JinkoSolar Holding Co. Ltd. (JKS) reported first quarter 2013 results with an adjusted loss per American Depositary Share (“ADS”) of 56 cents or (adjusted loss of 14 cents per share), narrower than the Zacks Consensus Estimate of a loss of $1.66 per share. Loss was also well below the year-ago adjusted loss per ADS of $2.36 or (adjusted loss 59 cents per share). Each “ADS” represents four ordinary shares.
The results reflect a diversified customer base and improvement in operational efficiency in a rapidly changing solar power environment.
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 92 cents, as against a loss of 64 cents per share in the first quarter of 2012.
Quarterly Performance
JA Solar’s revenues in the reported quarter were $187.3 million, missing the Zacks Consensus Estimate by $14 million. However, the top line was above the year-ago figure of $168 million.
Revenues remained approximately in line on a quarter-over-quarter basis due to a decrease in revenues from system integration projects for which the company provides Engineering, Procurement & Construction services. However, these decreases were offset by an increase in revenues from higher shipments of solar modules.
Total shipments in the first quarter of 2013 were 338.6 megawatts (“MW”). This represents a 12.2% increase from 301.9 MW in the fourth quarter of 2012 and a 36% rise from 249 MW in the first quarter of 2012. Of the total shipments, 282.4 MW were solar modules, 25.4 MW were silicon wafers, and 30.8 MW were solar cells.
Gross profit in the first quarter of 2013 was $23.7 million compared with a gross profit of $1.1 million in the first quarter of 2012 and $7.1 million in the fourth quarter of 2012. Gross margin was 12.7% in the first quarter of 2013 compared with 0.7% in the first quarter of 2012 and 3.8% in the fourth quarter of 2012.
Total operating expenses in the first quarter of 2013 were $26.4 million, down 78.8% sequentially and 46.9% year over year. Operating expenses in the reported quarter were 14.9% of total revenue.
Net interest expense in the quarter under review was $8.9 million, down from $9.3 million in the year-ago quarter.
Operating loss in the first quarter of 2013 was $2.7 million compared with an operating loss of $117.8 million in the fourth quarter of 2012 and an operating loss of $48.6 million in the first quarter of 2012.
Operating margin was a negative 4.1% in the first quarter of 2013 compared with a negative 62.9% in the fourth quarter of 2012 and a negative 28.9% in the first quarter of 2012.
Financial Condition
JA Solar at the end of the reported quarter had cash and cash equivalents and restricted cash of $93 million, up from $40.7 million at the end of Mar 31, 2012.
As of Mar 31, 2013, total short-term borrowings that included the current portion of long-term bank borrowings were $397 million compared with $380.1 million at the end of Mar 31, 2012. Total long-term borrowings were $55.4 million compared with $27.4 million in the year-ago quarter.
Guidance
JA Solar expects its cell and module shipments to be in the range of 450 MW and 470 MW in the second quarter of 2013. The company expects total solar module shipments in the range of 1.2 GW and 1.5 GW in 2013. By the end of full year 2013, the company expects in-house annual silicon wafer, solar cell and solar module production capacity to be approximately 1,200 MW.
Peer Comparison
Recently, Canadian Solar Inc. (CSIQ) reported first quarter 2013 results with adjusted loss per share of 10 cents much narrower than a loss of 49 cents in the first quarter of 2012 and a loss of $1.01 in the fourth quarter of 2012. JA Solar Holdings Co. Ltd. (JASO) announced a loss of 85 cents per ADS in its first quarter of 2013, better than the Zacks Consensus Estimate of a loss of $1.01. However, results came far below the year-ago earnings per ADS of $1.03.
Last month, ReneSola Ltd. (SOL) reported a loss per ADS of 45 cents, wider than the Zacks Consensus Estimate of a loss of 39 cents per ADS. However, its first-quarter loss narrowed from the year-ago quarterly loss of 47 cents per ADS.
Our Take
Though still in the red, the loss incurred by JinkoSolar in the reported quarter was narrower than the Zacks Consensus Estimate. Revenues however were short of the forecast.
Going forward, we remain concerned about the continued module oversupply, weak global economic growth, rising competition, decline in average selling prices of photovoltaic products and the financial stability of the company’s customers. JinkoSolar presently retains a short-term Zacks Rank #4 (Sell).
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