Renewable Energy Stock on Watch: JA Solar Holdings Co. Ltd. (JASO)
  • Stock Alert for JA Solar Holdings Co. Ltd. (JASO)
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    Stock Alert for JA Solar Holdings Co. Ltd. (JASO)

    JA Solar Holdings Co. Ltd. (JASO) is a manufacturer of high-performance solar power products. The Company sells its products to solar manufacturers worldwide, who assemble and integrate solar cells into modules and systems that convert sunlight into electricity for residential, commercial, and utility-scale power generation. The Company recorded total shipments of 1.46GW (gigawatt) in 2010, representing an increase of 187% compared to the previous year.

    Share Statistics (21-Sept-11) FY2009 FY2010 % Chg Q22010 Q22011 % Chg
    Symbol JASO Revenue, $CNY 3,778.6 11,760.8 211.2% 2,380.7 2,669.1 12.1%
    Current price $2.25 Gross marg. 12.8% 21.7% 69.5% 23.2% -3.0% -112.9%
    52wk Range: $2.00-$10.24 Oper. margin 16.8% -7.6%
    Avg Vol (3m): 5,161,530 Net margin -5.1% 14.9% -392.2% 8.2% -8.6% -204.9%
    Market Cap. 370.02M
    Shares Outstanding 164.45M EPS, $ -1.12 10.72 -1057% 1.23 -1.39 -213.0%

    Source: Reuters.com, SEC Filings.

    Investment Highlights

    Shares of JASO have lost 13.8% in the last five days; 35.3% in the last month; and 71.8% year to date.

    Share of the Chinese solar cells maker soared as much as 19% higher on Wednesday, with more than 9 million shares traded for the day. JASO shares plummeted last week after the company was downgraded to “underperform” from “hold” at Jefferies.  JASO’s target price was also slashed to $2.00 from $4.00.  Analyst Jesse Pichel cited weakening demand and soft pricing.

    Last month, JASO also saw its price target cut to $5.00 from $7.00 at RBC Capital, while Collins Stewart slashed its price target on JASO to $3.25 from $4.50.  Analysts at RBC Capital and Collins Stewart keep a a “sector perform,” and “neutral” ratings on JASO, respectively.

    JASO last month announced its results for its second quarter ended June 30, 2011, posting a 28.9% year-over-year increase in quarterly shipments. Despite the generally lower than anticipated installation levels in Germany and recent policy changes in Italy, Dr. Peng Fang, CEO of JASO, stated that demand for the Company’s high-efficiency, low-cost products remained healthy and ensured that the Company met its shipment goals. However, JASO gross margin and bottom line were hit by worse than anticipated market conditions and inventory provisions.

    Total shipments in the latest reported quarter were 401 megawatts (MW), compared with shipments of 451MW in the first quarter of 2011, representing a sequential decrease of 11.1%. Compared with the same period last year, shipments grew by 28.9% from 311MW.

    JASO reported revenue of RMB 2.7 billion ($413.0 million) for the quarter, representing a decrease of 26.7% compared to RMB 3.6 billion ($563.7 million) in the first quarter of 2011 and an increase of 12.1% from RMB 2.4 billion ($368.3 million) reported in the second quarter of 2010.

    Gross loss was RMB 72.0 million ($11.1 million), compared with gross profit of RMB 630.3 million ($97.5 million) in the first quarter of 2011 and gross profit of RMB 551.2 million ($85.3 million) in the second quarter of 2010. Gross margin was negative 2.7% in the second quarter of 2011, compared with 17.3% in the first quarter of 2011 and 23.2% in the second quarter of 2010.Included in the cost of sales was an inventory provision of RMB 179.0 million recorded in the second quarter. The provision was recorded to write down inventory costs in order to reflect a decline in the average selling price. The provision had a negative impact on gross margin of 6.7%.

    JASO posted an operating loss of RMB 202.0 million ($31.3 million), compared with an operating income of RMB 545.4 million ($84.4 million) in the first quarter of 2011 and operating income of RMB 363.0 million ($56.2 million) in the second quarter of 2010.

    The Company’s loss per diluted ADS came in at RMB 1.39 ($0.22), compared with earnings per diluted ADS of RMB 2.68 ($0.41) in the first quarter of 2011 and earnings per diluted ADS of RMB 1.20 ($0.19) in the second quarter of 2010.

    JASO said it maintained a strong balance sheet with cash and cash equivalents of RMB 4.0 billion ($616.9 million), and total working capital of RMB 5.6 billion ($872.4 million) at June 30, 2011. Total long term borrowings were RMB 4.1 billion ($632.9 million) and the face value of outstanding convertible bonds due 2013 was RMB 1.5 billion ($228.2 million) at June 30, 2011.

    Outlook

    As of last month, the Company said it expects its solar cell and module shipments to be in the range of about 450MW to 470MW in the third quarter.  Its current estimate for total cell and module shipments for the full year 2011 is expected to be approximately 1.8GW, down from its previous forecast of 2.2GW.

    Source:

    http://investors.jasolar.com/phoenix.zhtml?c=208005&p=irol-newsArticle&ID=1597754&highlight=

    Financial Strength (21-Sept-2011)

    Company

    Industry

    Sector

    S&P 500

    Quick Ratio (MRQ) 0.40 0.54 0.77
    Current Ratio (MRQ) 0.56 0.78 1.13
    LT Debt to Equity (MRQ) 41.09 14.57 109.95
    Total Debt to Equity (MRQ) 46.88 19.07 147.40
    Interest Coverage (TTM) 1.47 10.43 23.42

    Source: Reuters.com, SEC Filings.

    Analyst Consensus

    No analyst recommendations and revisions data available.

    Technical Analysis

    Source: http://stockcharts.com

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    Sept21-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    Suntech Power Holdings Co. Ltd. STP 2.92 526.75M n/a 7.68 0.16 0.16
    China Sunergy Co. Ltd. CSUN 1.34 59.69M n/a 19.14 0.09 0.09
    Hanwha Solarone Co. Ltd. HSOL 2.53 212.28M 9.37 4.77 0.17 0.16
    Semiconductor – Specialized Median       12.58 n/a 2.11 n/a
    JA Solar Holdings Co. Ltd. JASO 2.25 370.02M 4.41 3.63 0.20 0.19

    Source: Thomson Financial

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