Friday, November 14, 2008

JA Solar cuts forecast, sees solar "panic"

Wed Nov 12, 2008

By Matt Daily

NEW YORK (Reuters) - Chinese solar cell maker JA Solar Holdings Co Ltd said on Wednesday the global economic slump had triggered a "panic" in the solar market, prompting it to slash its sales forecasts and sending its shares down more than 30 percent.

Sales of solar cells and panels have risen sharply in recent quarters as companies such as JA Solar ramped up production of the clean power source, but the global economic slowdown has caused that growth to slow, leading to a supply glut.

"At this moment the market reaction has been panic," Samuel Yang, chief executive officer, told a conference call.

The company, which posted a quarterly loss from its ties to defunct investment bank Lehman Brothers, said it had cut back on output of the cells that turn sunlight into electricity and would seek to renegotiate its polysilicon supply contracts.

That effort to cut costs for polysilicon, the key material in its cells, was an attempt to offset an expected 20 percent price decline in the average selling prices of its products.

"Just recently the euro depreciated dramatically, more than 23 percent. So we have to adjust our ASP (average selling price) to support our customers," Yang said.

Europe is the largest market for photovoltaic solar equipment because of the subsidy programs set up by the German and Spanish governments.

JA Solar's stock plunged as much as 32 percent to $2.27 following the announcement, bringing its loss since the beginning of September to nearly 90 percent.

"We do not believe in the 'disaster scenario' implied by the stock's sharp drop during today's session," Raymond James analyst Pavel Molchanov said in a client note, noting that the stock was trading nearly 40 percent below its book value. "JA Solar's low cost structure and healthy balance sheet place it in a strong competitive position."

JA Solar said it would seek a 20 percent drop in the price it pays its suppliers for polysilicon in 2009, and that it had already won price concessions for 2008. The company would seek to push its contracted costs for silicon below the spot market price of about $200 to $220 per kilogram.


The company cut its 2008 revenue forecast to between $849.5 million to $878.9 million from the $1.05 billion to $1.17 billion it had forecast in October, and said its earnings per share would be near break-even.

It also cut its 2009 revenue forecast to $1.5 billion to $1.7 billion from the previously issued $2.0 billion to $2.2 billion.

Fourth quarter growth margins would drop to 5 to 7 percent, the company said, from 21.6 percent in the third quarter and 23.3 percent in the second quarter.

JA Solar said it lost a net $21.0 million, or 36 cents per American Depositary Receipt, in the third quarter. In the same quarter a year ago it earned $24.4 million, or 17 cents per ADS.

Excluding one-time items, the Hebei, China-based company reported earnings of 25 cents per share, just short of Wall Street analysts' average forecast of 26 cents per share, according to Reuters Estimates'

Total revenue rose to $312.3 million from $125.2 million, and beat estimates of $302.1 million, according to Reuters Estimates, as the company more than doubled its solar cell sales.

JA Solar posted a one-time loss of $100 million in investments it made with Lehman, a $7.3 million loss from the derivatives deals with the bank and a 1.1 million share dilution based on shares lent to the collapsed investment bank.

Spot market price of 6-inch solar-grade wafers fall to US$9

Nuying Huang, Taipei; Adam Hwang, DIGITIMES [Wednesday 12 November 2008]

The price level of a 6-inch solar-grade silicon wafer in the spot market stands at US$9 currently, dropping by 10-14.3% from US$10-10.5 quoted in October 2008, according to industry sources in Taiwan.

The price drop is mainly because the global demand for solar cells has turned slack for the time being since Spain's incentive program (Royal Decree 661/2007) expired at the end of September 2008, the sources pointed out. Before the end of September 2008, spot market quotes for such wafers had once climbed to US$11-12.5, the sources indicated.

Several small makers of 6-inch solar-grade silicon wafers in China have offered prices of lower than US$9 in the spot market, but the product quality may be an issue, the sources noted.

As US$9 is still higher than but close to existing contract prices of 6-inch solar-grade silicon wafers, Taiwan-based makers of crystalline silicon solar cells may ask for re-negotiation of such contract prices if spot market prices further slip, the sources pointed out.

Trina Solar Announces UMG-based Module Launch

CHANGZHOU, China, Nov. 11 /Xinhua-PRNewswire-FirstCall/ -- Trina Solar Limited ("Trina Solar" or the "Company"), a leading integrated manufacturer of photovoltaic products from the production of ingots, wafers and cells to the assembly of PV modules, founded in 1997, today announced its development of a new product line fully based on Upgraded Metallurgical Grade (UMG) silicon material. UMG is a variety of solar grade polysilicon feedstock capable of delivering conversion rates comparable to higher grade polysilicon, but at a significantly lower cost. The product launch is part of Trina Solar's strategy to extend its product portfolio in order to better address customer demand for lower cost solar module systems. Trina Solar is one of the first vertically integrated solar manufacturers to offer a UMG-based module product.

