) fell 21% on Dec 5 on daily trade following the release of its
third-quarter earnings report. This is due to the fact that the
photovoltaic manufacturer ReneSola incurred a bigger loss in the
third quarter of 2013 as it shut down a part of a polysilicon
ReneSola reported loss per American Depositary Share (ADS) of
$2.23 for the third quarter of 2013, wider than the Zacks
Consensus Estimate of a loss of 24 cents per ADS. The
third-quarter loss was also wider than the year-ago quarterly
loss of 91 cents per ADS and the prior quarter loss of 24 cents
This Chinese solar panel maker had initiated an effort last year
to upgrade a polysilicon factory in Sichuan and integrate it with
a more advanced facility while reducing costs. However, the
company said that its effort to cut costs failed and it
discontinued the production. Consequently, the company digested a
$194.7 million impairment charge.
Although ReneSola booked bigger losses during the quarter, its
net revenue surged 92.2% to $419.3 million from $218.2 million in
the prior-year quarter, supported by increased shipments. The
reported figure also came well ahead of the $362.0 million Zacks
Consensus Estimate and was 11.1% above the prior quarter's $377.4
During the quarter, total solar wafer and module shipments were
851.0 megawatt ("MW"), up 59.8% year over year and 0.2%
sequentially. Its module shipments were 462.9 MW, up a
considerable 219% year over year and 6.6% sequentially.
The company continued to grow its module business while focusing
more on the geographic diversification of its sales. This has
resulted in another quarter of record shipments and
Operating expenses increased significantly during the quarter to
$214.3 million versus $43.6 million in the third quarter 2012 and
$44.0 million in the preceding quarter. The increase was due to a
non-cash impairment charge on assets of $202.8 million, including
a charge of $194.7 million related to the above-mentioned Sichuan
Operating loss during the quarter was $180.3 million as compared
with operating losses of $82.8 million in third quarter of 2012
and $16.6 million in second quarter of 2013.
As of Sep 30, 2013, ReneSola had cash and cash equivalents plus
restricted cash of $438.5 million, compared with $442.7 million
as of Mar 31, 2013. Net cash inflow from operating activities was
$79.6 million compared with $65.5 million in the second quarter
of 2013. Total debt was $831.2 million compared with $958.6
million as of Mar 31, 2013.
The company expects fourth quarter 2013 total module shipments to
be between 490 MW and 510 MW, with overall gross margin in the
range of 9% to 11%.
Full-year 2013 solar wafer and module shipments are forecast
between 3.0 gigawatts (GW) and 3.1 GW, with solar module
shipments of 1.7 GW to 1.75 GW.
At the Peers
The largest solar-cell producer by capacity,
JA Solar Holdings Co. Ltd.
) announced a loss of 37 cents per ADS in the third quarter of
2013, narrower than the Zacks Consensus Estimate of a loss of 42
cents. The company also cut its loss on a sequential as well as
year-over-year basis. Loss per ADS was $1.56 in the year-ago
period and 59 cents in the preceding quarter.
The narrower loss was due to higher-than-expected shipments
backed by an improving macro environment and increased
installation activity across key markets.
JinkoSolar Holding Co. Ltd.
) reported adjusted third quarter earnings per ADS of $1.36
(adjusted earnings of 34 cents per share), much ahead of the
Zacks Consensus Estimate of 35 cents. The company reversed its
year-ago adjusted loss per ADS of $3.96 (adjusted loss 99 cents
per share). Each "ADS" represents four ordinary shares. The
results reflect a diversified customer base and improved
operational efficiency in a rapidly changing solar power
In spite of ReneSola reporting in the red this quarter, we remain
optimistic about the company. The company after all outstripped
the shipment volume guidance even in a challenging macro
environment and a competitive solar industry. In order to build
its brand image, the company also introduced its proprietary
technology to customers across multiple international markets.
We believe that the company is well positioned given its focus on
improving operating efficiencies, multiple contracts and
agreements in place, generation of material cost savings and
introduction of innovative products like the power conserving
China is anticipated to install up to 15 GW of solar power next
year which will boost ReneSola's growth momentum. The
government's policy of refunding 50% of the value-added tax for
sales occurring from Oct 2013 through Dec 2015 to local solar
manufacturers helped trigger the rising demand trend.
ReneSola presently carries a short-term Zacks Rank #3 (Hold).
Other better-placed solar players include Zacks Ranked #1 (Strong
Buy) JinkoSolar Holding and Zacks Ranked #2 (Buy)
First Solar Inc
FIRST SOLAR INC (FSLR): Free Stock Analysis
JINKOSOLAR HLDG (JKS): Free Stock Analysis
RENESOLA LT-ADR (SOL): Free Stock Analysis
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