JA Solar Holdings Co., ADR (NASDAQ:JASO) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.
Shipments to Japan
Brandon Heiken – Credit Suisse: This is Brandon Heiken speaking on behalf of Satra Kumar. I was wondering for, one, if you could talk about the shipments to Japan. Do you think a more sustainable level or was this the result of say one large order of shipment? Then I have a follow-up if, I may please?
Jian Xie – COO: I think our shipment to Japan is sustainable and we have ability – the market over the past two years and this year we had a very good result in Japanese market and the result for the future will continue to be very strong.
Brandon Heiken – Credit Suisse: I know you guys have been working on some project development activity. Can you give an update maybe on the projects megawatts that you expect for the year? If you could give maybe a longer-term outlook up for that as well, please?
Jian Xie – COO: So most our projects that developed this year are at early stages. So in total, I think we’re at around the 50 to 100 megawatts will be installed this year. So the profit I think will be a small part of our total like margin.
Brandon Heiken – Credit Suisse: If I may ask one more; can you talk about your progress on cost reductions for the year, what you foresee for reducing your cost and if you could talk about what your costs were for the first quarter, please?
Jian Xie – COO: I think our cost reduction effort has been materialized in Q1. Compared to the Q4, our costs (indiscernible) still reduce $0.04 on average and we will continue to do a cost reduction (for full years).
Brandon Heiken – Credit Suisse: How much do you expect the cost to come down this year for …?
Jian Xie – COO: Our target by end of the year that processing cost is $0.46.
Brandon Heiken – Credit Suisse: So that’s for non…
Jian Xie – COO: End of the year. Processing cost, our non-silicon processing cost.
Brandon Heiken – Credit Suisse: Okay. For the margin, okay?
Jian Xie – COO: Yes.
Brandon Heiken – Credit Suisse: What is it in the first quarter?
Bill Chen – VP of Strategic Development: In Q1, it’s $0.52.
Average Selling Price Outlook
Edwin Mok – Needham & Company LLC: First question is on your average selling price. How much of that increased sequentially from the fourth quarter to first quarter? How do you expect your average selling price to trend as again in the second quarter and the rest of the year?
Bill Chen – VP of Strategic Development: I think our ASP has been increased for at least ($0.03) on a sequential basis. On an annual basis, I think that we’ll continue this trend.
Jian Xie – COO: In Q1, our ASP is about ($0.54) for module and the last quarter it’s $0.61; so less (indiscernible) improvement and we speculate further stabilization of our ASP this year.
Edwin Mok – Needham & Company LLC: (I’d say) the (NASDAQ:CELL) increased by similar amount or so?
Jian Xie – COO: The same percentage.
Edwin Mok – Needham & Company LLC: In the first quarter, how much of your revenue came from module? Can you give us that break out?
Jian Xie – COO: I have 60% revenue come from module sales.
Edwin Mok – Needham & Company LLC: Did you say 50?
Jian Xie – COO: 60%.
Edwin Mok – Needham & Company LLC: Then can I ask you – when I look at your guidance, you got – if I just take your guidance range during the second quarter and then I take the midpoint of full year range, that will imply that you have slower shipment in the second quarter relative to the first quarter. Do you expect shipment to pick up in the second half? What are the factors that contribute to that range of shipment for the next three quarters (enough)?
Jian Xie – COO: In four quarters we have relatively flatter shipment. In Q2, due to the uncertainty in Europe, we slowed our shipment to Europe. So that’s why our guidance in Q2 has relatively lower number compared with our Q1.
Edwin Mok – Needham & Company LLC: That means for the full year you expect to come back in back half or was that more towards the emerging market?
Jian Xie – COO: We expect to have more shipment to other emerging market in closer end of Q4. So, we have a relatively flat shipment in coming quarters.
Edwin Mok – Needham & Company LLC: Then last question, I noticed that your APAC shipment design was very high in the first quarter. How much was that was Japan versus other market? Can you describe – I think in your prepared remarks you talked about the other market, which was very, very helpful, but (model all) commentary on APAC. I was just curious what other market in Asia that you are seeing that are increase in demand right now?
Bill Chen – VP of Strategic Development: I think in APAC, Japan is the leading market for us, which account for the majority of the APAC’s delivery. In future, I think that we are developing some other APAC market as well, but Japan will still keep the leading position in this region.
Edwin Mok – Needham & Company LLC: So just maybe one more, sorry about that. So beyond Japan, how about Australia? That has been a market that people talked about? Have you guys seen much demand of that market?
Bill Chen – VP of Strategic Development: We see the potential in Australian market and we had sales force already for this market.