"We are happy to announce our achievement of critical development milestones in the design, engineering evaluation and reliability testing of this new product, from efforts which initiated in mid-2007," stated Jifan Gao, Trina Solar's Chairman and Chief Executive Officer. "This advancement, which reflects significant proprietary processes, was aided by our integrated manufacturing capabilities, which offer efficiencies in both technology and quality feedback control from our single-campus, ingot-to-module development path. Our UMG-based product is currently meeting our targeted conversion efficiency levels of approximately 14%, and offers advantage via its competitively lower silicon cost component. Customer benefits include a significantly lower module system investment cost compared to our standard high efficiency module lines. Our product development path has involved various stages of trial production, performance testing and evaluation in both real-time field applications and accelerated test environments before commercial production."

The Company further announced that the UMG module products will be produced using existing manufacturing lines and will be marketed and sold under a separate brand, backed by a 20-year warranty. Initial sales are expected in the current fourth quarter, with increasing production planned throughout 2009.

About Trina Solar Limited

Trina Solar Limited (NYSE: TSL) is a well recognized manufacturer of high quality modules and has a long history as a solar PV pioneer since it was founded in 1997 as a system installation company. Trina Solar is one of the few PV manufacturers that has developed a vertically integrated business model from the production of monocrystalline and multicrystalline ingots, wafers and cells to the assembly of high quality modules. Trina Solar's products provide reliable and environmentally-friendly electric power for a growing variety of end-user applications worldwide. For further information, please visit Trina Solar's website at .

Trina Solar to open U.S. headquarters in S.F.

Wednesday, November 12, 2008

San Francisco Business Times - by Lindsay Riddell

Trina Solar Ltd. will open its North American headquarters in San Francisco in the coming year, focused on selling its solar modules to the U.S. market.

The company (NYSE: TSL) was started as a solar installation business in 1997 and went public in 2006. It has about 5,000 employees.

The company shipped 75 megawatts of solar modules in 2007 resulting in $301.8 million in net revenue and $35.4 million in net income for the year. The company said it has secured longterm contracts for polysilicon — the conducting ingredient of its solar modules — and will develop its own polysilicon manufacturing plant to further boost its supply.

Yimei Wong, an executive of Trina Solar America, said it was too early to say how many employees might move to San Francisco or how large the office would be. She said San Francisco would be the company's American base and manufacturing would remain in Changzhou, China. The company is doubling its production capacity to 700 megawatts by the end of 2009.

The U.S. now makes up just 5 percent of the company's sales, while Germany, Spain and Italy, which provide lucrative subsidies for buying solar, account for the overwhelming majority of Trina Solar's business.

The company's new U.S. office was announced at the grand opening ceremony for ChinaSF, the San Francisco economic development office in Shanghai charged with helping companies from China locate in the Bay Area.

Wong said Trina Solar had been working with the ChinaSF office since late 2007, planning its eventual entrée to the U.S. market.

Because a quarter of San Francisco's population is Chinese, San Francisco has much to offer Chinese companies in the way of services, workforce and comforts like Chinese language schools, said San Francisco Assesor-Recorder Phil Ting, who chairs the ChinaSF advisory committee in San Francisco.

"We want to be the go-to city for any company looking to locate their company in North America," Ting said. "We think if we can get to that critical mass, we'll become the place to locate for companies from China.”

Solar cell maker Motech dismisses rumors of defaulted payments by China clients

Nuying Huang, Taipei; Adam Hwang, DIGITIMES [Thursday 13 November 2008]

Motech Industries, the largest Taiwan maker of crystalline silicon solar cells, has seen its stock price drop for five consecutive business days, having plunged 30.23% as of Wednesday since November 5. Market sources have indicated that the drop has been due to rumors that Motech's clients in China have decreased orders, some of them have defaulted on payments, and therefore Motech's revenue in the near future is likely to drop by 40%.

Motech clarified in its filing with the Taiwan Stock Exchange Wednesday that it has required advance payments for a portion of order value from all of its clients in China and thus it will not suffer large losses if clients are unable to pay. So far, none of its clients in China have defaulted on payments and the average time taken to clear accounts receivable remains 25.9 days, Motech emphasized. Revenues from the China market are less than 15% of its total revenue currently, compared to 30% for the European market and the US market each, Motech noted.

Motech recorded a gross margin of 19.93% in October 2008, the highest monthly level so far this year, the company said. Motech's total production capacity in Taiwan has been fully utilized for a while and Motech is confident of attaining the 2008 target output of 280MWp, it indicated.