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JA Solar (JASO) Beats on Q3 Earnings, China Shipments Down

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JA Solar Holdings Co., Ltd. (JASO - Free Report) posted third-quarter 2016 adjusted earnings of 13 cents per diluted American Depositary Share (ADS), beating the Zacks Consensus Estimate of 3 cents by a wide margin.

Earnings, however, deteriorated from the year-ago figure of 65 cents by 80%.

Total Revenue

JA Solar’s revenues in the reported quarter were $624.3 million, comfortably beating the consensus mark of $586 million by 6.5%. Moreover, the reported figure improved 9% from the year-ago level on strong shipments to key markets, which exceeded the low end of the company’s guidance.

JA SOLAR HOLDGS Price, Consensus and EPS Surprise

 

JA SOLAR HOLDGS Price, Consensus and EPS Surprise | JA SOLAR HOLDGS Quote

Q3 Shipments

Total shipments in the third quarter of 2016 were 1,240.9 megawatts (“MW”), nearly all of which were modules and cells shipped to external customers. So, external shipments were also 1,240.9 MW, up 10.1% year over year.

The year-over-year improvement in external shipments was attributable to an 11.8% upside in module shipment. However, a 22.8% decline was witnessed in cells and cell tolling.

The increase in shipments came on the back of strong demand from South America, which constituted 20.2% of the quarter’s total shipment. Shipments to North America rose to 13% of the total, from 1% in the year-ago quarter. Europe, however, witnessed a considerable drop, having contributed 6.5% to total shipments, compared with 7.8% a year ago. Asia-Pacific (excluding China) markets also witnessed a slowdown with shipments constituting 25.8% of the total, a considerable drop from 36.3% a year ago. China also saw a decline with shipments constituting 32% of the total in the reported quarter, from 53.1% in the year-ago quarter.

Highlights of the Release

Gross profits were $86.1 million, down 15.2% year over year. Gross margin, also, contracted 440 basis points year over year to 13.8%.

Total operating expenses of $67.9 million represented 10.9% of revenues, compared to the year-ago figure constituting 9.9% of revenues.Operating profit was $18.2 million, compared with $44.9 million in the year-ago quarter.

Interest expenses totaled $11.3 million, up from $8.7 million a year ago.

Financial Condition

At the end of third-quarter 2016, JA Solar had a cash balance of $298.2 million, compared with $445.1 million at 2015-end. Total long-term borrowings were $467.8 million as of Sep 30, 2016.

Guidance

JA Solar expects to ship 1.2–1.3 gigawatts (“GW”) of cells and modules in the fourth quarter of 2016, with essentially all being external shipments.

For 2016, the company has slashed its shipment guidance. The company currently expects to ship 4.9–5 GW of cells and modules, compared to the earlier expectation of 5.2–5.5 GW.

Zacks Rank

JA Solar currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

SolarCity Corp. , the largest U.S. rooftop solar installer, posted an adjusted loss of $2.27 per share in the third quarter of 2016, narrower than the Zacks Consensus Estimate of a loss of $2.35. However, in the year-ago quarter, the company had incurred a loss of $2.10.

First Solar Inc. (FSLR - Free Report) reported third-quarter 2016 earnings of $1.22 a share, beating the Zacks Consensus Estimate of 69 cents by a wide 76.8%. The reported number, however, declined 64.2% from the prior-year figure of $3.41.

SunPower Corp. (SPWR - Free Report) reported third-quarter 2016 adjusted earnings of 56 cents per share, missing the Zacks Consensus Estimate of 67 cents by 16.4%. Reported earnings were, however, way higher than the year-ago figure of 3 cents.

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