My dear friends,
http://solar-in-china.blogspot.com/ is my blog for China's solar energy industry, and I did not plan to talk about other issues here. But since the 8.0 magnitude earthquake hit Wenchuan China, all Chinese people have been following the rescue operation progress, and hundreds of thousand people went to join the rescue and disaster relief operation, the whole nation is moved by lots of heart-broken stories, and I would like to share such stories here with you.
Chinese governemnt agencies, companies, and individuals are donating to help the victims, but 11,367,929 people have to leave their home and stay in the temporary living areas, the death toll is 55,740, and 292,481 people are injured, and 24,960 people are missing by May 23rd 12 am. Especially many children lost their parents, and many senior citizens lost their sons and daughters. These victims need our help, and I hope you may forward the earthquake information to your friends, and I hope you may pray for them, and help them in anyway if possible.
Now I would like to tell you a story about the earthquake.
Lexiao Bai is a 12 years old girl, and in the earthquake when she tried to run out of their classroom, her arm was clamped by the door of their classroom. In order to let her classmates behind her get out of the classroom, she pulled her arm to get her arm broken off. Her classmates are saved, but she lost a arm forever.
Friday, May 23, 2008
Suntech Reports First Quarter 2008 Financial Results
SAN FRANCISCO and WUXI, China, May 22 /Xinhua-PRNewswire/ -- SuntechPower Holdings Co., Ltd. (NYSE: STP), one of the world's leading manufacturers of photovoltaic (PV) cells and modules, today announced first quarter 2008 financial results.
First Quarter 2008 Highlights(1)
-- First quarter 2008 total net revenues grew 76.1% year-over-year to $434.5 million.
-- Consolidated gross margin increased to 22.2% for the first quarter 2008 compared to 19.0% for the first quarter of 2007. Non-GAAP(2) gross margin reached 22.5 % for the first quarter 2008, compared with 19.9% for the first quarter 2007.
-- Net income for the first quarter 2008 was $55.8 million or $0.33 per diluted American Depository Share (ADS). On a non-GAAP basis, Suntech's net income for the first quarter 2008 was $60.6 million or $0.35 per diluted ADS. Each ADS represents one ordinary share.
-- Suntech's PV cell production capacity was 540MW at the end of the first quarter of 2008. The Company is on track to reach 1GW PV cell production capacity by the end of 2008.
"We executed extremely well during the first quarter, despite the impact of the snowstorm, to deliver stronger than expected growth in net revenues and solid financial results," said Dr. Zhengrong Shi, Suntech's Chairman and CEO. "A vigorous demand environment in the major solar markets in Germany and Spain as well as in the emerging markets including South Korea and Italy drove strong pricing during the quarter. We expect demand to remain robust through 2008 and are virtually sold out for the full year."
Commenting on Suntech's silicon outlook, Dr. Shi said, "During the first quarter we leveraged the funds raised through our convertible senior notes offering to enhance our long term cost competitiveness with new and expanded polysilicon supply agreements and strategic investment in key suppliers. Our ability to secure reasonably priced silicon reflects our competitive strengths with respect to our leading market position, financial strength, and close relationships with upstream suppliers. We are confident that this improved silicon outlook will help us to achieve ourgoal of providing grid parity solar solutions."
"During the first quarter, we continued to hire impressive talent incurrent and developing international markets including Germany, Spain, France, Greece, Italy, South Korea and Australia. This will lay the infrastructure for the continued rapid growth in our business, and provide the flexibility to respond to changing market dynamics. We are confident that our strategy of developing a broad portfolio of superior quality solar products, world-class manufacturing facilities and techniques, deep sales channels and improving cost efficiencies will differentiate Suntech as a clear leader in the solar industry," concluded Dr. Shi.
Recent Business Highlights
Products and Projects
-- Suntech established a 4MW module supply agreement with Enerray, an Italian designer, developer and manager of photovoltaic systems. The Suntech modules will be installed by Enerray in PV systems for the roof tops of large Italian industrial complexes.
-- Subsequent to the close of the quarter, Suntech signed an agreement with Hanau Energies SAS to supply a 4.5MW building integrated PV system (BIPV) to a farm located in Alsace, France. The project will be one of the largest BIPV installations ever built and will employ Suntech's 'Just Roof' modules to form complete weather proof roofs on five agricultural warehouses.
Global Offices and Acquisitions
-- Suntech Australia was opened in April 2008 to focus on sales and business development in Australia, New Zealand and the Pacific Islands.
