Demand Surge Powers Solar Earnings

• By the tickerspy.com Staff
• On 9:42 am EST, Tuesday November 10, 2009

So much for the supply glut, JA Solar (NASDAQ: JASO - News) turned in record-breaking Q3 numbers.

Shanghai-based JA Solar shipped 177 megawatts of solar cells in the third quarter, breaking a company record, and more than doubling revenue compared to Q2. The $193 million in revenue resulted in a net profit of $15.7 million or 10 cents a share, up from a loss in the third quarter of 2008. JA CEO Baofang Jin said the company, "gained significant market share during the quarter." He also noted, "we are seeing robust demand from our customers with improved visibility."

Visibility has been hard to come by in the solar sector. Technology research group iSuppli this summer forecast a solar supply glut through 2012. It will be interesting to see if forthcoming company reports point to the same robust demand that JA saw in Q3.

A look at the Chinese Solar Stocks Index's six-month performance chart shows the sector has been subject to some massive swings recently. Prior to Today's opening bell, the Index was underperforming the S&P 500 by -5% over the last month.

On a five-day basis, however, the entire sector is positive. JA is leading the way with a 12% rally for the period. Solarfun Power Holdings (NASDAQ: SOLF - News) and LDK Solar (NYSE: LDK - News) are both up by more than 5% in the last week.

Trina Solar (NYSE: TSL - News) is the leader over the last month, up by 14.5%. Suntech Power Holdings (NYSE: STP - News), China's largest solar player by market cap, has swung by -15% in the other direction for the period.

Besides LDK, the entire Chinese solar sector remains more than 100% above 52-week lows. Trina, Canadian Solar (NASDAQ: CSIQ - News), and Yingli Green Energy (NYSE: YGE - News) are all up by 400% or more since their bottom.

As of this writing, the Chinese Solar Stocks Index is outperforming the broader Solar Stocks Index by more than 400 basis points over the last month. U.S.-based First Solar (NASDAQ: FSLR - News) and Evergreen Solar (NASDAQ: ESLR - News) have weighed on the latter by -20% during the period.

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