per “ADS” was 39 cents, lower than the loss of $1.86 in the third quarter of 2011.
Quarterly Performance
JA Solar’s revenues in the reported quarter were $221.1 million, missing the Zacks Consensus Estimate of $231 million. Revenues increased 12.2% quarter over quarter driven by an increase in the sales volume of the solar modules. It was, however, partially offset by a decline in the average selling prices of the solar modules. However, revenues decreased 22% year over year.
Total shipments in the third quarter of 2012 were 335.2 megawatts (“MW”). This represents an 11.0% increase from 302.1 MW in the second quarter of 2012 and 30.1% rise from 257.7 MW in the third quarter of 2011. Of the total shipments, 280.0 MW were solar modules, 28.6 MW were silicon wafers, and 26.6 MW were solar cells.
Gross profit in the third quarter of 2012 was $21.9 million compared with a gross profit of $16.3 million in the second quarter of 2012 and $10.4 million in the third quarter of 2011.
Gross margin was 9.9% in the third quarter of 2012 compared with 8.4% in the second quarter of 2012 and 3.7% in the third quarter of 2011.
Total operating expenses in the third quarter of 2012 were $30.1 million, up sequentially from $29.3 million. However, it was below than the year-ago figure of $41.3 million. The operating expenses of the reported quarter represent 13.6% of total revenue.
Net interest expense in the quarter under review was $8.2 million, down from $8.6 million in the year-ago quarter.
Operating loss in the third quarter of 2012 was $8.2 million compared with an operating loss of $13 million in the second quarter of 2012 and an operating loss of $30.9 million in the third quarter of 2011. Operating margin was negative 3.7% in the third quarter of 2012 compared with a negative 6.7% in the second quarter of 2012 and a negative 11.1% in the third quarter of 2011.
Net loss was $8.7 million compared with a net loss of $48.9 million in the second quarter of 2012 and net income of $10.7 million in the year-ago quarter.
Financial Condition
JA Solar at the end of the reported quarter had cash and cash equivalents and restricted cash of $54.9 million, down from $97.2 million at the end of June 30, 2012. Capital expenditures made by the company were $4.4 million versus $6.9 million in the year-ago quarter.
As of September 30, 2012, total short-term borrowings that include the current portion of long-term bank borrowings were $341.4 million compared with $366.5 million at the end of June 30, 2012. Total long-term borrowings were $43.8 million compared with $43.3 million in the year-ago quarter.
Guidance
JA Solar expects its cell and module shipments to be in the range of 250 MW and 300 MW in the fourth quarter of 2012. By the end of full-year 2012, the company expects in-house annual silicon wafer, solar cell and solar module production capacity to be approximately 1,200 MW.
Our Take
Though the company reported loss, it was narrower than the Zacks Consensus Estimate. However, revenue missed the Zacks Consensus Estimate. Going forward, demand for solar products is promising and with its focus on cost reduction and geographical diversification, the company will be able to meet the demand. Moreover, the company’s strong relationships with its clients and capability to manage business prudently will drive future growth.
However, we are concerned about the rising competition, decline in average selling prices of photovoltaic (“PV”) products, the financial stability of customers and the oversupply of solar cells in the near term. The company presently retains a short-term Zacks #3 Rank (Hold).
JinkoSolar Holding Co., Ltd. is a leading solar power product manufacturer with production operations in Jiangxi and Zhejiang Provinces in China and sales and marketing offices in Shanghai and Beijing, China; Munich, Germany; Bologna, Italy; Montpellier, France; Zug, Switzerland; San Francisco, U.S.; Queensland, Australia; Ontario, Canada and Singapore. JinkoSolar has built a vertically integrated solar product value chain with an integrated annual capacity of approximately 1.2 GW each for silicon wafers, solar cells and solar modules as of September 30, 2012. JinkoSolar distributes its photovoltaic products to a diversified customer base in the global PV market, including in Germany, Italy, Belgium, Spain, the United States, France, Eastern Europe, China and other countries and regions.
The company mainly competes with JA Solar Holdings Co. Ltd. (JASO) and Suntech Power Holdings Co. Ltd. (STP).
JA SOLAR HOLDGS (JASO): Free Stock Analysis Report
JINKOSOLAR HLDG (JKS): Free Stock Analysis Report
SUNTECH PWR HLD (STP): Free Stock Analysis Report
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