ReneSola Seems to Have Turned a Corner

Credit Suisse on Thursday upgraded ReneSola (SOL) based on its improvement in earning and outlook. On Wednesday, ReneSola kicked off earning among Chinese solar names. The company reported 5 cents loss, beating the Street consensus of 6 cents per ADS,

The important development in this company is that the company converted itself into a vertical intergration PV maker from a pure solar wafer provider. China PV makers such as Canadian Solar (CSIQ), Yingli Green (YGE) and Suntech (STP) all gained momentum to scoop up market shares in China, Europe and the U.S., forcing First Solar (FSLR) to start a rebate program to face the competition. According to CEO Li, ReneSola sees a sequential increase in revenue by 60-70% quarter over quarter for the 3rd quarter, margin improved from -47% to positive 5.1%; the company announced 2009 guidance of $500 million to $550 million.

It is worthy notice that ReneSola's cell/module business is expected to ramp up production in the 2nd half of 2009. A new stream of revenue from modules will boost ReneSola's total revenue in coming quarters: an estimated 240MW module capacity is expected in 2010. 25-30MW is anticipated to contribute to Q3/Q4 revenue, according to the company.

The company told conference calersl that the 2009 guidance does not include coming revenue from Chinese domestic projects, which will be extra revenue on top of the guidance if any. The company also said it had submitted application to Golden Sun projects and expects to be approved in Q4 of this year.

JA Solar (JASO) is a totally different story. The company keep losing money at astable pace. If you compare Q2 to Q1, revenue was also down to $88 million; the company said its net loss widened in the second quarter. Analysts complain that JA Solar has only one big customer, which is BP solar. It is another example that good companies are gaining market share, while others are losing ground.

Disclosure: Author is long FSLR, YGE, SOL, STP