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JA Solar Holdings Co. Ltd. (JASO - Analyst Report) announced a profit of 32 cents per American Depositary Share (ADS) in the first quarter of 2014, comfortably surpassing the Zacks Consensus Estimate of a profit of 8 cents by 300%. The company also swung to a profit in the reported quarter from a loss of 85 cents per share in the year-ago period. The reported figure was also 113.3% higher than 15 cents per ADS reported in the preceding quarter.

The better-than-expected result was attributable to higher shipments and the increase in revenue. The solid quarterly performance reflects the resilience of the company’s business model and its ability to quickly adapt to market demand. JA Solar has an attractive product and geographic mix.

Total Revenue

JA Solar’s revenues in the reported quarter were $366.0 million, comfortably beating the Zacks Consensus Estimate of $336.0 million by 8.9%. Revenues also increased 35.7% from $269.8 million in the first quarter of 2013 and 5.2% from $348.0 million in the fourth quarter of 2013.

Shipments

Total shipments in the first quarter 2014 were 638.1 megawatt (MW), comfortably exceeding the high end of the company's forecast of 610 MW. Shipments climbed 44.1% from 442.7 MW shipped in the year-ago period. However, the reported figure was down 4.1% from 665.5 MW in the fourth quarter of 2013.

The year-over-year improvement in shipments was attributable to 54.3% and 30.8% increase in module and cell shipment, respectively. In fact, modules and cells comprised 61% and 39% of total shipments in the reported quarter.

Increasing shipments came on the back of a strong Asia-Pacific market where sales increased 66.0% year over year. Shipments to Japan increased sequentially and represented 32% of the total, while demand in Europe remained healthy as the market became competitive for high-power products. However, shipments to China were impacted by seasonality during the quarter under review.

Operational Highlights

Gross profit was $61.2 million or 16.7% of total revenues, compared with $16.1 million or 6.0% of total revenues in the year-earlier period and $53.9 million or 15.5% of total revenues in the fourth quarter of 2013.

Total operating expenses increased 18.5% year over year but declined 20.5% sequentially to $35.3 million.

Financial Condition

At the end of the reported quarter, JA Solar had a cash balance of $313.4 million with $225.6 million of total working capital. Total long-term bank borrowings were $366.7 million, of which $118.5 million were due in one year.

Guidance

Management has provided an optimistic guidance for 2014 based on a flourishing solar industry. The company expects lucrative opportunities from the emerging markets of Latin America and the Middle East. Expansion of its downstream project pipelines will also give its business a boost. Apart from other markets, it also expects favorable demand from its home market of China. In the second half of 2014, JA Solar expects to start the construction of Standard Operating Environment - owned utility projects in China.

JA Solar expects to ship 670–700 MW of cells and modules in total for the second quarter. For 2014, the company reaffirmed its full year cell and module shipment guidance of between 2.7 GW and 2.9 GW, including 200 MW of module shipments to the company's downstream projects.

Peer Comparison

Enphase Energy, Inc. (ENPH - Snapshot Report) reported a loss of 15 cents per share in the first quarter of 2014, narrower than the Zacks Consensus Estimate of a loss of 19 cents per share.

Other Upcoming Releases

Trina Solar Limited (TSL - Snapshot Report) is scheduled to release its first quarter earnings on June 4. The Zacks Consensus Estimate is currently at a loss of 1 cent.

ReneSola Ltd. (SOL - Analyst Report) is scheduled to release its first quarter earnings on May 15. The Zacks Consensus Estimate is currently at a loss of 5 cents.

Zacks Rank

Shanghai, China-based JA Solar Holdings Co. currently sports a Zacks Rank #1 (Strong Buy).
 

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