North Coast Solar Stocks

August 12, 2009

JA Solar posts loss, shares slide sharply

Filed under: JASO — Tags: , , , , — Jason @ 1:50 pm

Wed Aug 12, 2009 1:50pm EDT

* Q2 net loss of 18 cents per share

* Shr loss ex items $0.09/shr vs loss of $0.07/shr view

* Sees 5-10 pct price decline in Q3

* Shares fall as much as 16 percent

NEW YORK/LOS ANGELES, Aug 12 (Reuters) – China’s JA Solar Holdings Co Ltd (JASO) reported on Wednesday a wider quarterly net loss as inventories rose and prices on its solar cells slid nearly 30 percent, sending shares down as much as 16 percent.

Like many in the solar industry, JA Solar has suffered from a dearth of financing for renewable energy projects due to the global financial crisis. In addition, a global recession and a pullback in solar incentives in Spain have led to a global oversupply of solar panels, sending prices into a tailspin.

JA Solar said its average selling prices would fall another 5 to 10 percent in the third quarter after sliding 27 percent in the previous period. It also said inventories rose 18 percent during the second quarter.

JA Solar’s second-quarter net loss was $28.5 million, or 18 cents per share, compared with a loss of 1 cent per share a year earlier.

Before one-time items, Reuters Estimates said the company’s loss was 9 cents a share, compared with analysts’ average estimate of a loss of 7 cents per share. Simmons & Co analyst Burt Chao, however, said the company’s loss excluding items was 6 cents per share, while Barclays Capital analyst Vishal Shah said the loss per share was 4 cents excluding items.

Revenue slid 51 percent to $88 million, but analysts had been expecting revenue to fall as low as $66.7 million, according to Reuters Estimates.

Simmons & Co’s Chao said in addition to the rise in inventories and sharp drop in prices, investors were disappointed that the company did not announce any new major customers. BP Plc’s BP Solar accounts for about 30 percent of JA Solar’s sales, he said, and investors would like to see a more diverse mix of customers.

JA Solar supplies solar cells to customers who use them in their solar panels. Many of its rival cell makers also operate in other parts of the market, such as assembling panels.

“There are still concerns about the overall customer mix,” Chao said. “Some of the people in the stock still see the business model as an issue, considering they are in one segment of the market.”

In a client note, Barclays’ Shah also said the company’s market visibility for the fourth quarter was “very limited.”

Earlier this month, JA Solar unexpectedly said its chairman, Baofang Jin, would take on the role of chief executive. Former CEO Samuel Yang is vice chairman, reporting to Jin.

On a conference call with investors, Jin said that while average selling prices would continue to fall in the third quarter, costs for silicon wafers, which had fallen by 30 percent, would be near unchanged.

JA Solar shares, which had been boosted in recent weeks by news that the Chinese government had launched a long-awaited plan to offer subsidies for utility-scale solar projects, sunk as much as 16 percent to $4.41 on the Nasdaq before recovering somewhat to $4.56, down 13 percent.

(Reporting by Nichola Groom and Matt Daily, editing by Gerald E. McCormick)

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