Stock Alert for JA Solar Holdings Co., Ltd. (ADR)(JASO)
JA Solar Holdings Co., Ltd. (ADR)(NASDAQ: JASO)
JA Solar Holdings Co., Ltd. (JASO) is engaged in the development, production and marketing of photovoltaic (PV) solar cells, which convert sunlight into electricity, in the People’s Republic of China (PRC). Its solar cells are assembled and integrated into solar modules and systems that convert sunlight into electricity through a process known as the photovoltaic effect. Substantially all of the Company’s business is conducted through the operating subsidiaries, JingAo Solar Co., Ltd. (JA Hebei), Shanghai JA Solar PV Technology Co., Ltd. (JA Zhabei) and JA Solar Technology Yangzhou Co., Ltd. (JA Yangzhou), in which the Company indirectly holds a 100% interest. JA Solar also produces and sells monocrystalline and multicrystalline solar cells.
The Company was founded in 2005 and is based in Shanghai, the People’s Republic of China.
| Share Statistics (24-May-10) | FY
2007 |
FY
2008 |
%
Chg |
Q4 2008 | Q4 2009 | %
Chg |
||
| Symbol | JASO | Revenue, $Mn | 354.1M | 786.5M | 122.1% | 143.1M | 238.3M | 66.5% |
| Current price | $5.11 | Gross marg. | 23.3% | 18.2% | 18.4% | 1.0% | 20.9% | 1990% |
| 52wk Range: | $6.95-3.22 | Oper. margin | 16.6% | 3.8% | 77.1% | 8.4% | 14.7% | 75.0% |
| Avg Vol (3m): | 10,113,900 | Net margin | 14.9% | 8.8% | 40.9% | 15.2% | 9.2% | 39.5% |
| Market Cap. | 863.68M | |||||||
| Dil. Shares Outst. | 169.0M | EPS, $ | 0.40 | -0.30 | 175.0% | 0.00 | 0.13 | 100.0% |
Source: Reuters.com, SEC Filings.
Financial Summary
First Quarter 2010 Financial Results
Total shipments in the first quarter of 2010 were a record 272MW, compared with fourth quarter 2009 shipments of 231MW, representing sequential growth of 17.7%. Tolling business was 26% of total shipments. Shipments to international customers expanded substantially during the quarter, representing 36% of total shipments and increased 700bps from the previous quarter.
Revenue in the first quarter of 2010 was RMB 1.9 billion ($279.2 million), an increase of 17.1% from RMB 1.6 billion ($238.4 million) reported in the fourth quarter of 2009. Gross margin was 22.9% in the first quarter of 2010, compared with 20.5% in the fourth quarter of 2009, reflecting a high utilization rate and continuous manufacturing process improvement and cost control efforts.
Operating income in the first quarter of 2010 was RMB 352.9 million ($51.7 million), compared with RMB 245.5 million ($36.0 million) in the fourth quarter of 2009. Operating margin was 18.5% in the first quarter of 2010, compared with 15.1% in the fourth quarter. JASO’s GAAP earnings per diluted ADS in the first quarter were RMB 1.61 ($0.24), compared with RMB 0.84 ($0.12) in the fourth quarter of 2009.
JASO recorded the following significant non-cash items in its first quarter 2010 financial results:
- Stock-based compensation charge of RMB 16.7 million ($2.4 million)
- Depreciation expense of RMB 57.6 million ($8.4 million)
- Gain in change in fair value of derivative related to convertible bond of RMB 1.9 million ($0.3 million)
- Interest expense related to a convertible bond including impact of adoption of new accounting rule of RMB 23.8 million ($3.5 million)
These non-cash items totaled RMB 96.2 million ($14.0 million) and had RMB 0.59 ($0.09) impact to diluted earnings per share.
During the first quarter of 2010, JASO adopted new accounting rule, ASU 2009-15, Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing. The impact of adopting ASU 2009-15 is shown in the table below.
Financial Position and Liquidity
In the first quarter of 2010, the Company generated an operating cash flow of RMB 426.4 million ($62.5 million) and incurred capital expenditures of RMB 332.3 million ($48.7 million).
The Company continues to maintain a strong balance sheet with cash and cash equivalents of RMB 1.9 billion ($281.6 million), and total working capital of RMB 3.2 billion ($464.7 million) at March 31, 2010. Average receivable turns were 19 days and the average inventory turn was 33 days. The Company has no short term loans and total long term bank borrowings were RMB 680 million ($99.6 million). The face value of the convertible bonds, due 2013, outstanding was RMB 1.6 billion ($228.2 million) at March 31, 2010.
Outlook
Based on robust customer demand for JASO’s products, the Company is raising its outlook for the full year of 2010. The Company currently expects shipments to exceed 1GW for 2010, compared with prior guidance of 900MW. Shipments in the second quarter of 2010 are expected to be approximately 275MW.
