JASO

JA Solar Holdings, Co., Ltd. (JASO)

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JA Solar Holdings Co, Ltd. (JASO)

Q1 2011 Earnings Call

May 10, 2011 8:00 a.m. ET

Executives

Martin Reidy - Brunswick Group

Peng Fang - CEO

Anthea Chung - CFO

Ming Yang - VP of Business Development and Corporate Communications

Analysts

Ming Chu - Jefferies

Mark Bachman - Auriga

Samuel Reed - Collins Stewart

Colin Rusch - ThinkEquity

Edwin Mok - Needham

Ahmar Zaman - Piper Jaffray

Kelly Dougherty - Macquarie

John Hardy - Gleacher & Company

Satya Kumar - Credit Suisse

Sam Dubinsky - Wells Fargo

Jay Greenblatt - Barclays Capital

Presentation

Operator

Hello and thank you for standing by for JA Solar’s first quarter 2011 earnings conference call. At this time all participants are in a listen-only mode. After management’s prepared remarks there will be a question and answer session. Today’s conference is being recorded.

If you have any objections you may disconnect at this time. I would now like to turn the meeting over to your host for today’s conference, Martin Reidy of Brunswick Group. Please proceed.

Martin Reidy

Thank you. Welcome to JA Solar’s first quarter 2011 earnings conference call. Joining us from the company are Dr. Peng Fang, CEO, Ms. Anthea Chung, CFO, and Mr. Ming Yang, VP of Business Development and Corporate Communications.

As stated in the press release, the oversimplified translation of CNY into US dollars, which is set at CNY6.5483 to US $1, is made solely for the convenience of the audience. References to dollars are the lawful currency of the USA. The press release published today provides detailed financial tables under conversion from CNY to USD.

On this call Dr. Fang will begin with an overview of our Q1 2011 results covering business and operational developments and following that, Anthea will provide details of the company’s financial performance and outlook. After our prepared remarks we will open up for questions for the remainder of the call.

We expect the entire call to last approximately one hour. Before we begin the formal remarks I would like to remind you that certain statements on today’s call including statements regarding expected future financial and industry growth are forward-looking statements that involve a number of risks and uncertainties that could cause actual results to differ materially.

These statements are made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Factors that could cause actual results to differ include general business and economic conditions in the solar industry, governmental support for the development of solar power, future shortage or availability of the supply of high purity silicon, demand for end-user products by consumers and the inventory levels of such products in the supply chain;

Changes in demand from significant customers, changes in demand for our major markets, changes in product mix, capacity utilization, level of competition, pricing pressures and declines in average selling prices, delays in the introduction of new product lines, continued success and technological innovations, shortage in supply of raw materials, availability of financing, exchange rate fluctuation, litigation and other risks as described in the company’s SEC filings, including its annual report on Form 20-F filed with the SEC.

Although the company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results. You should not place undue reliance on these forward-looking statements. All information provided on today’s conference call speaks as of today’s date unless otherwise stated and the company undertakes no duty to update such information except as required under applicable law. I will now turn the call over to Dr. Peng Fang, CEO of JA Solar.

Peng Fang

Hello everyone and welcome to today’s call. We appreciate your interest in JA Solar. Despite a challenging market environment due to uncertainties surrounding the solar policy in Italy, we had a solid quarter with net sales of 556 million, operating profits of 83 million or 15% of sales, net income of 72 million and a diluted earnings per share of 41 cents per share.

Our position as market leader, strong support from our customers and diligent effort by our team have ensured that we have done relatively well despite the dynamic market environment. Solar cells and module shipments were 441 million in the first quarter, which means that we achieved 97% at the low end of our previously announced guidance.

Despite a certainly weaker first quarter, we saw good demand for our product across the rest of the customer base. However, our planned shut down during the Chinese New Year holiday this year had a greater than anticipated impact on our production and shipment schedules. This year we closed our factories for several days over the holiday to allow time for key equipment upgrades and facility maintenance, which was the first time we shut down the production in the last 18 months.

The ramp down and ramp up process before and after the holiday took longer than planned and as a result our first quarter solar sale production volumes were less than expected. This in turn impacted shipment volume. Overall, our total solar cell production volumes were roughly in line with our cell and module shipments for the quarter meaning that we shipped about the same as we produced during the first quarter.

In terms of geography, sales to customers outside of China were slightly more than 50% of sales. Sales to Europe represented approximately 35% of revenue with Germany accounting for the largest portion. Sales to US customers represented approximately 9% of revenue and India, Australia, Korea and other regions represented approximately 6.5% of revenue.

I should note also that as a result of two upgrades we carried out over the Chinese New Year during the month of March, we saw immediate conversion efficiency improvements. The average efficiency for our conventional multi-crystalline cell utilizing the upgraded equipment and the new developed GS3 process increased to 16.8% compared to the average efficiency of 16.4% in the previous quarter.

Read the rest of this transcript for free on seekingalpha.com