China's Solar Companies 'Home in' on Domestic Market

Chinese solar panel manufacturer Yingli Green Energy Holding Co told investors, who listened in on a conference call today, that it is increasing its sales to the domestic market and expects 20 percent of its revenue to come from China in 2012.

As the United States imposes tariffs on China’s solar manufacturing leaders and the market prices of modules continues to plummet, Yingli reported, “Our revenues from [the] China market increased from 14 percent in the second quarter to 28 percent of total net revenues in the third quarter, and [are expected]to continuously increase in the fourth quarter.”

The company also intends to take advantages of generous Chinese government subsidies, noting that, in August, the People’s Republic boosted its cumulative solar installation target for 2015 by 40 percent, from 15 gigawatts (GW) to 21 GW–the third such increase in just a little more than 12 months—and further strengthened its promotion of solar by a series of new incentive programs

Compared to Q3 revenues of US$667.7 million in 2011, Yingli posted results of US$355.9 in Q3 2012.

JA Solar Is in ‘Home Stretch’

JA Solar Holdings Co Ltd., which also reported on Q3 earnings today, said it intends to rely on a similar strategy—building sales domestically and in developing global markets.

The company, which consolidated its American Depository Shares (ADS) last week, to avoid delisting by Nasdaq, reported flat results for the third quarter. Shipments were 418 MW, above the high end of the company's previous guidance of 370 MW, and level with the 418 MW shipped in the second quarter of 2012. Net revenue was US$260.9 million, a decrease of 9.2 percent from the US$287.5 million in the second quarter of 201.2

Dr. Peng Fang, CEO of JA Solar, commented, "In spite of tough market conditions, shipments exceeded the top end of our guidance in the third quarter, thanks to robust sales across emerging markets. The proportion of modules in our overall sales mix continued to increase, accounting for 68% of revenue and 59% of total shipments in the quarter. In light of the current slowdown in demand and ongoing trade issues in Europe, we continued to explore opportunities in nascent growth markets while stringently managing our cash position."

Dr. Fang continued, "In China, shipments more than doubled sequentially, largely driven by a strong pipeline of projects from major utility companies. We continue to perform strongly in Japan, where we achieved record quarterly shipments, thanks to our market development efforts and high-efficiency, high-quality product offerings. While the outcome of the recent trade dispute in the United States was disappointing, we are pleased that it has reached a conclusion, and we look forward to further expanding our presence there in the coming quarters. We are also making encouraging inroads into the burgeoning solar markets in Australia, Southeast Asia and South America, where we see strong growth potential.”

More Tradeoffs

JinkoSolar Holding Co Ltd.–which reported last week that its total revenue for the third quarter was US$221.1 million, representing an increase of 12.2 percent from the second quarter of 2012, and a decrease of 22 percent from the third quarter of 2011— also announced its intentions to increase marketing efforts domestically, as well as in China, South Africa, South America, and Eastern Europe.

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“We are encouraged by our strong performance this past quarter as we continue to benefit from our strategic focus on cost reduction and geographical diversification with strong sales in China compensating for weakness in our more traditional markets. We believe we have turned a corner operationally and financially despite the global economic softening as we continue to focus on our core business and work to advance our industry leading position." stated JinkoSolar's Chief Executive Officer Kangping Chen,adding, "This marks the third consecutive quarter where we effectively increased gross margin and reduced net loss as we make our way back to profitability. This was done in part, by working aggressively to maintain our industry-leading position in terms of cost structure by improving efficiency without sacrificing the quality and performance our modules are well known for."

He commented on the company’s global outlook, as well as the trade complaints from the United States and the European Union. "We continue to deepen our relationships with customers across the globe with total module shipments of 280 MW during the third quarter of 2012. The strong momentum we have picked up in China continued where shipments surged 117 percent, quarter-over-quarter, a testament to being a market leader domestically as well as internationally,” said Chen. “Despite the difficult circumstances in the United States, the final determination of injury by the United States International Trade Commission concerning the anti-dumping duty and countervailing duty investigation of imports of crystalline silicon photovoltaic cells and modules from the People's Republic of China was partially favorable to us and we remain fully committed to our customers in the United States. With potential European Union tariffs on the horizon, we continue to adapt our strategy there and diversify the geographic mix of our customers. We are focused on emerging markets such as China, South Africa, South America and Eastern Europe."

According to Reuters (News - Alert), the bleak shipment forecasts come days after rivals Trina Solar and Canadian Solar cut their full-year forecast for solar panel shipments.

Shares of Yingli, valued at about $218 million, closed at $1.43 on Tuesday on the New York Stock Exchange. Shares of JA Solar, valued at about $132 million, closed at 65 cents. Yingli shares have lost nearly two-thirds of their value this year, while those of JA Solar have more than halved.

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