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JA Solar Holdings Co. Ltd. (NASDAQ:JASO) announced preliminary un-audited financial results for the second quarter of 2011. In the quarter the company faced changes in solar subsidy regulations in key markets like Italy. The company also faced slower-than-expected growth in market demand in Germany.

JA Solar anticipates shipments for the second quarter of 2011 to be approximately 400MW. However in the quarter gross profits were affected by inventory provisions recorded on high-cost inventory.

As a result, the company expects gross margin to be in a negative low single digit range. JA Solar is scheduled to announce its financial results for the second quarter of 2011 on August 18, 2011.

Based in Ningjin of the Hebei province in the People’s Republic of China, JA Solar Holdings Co. Ltd. is a leading manufacturer of high-performance solar power products.

The company sells its products to solar manufacturers worldwide, who assemble and integrate solar cells into modules and systems that convert sunlight into electricity for residential, commercial and utility-scale power generation.

JA Solar is one of the most cost-efficient solar producers in the world, with a geographically-diverse customer base as well as silicon wafer supply agreements in place to feed its production. Positive factors include ongoing expansion programs, improving operating efficiencies, rising margins and higher conversion efficiency.

JA Solar is steadily expanding its customer base worldwide. It is experiencing strong growth in several geographic end-markets including, U.S., Canada, Italy, Japan, Australia, China and India.

In the near term, however, apprehensions over the tepid module demand in Europe, margin blues, rising competition, wafer dependency, the financial stability of its customers and the oversupply of solar cells in the market will restrain the valuation of the company.

JA Solar presently retains a short-term Zacks #5 Rank (Strong Sell) that corresponds with our long-term Underperform recommendation on the stock.

However, in the near term, we would advise investors to accumulate its short-term Zacks #2 Rank (Buy rating) peers like Real Goods Solar Inc. (RSOL) and Westinghouse Solar Inc. (OTCPK:WEST).