Yingli Green's Earnings Flash a Buy Signal

Yingli Green Energy (YGE) reported a strong quarter on Tuesday, however the share price was hit early in the morning by the weak market sentiment. It recovered most of its losses later that afternoon (conference call transcript here). Revenues totaled $219.5 million, up 50% sequentially. Excluding a one time charge, the company recorded a net income of $17.5 million, or 14c a share, compared to 4c a share analysts were expecting.

CEO Liansheng Miao indicated the quarter marked a 72% rise in shipments from the first quarter and company seeing better project financing and demand down the road in 2009. The German market is the key driver. He also said the US market has been picking up pace in recent months and expects growing market share in coming quarters as demand for its PV module is increasing. Last week, Renesola (SOL) and Canadian Solar (CSIQ) also said they expect to see higer demand for the next few quarters, and a resultant sequential revenue increase is expected as a result.

While the solar sector did not participate the recent market rally, the valuations have become atrractive in many names other than Yingli (YGE), such as Renesola (SOL) and Suntech (STP). The U.S. and China will apparently give the next push in the renewable energy sector. According to the White House, the government will roll out more details in Solar and wind energy later this year and more projects are expected then. On Wednesday, First Solar (FSLR) announced plans to build two solar power plants totaling 550 megawatts for Southern California Edison in a deal the companies signed Monday, another sign that domestic solar energy industry is warming up to the next stage.

Disclosure: Author is long FSLR, SOL and YGE.

Comments

[Mayascribe:]

(YGE) is a great solar play, given that China's government is subsidizing the installation of solar power in the urban areas to the tune of 50%, and the rural areas of China 70%. How can they lose with this kind of subsidy? The report you wrote above is proof of the pudding that YGE is one of the best solar plays out there.

I'm not sure if they use Tereruim in their solar panels, or not. If they do, that rare earth mineral could spike as demand increases.

Thanks for taking the time to write this article.

Aug 21 12:11 PM

[J1Hampton:]

Off the record, Barclay's came out with a memo at 1pm on Tuesday revising the "short term target" for YGE reduced to $10, the day before YGE declared earnings forcing anyone who had been anticipating the YGE run up on Wednesday to rethink their strategy and buy in at 10 early Wednesday. Market maniputation to the nth degree,, but if you can't beat em, join em, and buy in at 10 we did. I just want to flip Barclays the bird for messing with a pure solar play.

Aug 21 05:50 PM

[biomedlives:]

I believe you mean Tellurium. My understanding is that First Solar is the only company that uses Tellurium in PV panels.


On Aug 21 12:11 PM Mayascribe wrote:

> (seekingalpha.com/symbo...) is a great solar play, given
> that China's government is subsidizing the installation of solar
> power in the urban areas to the tune of 50%, and the rural areas
> of China 70%. How can they lose with this kind of subsidy? The report
> you wrote above is proof of the pudding that YGE is one of the best
> solar plays out there.
>
> I'm not sure if they use Tereruim in their solar panels, or not.
> If they do, that rare earth mineral could spike as demand increases.
>
>
> Thanks for taking the time to write this article.

Aug 22 11:38 AM

[Windsun33:]

I disagree on the buy signals right now. I think solar still has a ways to fall. We are seeing panels selling for 30-40% less than just a year ago, as manufacturers struggle to sell already produced products just for the cash flow. Prices right now are in many cases barely at production costs.

I do think that the bottom is near - but that there will be some failures in the meantime. One problem with solar right now is that so much of the sales are tied to high government subsidies, and we all know how fickle governments can be.

Aug 22 12:20 PM

[ldker:]

I still believe the 1st qtr was the bottom. Also, poly silicon prices are finally seeing a steady increase which is what everyone should follow: pvinsights.com

That said, i am watching Sept & Oct as months of serious price declines in the overall market after the huge run up we had. I hope I am wrong, but I suspect you will be able to get just about anything cheaper in 2 months from now. Then, along with commodities, solar will be ready for a nice, sustainable move up.

Aug 23 08:11 AM

[manuel:]

German Q Cells (Europe´s First Solar) is trading at March lows, 10 Euros, 2 times 10 Euros was support in 2009, went from 20 to 10 in the last 4 months, never got any lower in the last 4 years, I think it is a Good buY

Aug 31 12:59 PM