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JA Solar Narrows Q/Q Loss, Beats Rev

Zacks Equity Research

JA Solar Holdings Co. Ltd. (JASO) announced a loss of 85 cents per American Depositary Share (ADS) in its first quarter of 2013, better than the Zacks Consensus Estimate of a loss of $1.01. However, results came far below the year-ago earnings per ADS of $1.03.

The largest solar-cell producer by capacity, JA Solar managed to narrow the loss on a sequential basis backed by record first-quarter shipments that exceeded the company’s forecast. Strong demand in the high average selling price market of Japan led to the growth. Japan accounted for a record 38% of its module shipments in the quarter. During the quarter, the company also increased its foothold in the high-margin markets of Asia-Pacific, the Middle East and Africa.

Quarterly Performance

JA Solar’s revenues in the reported quarter were $270.0 million, comfortably ahead of the Zacks Consensus Estimate of $230.0 million. Also, revenues increased 4.7% from $258.0 million in the first quarter of 2012, and rose marginally from $268.9 million in the fourth quarter of 2012.

Gross profit was $16.1 million, compared with a gross profit of $5.4 million in the year-earlier period and a gross loss of $12.4 million in the fourth quarter of 2012.

Total operating expenses declined 3.9% year over year and 55.6% sequentially to $29.8 million.


Total shipments in the reported quarter were 442.7 megawatt (MW), exceeding the high end of the company's forecast of 410 MW to 430 MW. Shipments climbed 20.9% from 366 MW shipped in the year-ago period, but decreased 11.5% from 500 MW in the fourth quarter of 2012.

The Chinese solar-products maker saw declining revenue for six consecutive quarters due to weak demand and a global supply glut of wafer and module, which resulted in cascading average selling prices. However, the company successfully handled it with shipments rising almost 21% year over year in the first quarter.

Financial Condition

JA Solar at the end of the reported quarter had a cash balance of $254.9 million with $44.8 million of total working capital. Total long-term bank borrowings were $623.2 million, of which $451.4 million were due in one year. The total face value of outstanding convertible notes due 2013 was $116.6 million as of Mar 31, 2013.


JA Solar expects second-quarter 2013 deliveries between 410 MW and 430 MW. For 2013, the company reaffirmed its total cell and module shipments of 1.7 gigawatt (:GW) to 1.9 GW.

Our Take

JA Solar is one of the most cost-efficient solar producers in the world, with a geographically diverse customer base as well as silicon wafer supply agreements in place to feed its production. Positive factors include ongoing expansion programs, improving operating efficiencies, and higher conversion efficiency. JA Solar is steadily expanding its customer base worldwide in several geographic end markets including the U.S., Canada, Italy, Japan, Australia, China and India.

The first-quarter 2013 earnings beat led to a 70.4% jump in JA Solar’s ADSs on May 20, 2013 on the Nasdaq. Other Chinese solar stocks also gained ground with Trina Solar Limited (TSL) jumping 20.4%, First Solar Inc. (FSLR) climbing 9.8%, Suntech Power Holdings Co. Ltd. (STP) increasing 27.3% and Yingli Green Energy Holding Co. Ltd. (YGE) seeing a boost of 13.1%.

JA Solar currently retains a Zacks Rank #2 (Buy).

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