Manufacturing Capacity Update
To meet customer order requirements, the Company expects to achieve actual solar cell production capacity, which is higher than the nameplate capacity previously reported, of 1.5GW by end of 2010. Module capacity is expected to reach 500MW, and wafer capacity is expected to reach 300MW by the end of year 2010. The revised capital expenditure for the full year is expected to be in the range of $220 million to $250 million, compared with prior guidance of $130 million. JASO said it expects to fund the capacity expansion through its existing cash balance, operating cash flow, as well as credit facilities provided by banks in China.
| Financial Strength (24-May-2010) | Company | Industry | Sector | S&P 500 |
| Quick Ratio (MRQ) | – | 1.00 | 0.97 | 0.79 |
| Current Ratio (MRQ) | – | 1.43 | 1.32 | 0.95 |
| Long-Term Debt to Equity (MRQ) | – | 22.12 | 51.08 | 134.30 |
| Total Debt to Equity (MRQ) | – | 30.12 | 65.39 | 201.19 |
Source: Reuters.com, SEC Filings.
Analyst Consensus
| Buy | Outperform | Hold | Underperform | Sell | No Opinion |
This is the consensus forecast amongst 16 polled investment analysts. Against the JA Solar Holdings Co Ltd company.
| Analyst Detail | Buy | Outperform | Hold | Underperform | Sell | No Opinion |
| Latest | 2 | 7 | 6 | 1 | 0 | 0 |
| 4 weeks ago | 1 | 6 | 8 | 1 | 0 | 0 |
| 2 months ago | 0 | 7 | 10 | 1 | 0 | 0 |
| 3 months ago | 0 | 7 | 10 | 1 | 0 | 1 |
| Last year | 2 | 4 | 6 | 3 | 0 | 0 |
The 16 analysts offering 12-month price targets for JASO have a median target of 6.75, with a high estimate of 10.00 and a low estimate of 2.50. The median estimate represents a 33.93% increase from the last price of 5.04.
Source: www.ft.com
No consensus analysis data available.
Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=JASO.O
Investment Highlights
JASO is one of the biggest solar cell manufacturers in the world, focusing on driving its brand of high quality and good efficiency by means of continuously diligent work. To further promote its brand and enhance market share, the Company has established strategic alliances with superior module manufacturers to OEM JA Solar’s solar module.
The Company’s modules are optimally manufactured and adjusted to meet the needs of the current market and are scientifically designed module dimension makes the installation simple and easy.
JASO produces a wide variety of high-cost-performance module types that fulfill different requirements by its customers, from on-grid systems to off-grid systems, commercial use to industrial use and residence, buildings to public utility. The Company can also customize its products under specific requirement.
JASO uses its proprietary technology to purify metallurgical grade silicon to make solar cells. Substantially upgraded silicon wafers produced by this technology are less expensive than those of electronic grade and make it possible to manufacture high quality silicon solar cells at low cost.
The Company uses various innovative approaches to develop crystalline silicon based solar cells with high conversion efficiency that can be mass produced in a cost effective way.
The Company partners with equipment vendors in developing JASO’s unique thin film based solar cell/module manufacturing process in large scale yet at low cost.
Source: http://www.jasolar.com/
Technical Analysis
Source: http://stockcharts.com
JASO is trading below its 50-day moving average. However, this moving average is trending higher which suggests that there has been buying interest in this stock.
JASO is trading near its lower Bollinger Band. This suggests that the stock price is low relative to its recent price action.
The MACD for JASO currently indicates a strong bearish signal for two reasons. First, the MACD is below the signal line, a 9-day moving average. Second, the MACD is below the critical level of zero, which implies that the underlying moving averages are trending lower.
Comparative Analysis
| Company Name | Ticker | Price per | Mrkt. Cap. | P/E | P/S | ||
| May-24-2010 | symbol | Share, $ | $ Mn | 2010 | 2011 | 2010 | 2011 |
| LDK Solar Co. Ltd. | LDK | 5.85 | 662.50M | n/a | n/a | 0.63 | n/a |
| ReneSola Ltd. (ADR) | SOL | 5.75 | 496.30M | n/a | n/a | 1.06 | n/a |
| Tingli Green Energy Holdings Co. | YGE | 9.95 | 1.27B | n/a | n/a | 1.11 | n/a |
| Solar Manufacturer Median | 809.60M | n/a | n/a | 0.93 | n/a | ||
| JA Solar Holdings Co. Ltd (ADR) | JASO | 5.11 | 863.68M | 18.32 | n/a | 1.68 | n/a |
Source: Thomson Financial
Insider Trading Activity
| NET SHARES PURCHASE ACTIVITY
Inside Purchases – Last 6 Months |
||
| Shares | Transaction | |
| Purchases | n/a | n/a |
| Sales | n/a | n/a |
| Net Shares Purchased (Sold) | n/a | n/a |
| Total Insider Shares Held | n/a | n/a |
| % Net Shares Purchased (Sold) | n/a | n/a |
| Net Institutional Purchases — Prior Qtr to Latest Qtr | |
| Shares | |
| Net Shares Purchased (Sold) | n/a |
| % Change in Institutional Shares Held | n/a |
Source: Yahoo Finance
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