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Yingli Green Energy Down on Wider-Than-Expected Q4 Loss - Analyst Blog

Solar panel manufacturer Yingli Green Energy Holding Company Limited YGE or Yingli Solar reported an operating loss of 49 cents per American Depository Share (“ADS”) in fourth-quarter 2014, wider than the Zacks Consensus Estimate of a loss of 14 cents.

The share price of Yingli Green, which has been incurring losses for more than three years, plunged 14.96% yesterday to $1.99.

Revenues

Total net revenues were $555.5 million, down 9.4% from $613 million in the fourth quarter of 2013. Revenues declined due to lower sales of PV modules and systems.

Yingli Solar’s revenues also fell short of the Zacks Consensus Estimate of $602 million.

Highlights of the Release

Gross margin in the reported quarter expanded 460 basis points year over year to 16.8%. Improvement in margins was a reflection of reduced costs of PV modules on account of the company’s cost-containment initiatives.

Operating loss in the fourth quarter of 2014 was $32.2 million, narrower than an operating loss of $132.8 million in the year-ago quarter.

Interest expenses were $43.3 million in the reported quarter, compared with $42.4 million in the year-ago period.

Financial Highlights

The company had cash & cash equivalents of $387 million as of Dec 31, 2014 compared with $462.2 million as of Dec 31, 2013.

Long-term debt excluding current portion was $460.7 million as of Dec 31, 2014, down from $678.6 million as of Dec 31, 2013.

Guidance

Yingli expects PV shipment volumes in the range of 3.6–3.9 gigawatts (“GW”) (including 400–600 MW shipment for PV systems to its downstream power plants) for 2015. This represents an increase of 7.1% to 16% over the prior year.

Other Solar Company Releases

JA Solar Holdings Co. Ltd. JASO recorded non-GAAP adjusted earnings of 30 cents per ADS in the fourth quarter of 2014, beating the Zacks Consensus Estimate of 27 cents by 11.1%.

ReneSola Ltd.’s SOL adjusted loss per ADS of 15 cents in the fourth quarter of 2014 came in line with the Zacks Consensus Estimate.

Solar PV module manufacturer Trina Solar Ltd. TSL reported earnings of 21 cents per ADS in the fourth quarter of 2014, ahead of the Zacks Consensus Estimate by 50%.

Our View

Yingli Solar reported improved gross margins on account of management’s efforts to reduce expenses and enhance operating efficiency.

In the reported quarter, the company saw higher demand for PV modules from its key markets, namely China, Japan and other emerging nations. The company also witnessed rising demand for its solar panels in the domestic market. China accounted for approximately 37% of its total shipments in 2014.

Both the U.S. and China have issued a joint statement to curb pollution levels. China has pledged to increase energy consumption from renewable sources to 20% by 2030 and aims to add 100 GW by 2020 to support photovoltaic power generation. This will lead to a major boom in the global solar energy market.

Moreover, the Chinese National Energy Administration recently revealed its ambitious goal of installing 17.8 GW of solar capacity in 2015, which is about 18.7% higher than the previous 15 GW proposal announced in February. The company is likely to reap the benefits of surging demand for solar panels in its domestic market.

Yingli Solar currently has a Zacks Rank #3 (Hold).
 


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