Solar panel manufacturer Yingli Green Energy Holding Company Limited (YGE) or Yingli Solar reported an operating loss of 10 cents per American Depository Share (“ADS”) or RMB 0.62 per ordinary share in third-quarter 2014 compared with a loss of 24 cents per ADS (RMB 1.45) in the year-ago quarter.
Yingli Solar’s loss per share in the reported quarter was narrower than the Zacks Consensus Estimate of a loss of 13 cents.
Revenue
Total net revenues were $551.5 million (RMB 3,385.2 million), down 6.8% from $591.6 million (RMB 3,649.4 million) in the third quarter of 2013. Revenues declined due to lower sales at the PV modules and PV systems segment.
Yingli Solar’s revenues also fell short of the Zacks Consensus Estimate of $623 million.
Highlights of the Release
Gross margin in the reported quarter expanded 720 basis points year over year to 20.9%. Improvement in margins reflected the reduced costs of the PV modules on account of the company’s cost-containment initiatives.
Operating expenses were $82.5 million (RMB 506.4 million) compared with $92.3 million (RMB 569.1 million) in third-quarter 2013. Expenses decreased primarily due to lower selling, general and administrative expenses.
Operating income in the third quarter of 2014 was $32.5 million (RMB 199.7 million) compared withan operating loss of $11.4 million (RMB 70.3 million) in the year-ago quarter.
Interest expenses were $42.9 million (RMB 263.1 million) in the reported quarter, compared with $43.5 million (RMB 268.3 million) in the year-ago period. The decrease in interest expenses was due to a decline in bank borrowings.
Financial Highlights
The company had cash & cash equivalents of $125.2 million (RMB 768.4 million) as of Sep 30, 2014 compared to $159.4 million (RMB 981.5 million) as of Jun 30, 2014.
Long-term debt excluding current portion was $525.3 million (RMB 3,224.2 million) as of Sep 30, 2014 down from $552.5 million (RMB 3,402.3 million) as of Jun 30, 2014.
Guidance
Yingli Solar revised its 2014 shipment volumes downwards expecting lower solar panel demand worldwide. The company now expects PV shipment volumes in the range of 3.30–3.35 GW (including 200–240 MW shipment for PV systems) for 2014, down from the previous expectation of 3.6–3.8 GW (including 400–600MW shipment for PV systems).
Despite a reduction from the earlier guidance, the new guidance is still showing improvement in the range of 3%-4.6% from the prior-year guidance.
Other Solar Company Releases
JinkoSolar Holding Co., Ltd. (JKS) reported third-quarter 2014 non-GAAP earnings per American Depositary Share (ADS) of $1.36 (non-GAAP earnings of 34 cents per share), well ahead of the Zacks Consensus Estimate of 71 cents by 91.5%.
JA Solar Holdings Co. Ltd. (JASO) posted strong third-quarter 2014 results, reversing its year-ago loss as its shift to focus on solar modules instead of cells paid off. The company recorded non-GAAP earnings of 21 cents per ADS in the third quarter of 2014, beating the Zacks Consensus Estimate of 15 cents by 40%.
Trina Solar Ltd. (TSL) reported earnings of 34 cents per American Depositary Shares (ADS) in the third quarter of 2014 compared with 14 cents per ADS in the year-ago quarter. With this, the bottom line was ahead of the Zacks Consensus Estimate by a whopping 126.7%.
Our View
Yingli Solar reported improved gross margins on account of management efforts to reduce expenses and enhance operating efficiency.
In the reported quarter, the company saw higher demand for PV modules from its key markets, namely China, Japan and other emerging nations. The company also witnessed rising demand for its solar panels in the domestic market. Shipments to China registered an increase of about 19% sequentially.
Both the U.S. and China have issued a joint statement to curb pollution levels. China has pledged to increase energy consumption from renewable sources to 20% by 2030 and aims to add 100 GW by 2020 to support the photovoltaic power generation. This will cause a major boom in the global solar energy market.
The company will likely reap huge benefits from such an immense rising demand for solar panels.
Yingli Solar currently has a Zacks Rank #3 (Hold).
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