JA Solar (JASO) Q1 Earnings Beat Estimates, Shipments Up

JA Solar Holdings Co. Ltd. (NASDAQ:JASO) posted first-quarter 2016 adjusted earnings of 36 cents per diluted American Depositary Share (ADS), beating the Zacks Consensus Estimate of 22 cents by a wide margin of 63.6%. Earnings also surged from the year-ago figure of 13 cents by 176.9%.

Total Revenue

JA Solar’s revenues in the reported quarter were $538.1 million, beating both the Zacks Consensus Estimate of $431 million by 24.8% and the year-ago figure by 44.4%. The improvement in revenues was driven by strong shipments to key markets, primarily to its domestic market China.

First Quarter Shipments

Total shipments in the first quarter 2016 were 1,128.3 megawatts (“MW”). External shipments were 1,038.3 MW, up 52.4% year over year.

The year-over-year improvement in external shipments was attributable to a 57.4% upside in module shipment as well as a 22.1% rise in cells and cell tolling.

The increase in shipments came on the back of strong demand from China, which constituted 59.6% of the quarter’s total shipment. Shipments to America jumped to 4.5% of the total from 1.0% in the year-ago quarter. Europe, however, witnessed a considerable drop, having contributed 5.6% to total shipments, compared with 22.6% a year ago. Asia-Pacific (excluding China) markets also witnessed a slowdown with shipments constituting 26.7% of the total, a considerable drop from 53.9% a year ago.

Highlights of the Release

Gross profit was $89.2 million, up 48.8% year over year. Gross margin expanded 60 basis points year over year to 16.6%.

Total operating expenses of $54.9 million represented 10.1% of revenues, up 43.7% from the year-ago period.

Interest expenses were $10.4 million, up from $10.3 million a year ago.

Financial Condition

At the end of first-quarter 2016, JA Solar had a cash balance of $362.1 million, compared with $445.1 million at 2015 end. Total long-term borrowings were $499.1 million as of Mar 31, 2016.

Guidance

JA Solar expects to ship 1.4–1.5 gigawatts (“GW”) of cells and modules in the second quarter of 2016. The company anticipates module shipment of about 100 MW to its downstream projects.

For 2016, the company maintained its earlier expectation to ship 5.2–5.5 GW of cells and modules. It anticipates module shipment of about 250–300 MW to its downstream projects.

The company had earlier expressed that it expects to expand its manufacturing capacity to 2.0 GW for wafers, 5.5 GW for cells, and 5.5 GW for modules by 2016 end.

Other Peer Releases

Solar photovoltaic (“PV”) module manufacturer Trina Solar Ltd. (NYSE:TSL) reported earnings of 29 cents per ADS in the first quarter of 2016. The bottom line beat the Zacks Consensus Estimate of 23 cents by 26.1% and also surged 81.3% from 16 cents earned in the year-ago quarter.

ReneSola (NYSE:SOL) reported earnings of 6 cents per ADS in the first quarter of 2016. The Zacks Consensus Estimate was a loss of 4 cents.

Solar cell manufacturer Canadian Solar Inc. (NASDAQ:CSIQ) reported first-quarter earnings of 37 cents per share, beating the Zacks Consensus Estimate of 13 cents by a whopping 184.6%. Reported earnings, however, plunged 64.4% from the year-ago figure of $1.04 per share.

Zacks Rank

JA Solar presently holds a Zacks Rank #3 (Hold).

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