Earnings Cheat Sheet: JA Solar Triples Volume after Earnings

JA Solar Holdings (JASO), one of the world’s largest manufacturers of high-performance solar cells and solar power products hit the most active list today, with more than triple the average volume of shares (ADS) trading hands. JASO, based in Shanghai, has a market cap of about $1.6B, a strong balance sheet, and working capital of $539M.

The stock was up over 5 percent before the bell following the release of the earnings report for the third quarter, ending September 30.

In late October, the company revised guidance upwards for the year as a result of higher than expected supply agreements, many prepaid. JASO also signed a supply agreement with BP solar for delivery of 185MW of photovoltaic product, which will hit the books next quarter.

Earnings: $0.47 per share (diluted), compared to $0.18 (diluted) in the year-ago quarter, a hike of over 161 percent.

Revenues: Up 179.9 percent yoy @ $541M with sequential growth of 52 percent

Actual vs. Expected: $0.13 higher than expectations of $0.34 per share; reported earnings of $0.10 per share in the year-ago period

Notable Stats:

Record Q3 shipments of 418MW, above guidance of 375MW, an increase of 34% sequentially

Record Q3 revenue of $541M, an increase of 52% over second quarter revenue

Diversified global customer base: 53% international customers and 47% domestic customers

Shipped 1GW of solar products in the first three quarters of 2010, above cumulative total historical shipment from company’s inception through 2009

Q3 gross profit of $121.8 million and gross margin of 22.5%, exceeding guidance of 20%

Q3 operating expenses of 4.1% of total revenue, below previous guidance of 6%

Q3 operating income of $99.9 million and operating margin of 18.5%

Record net income of $76.8 million and GAAP EPS of $0.47, an increase of more than 161% sequentially

Core Product Updates:

The company is currently ramping up capacity to accommodate delivery of 1.9GW of photovoltaic product.

Key Quotes: “Business momentum continues to be strong, with robust demand from existing and new customers across multiple geographies,” said Dr. Peng Fang, CEO of JA Solar. “Visibility of customer demand remains high and major client indications give us increased confidence in the prospect for 2011. Due to our commitment to product quality and on-time delivery, JA Solar has been viewed as a reliable and dependable supplier partner by our diverse global customer base. We are pleased to have secured these supply agreements for next year delivery, which also demonstrates our continued and consistent leadership in supplying advanced, high-quality solar products.”

Competitors: LDK Solar (LDK), Solarfun Power (SOLF)

Technicals: The stock is trading over 6 percent above its 13-day EMA and more than 15 percent above its 50-day EMA, near the 52-week high of $10.24 reached in mid October. With a beta of 3.13, a big beat on earnings, improved margins, and upward guidance, the stock is likely to continue the strong momentum going forward. This is one way to pure play a developing technology with high growth potential emerging from its infancy in a burgeoning Chinese economy.

JA Solar Holdings Co ADS (NASDAQ: JASO)

Visit the web page @ http://www.jasolar.com/ for a closer look at the company and its financials.

Disclosure: No positions

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