Yingli Green Energy (YGE, Financial), one of the leading solar panel maker announced not so exciting results for the second quarter 2014 due to macroeconomic headwinds specially in China and tough environment persisting in obtaining finances in the region that slowed down its installation. However, its shipment for PV modules for the quarter second-quarter increased approximately 41% to 888 megawatts quarter-on-quarter on the back of strong demand in the countries such as China, Japan, United States, U.K and many other emerging markets as large scale utility companies started equipping them with its utility-scale PV solutions.
Results and outlook
Its revenue for the second quarter came in at $549.5 million, which slipped a fraction from $550.4 million in the same quarter a year ago, missing the consensus estimates of $625 million for the second quarter. However, it witnessed about 21.2% improvements in its net loss to $0.26 per share from loss of $0.33 per share, yet it was below the $0.11 loss per share estimated by the consensus.
Looking ahead, Yingli has lowered down its outlook for shipment. The company now expects its overall shipment to be in the range of 3.6 GW to 3.8 GW for its PV modules, which is below from its earlier guidance of 4.0 GW to 4.2 GW of PV modules for the full year. Yingli expects 34% of its total shipment to originate from China, 16% from Europe, 10% from United States and remaining 40% from emerging market. Meanwhile it maintained its earlier guidance of completing approximately 400 to 600 megawatts in the second half and expects to sell 60% of the total project by the end of fiscal 2014 and remaining in the first quarter of 2015.
Can it improve?
However, the amendment in the shipment is primarily due to the surging demand in the second half that the management decides to feed through exploiting the utilities of its third-party OEM capacity. This change in its shipment should assist the company accelerating its gross margin for the second half as it plans to decrease low margins OEM shipment volume. Besides, Yingli is focusing to deliver higher margin orders that will certainly boost its gross margins in the second half.
Meanwhile the solar market is forecasted to accelerate at the healthy pace as the recent report by Solarbuzz states approximately 9000 megawatts deployment of solar PV power capacity for the first quarter 2014 across the world. Further, the report expects overall deployment of solar PV power capacity to reach about 49,000 megawatts by the end of fiscal 2014.
Management is of the opinion that the company's performance can improve. Management states:
"We remain focused on returning to net profitability by improving our operating efficiency, reducing manufacturing costs and optimizing our geographical footprints. In the second quarter, we saw increased demand for Yingli Solar modules from our key markets, such as China, Japan, United Kingdom and other new emerging markets. In particular, our shipments to new emerging markets in the second quarter increased by approximately 18% quarter over quarter while customer base doubled compared with the second quarter of 2013. Our dedicated local team in Japan has obtained notable achievements, which resulted in our shipments to Japan in the first half of 2014 exceeded our total shipments to Japan in 2013."
Conclusion
Yingli is making good moves to tap the solar market. So, it will be a good idea for investors to consider this stock for the long run as it can improve due to the solar market's growth.
