ReneSola Ltd.
(
SOL
) in the second quarter of 2012 reported adjusted loss per American
Depositary Share (ADS) of 40 cents per share, missing the Zacks
Consensus Estimate of 34 cents of loss per ADS. Numbers also were
way short of the year-ago quarterly earnings of 5 cents per share.
Operational Results
In the reported quarter, ReneSola's revenues of $233 million fell
6.5% from $249.3 million in the year-ago quarter and rose 10.2%
from $211.5 million in the sequentially preceding quarter. The
sequential rise was due to higher module shipments. Reported
quarterly revenue was also higher then the Zacks Consensus Estimate
of $204 million.
Total solar product shipments in the second quarter of 2012 were
503.7 megawatts, an increase of 8.1% from 466 megawatts in the
first quarter of 2012. In the reported quarter, module shipments
rose over 75% quarter over quarter largely due to strong demand
from Europe, particularly from Germany, as well as demand from
Australia. Wafer shipments decreased 8.3% as a result of a strong
demand for modules leading to more in-house use.
Average Selling Prices continued to decline in the second quarter
with module ASPs dropping to 0.75 per watt and wafer ASPs dropping
to $0.31 per watt in the second quarter compared to $0.84 per watt
and $0.33 per watt, respectively, in the first quarter.
Gross margin for the quarter was reduced to 0.6% from 18.4% in the
year-ago period.
Overall, ReneSola recorded a net loss of $34.8 million compared
with a net income of $1.8 million in the year-ago quarter.
Financial Condition
As of June 30, 2012, ReneSola had cash and cash equivalents plus
restricted cash of $394.1 million, compared with $388.3 million at
the end of the first quarter of 2012. Total debt was $932.9
million, compared with $912.4 million at the end of the first
quarter of 2012. Short-term borrowings were $691.1 million, an
increase from $662.2 million at the end of the first quarter of
2012.
Guidance
ReneSola, for the third quarter of 2012, expects total solar wafer
and module shipments to be in the range of 510 MW-530 MW. Of this
module shipments are expected to be in the range of 150 MW-170 MW.
Revenue for the third quarter is expected to be in the range of
$200 million to $220 million.
For the full year 2012, the company's outlook is unchanged, with
total solar wafer and module shipments expected to be in the range
of 2.2 GW-2.4 GW.
Our Take
Based out of China, ReneSola is a leading global manufacturer of
solar wafers and producer of solar power products. Capitalizing on
proprietary technologies, economies of scale, high production
quality, technological innovations and know-how, and its in-house
virgin polysilicon and solar cell and module production
capabilities, ReneSola provides its customers with solar wafer
products and processing services. The company possesses a global
network of suppliers and customers.
ReneSola in the second quarter of 2012 developed high-efficiency
second generation Virtus II wafers which utilize new in-house
proprietary Virtus A++ manufacturing process, alleviating the need
for any crystalline seeds. The Virtus II modules' use of the Virtus
A++ manufacturing process produces high-efficiency Virtus A++
wafers with lower light-induced degradation and lower processing
cost. Current processing cost is close to $12 cents per watt, which
the company expects to further improve to 11 cents per watt by
year-end 2012. ReneSola in the second quarter of 2012 also
developed a microinverter, Replus, which can be used with its
modules for power conversion in solar systems.
ReneSola to meet higher demand increased its module production
capacity to 1.2 GW during the second quarter of 2012. In the
reported quarter, the company's total module selling cost was
approximately 66 cents per watt. The company expects total
manufacturing cost to decrease to below 63 cents per watt for the
ongoing quarter.
However, ReneSola's fortunes have been impacted by the
industry-wide oversupply glut leading to sharply falling Average
Selling Prices, tepid module demand in Europe, and rising
competition in the market. Given the industry-wide high inventory
level, we advise investors not to take any position in the
short-term Zacks #4 Rank (Sell) stock ReneSola. Over the longer run
we maintain our Neutral recommendation on the stock.
In the near term we would advise investors to focus on its Zacks #2
Rank (Buy) peer
First Solar Inc.
(
FSLR
).
FIRST SOLAR INC (FSLR): Free Stock Analysis
Report
RENESOLA LT-ADR (SOL): Free Stock Analysis
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