-- Suntech recently closed an acquisition of KSL-Kuttler Automation Systems GmbH ("KSL-Kuttler"), a leading manufacturer of automation systems for the Printed Circuit Board (PCB) industry. KSL-Kuttler will design, develop and supply primarily automation equipment employed in Suntech's manufacturing process. KSL-Kuttler will continue to manufacture and supply equipment for the PCB industry.
Silicon Procurement and Investment
-- Suntech announced the second phase of a strategic cooperative agreement with Nitol Solar, an independent polysilicon producer. Suntech will acquire a minority interest in Nitol Solar for a total consideration of up to $100 million. In addition, in an amendment to the original 7-year silicon supply contract, Nitol Solar has agreed to substantially increase the aggregate committed volumes to be supplied between 2009 and 2015.
-- An eight-year polysilicon supply agreement was established with DC Chemical Co. Ltd. to supply Suntech polysilicon with a total value of approximately $631 million from 2009 to 2016.
-- Suntech strengthened its relationship with Hoku Scientific, Inc. through an investment of approximately $20 million in a private placement offering, which included an amendment to the existing supply agreement that accelerated the delivery time and increased volume to be delivered under the agreement.
Financing
-- On March 17, 2008, Suntech completed an offering of $575 million of 3.00% Convertible Senior Notes due 2013. In the first quarter of 2008, Suntech leveraged the funds to improve long-term silicon prospects with new and expanded polysilicon supply agreements with Nitol Solar, DC Chemical and Hoku Materials and strategic investments in Nitol Solar and Hoku. Suntech expects to continue utilizing these funds to secure long term supply of favorably priced silicon to support future development.
Industry Recognition
-- Suntech was named Frost & Sullivan's 2008 Solar Energy Development Company of the Year in recognition of unparalleled excellence in design and delivery of high-quality PV cells and modules and customization of energy solutions catering to a global client base.
First Quarter 2008 Results
Non-GAAP Non-GAAP
Net Revenues Gross Profit Gross
(in $ % of Net (in $ Margin
millions) Revenues millions) (%)
Standard PV Modules $432.9 99.6% $98.2 22.7%
- Wafer to Modules 414.7 95.4% 96.6 23.3%
- Cell to Modules 18.2 4.2% 1.6 8.5%
Others 1.6 0.4% (0.3) (16.6%)
Total Net Revenues $434.5 100% $97.9 22.5%
Total net revenues for the first quarter of 2008 were $434.5 million, representing an increase of 76.1% from the corresponding period in 2007.
Non-GAAP gross profit for the first quarter of 2008 was $97.9 million, an increase of 98.9% year-over-year. Non-GAAP gross margin for the Company's core wafer-to-module business was 23.3% and non-GAAP consolidated gross margin was 22.5%. The gross margin increased from the fourth quarter of 2007 primarily due to an increase in the average selling price driven by strong demand for Suntech's solar products, which was partly offset by increased silicon wafer costs.
Non-GAAP operating expenses in the first quarter of 2008 totaled $31.0 million or 7.1% of total net revenues. Operating expenses increased from the fourth quarter of 2007 primarily due to an increase in expenses associated with the expansion of Suntech's global sales network, marketing associated expenses, bank service charges due to increased financing costs and bank commission charges in China, and bad debt provision on certain long-aging receivables.
Non-GAAP income from operations for the first quarter of 2008 was $66.9 million, an increase of 86.5% year-over-year. Non-GAAP operating margin was 15.4%.
Net interest expense was $4.0 million in the first quarter of 2008 compared to net interest income of $1.1 million in the fourth quarter of 2007. The sequential increase in net interest expenses was primarily due to an increase in the short-term borrowing balance to facilitate daily operations, a decrease in interest income resulting from the reduction of the interest rate by the U.S. Federal Reserve Bank, and an increase in average borrowing costs due to the worsening global credit market.
Foreign currency exchange gain was $2.9 million in the first quarter of 2008 compared to a foreign currency exchange loss of $3.7 million in the fourth quarter of 2007. The foreign currency exchange gain in the first quarter of 2008 was primarily due to the appreciation of the Euro against the USD coupled with an increase in Euro-denominated sales.
Non-GAAP net income for the first quarter of 2008 was $60.6 million, an increase of 85.2% year-over-year, or $0.35 per non-GAAP diluted ADS.
On a GAAP basis, for the first quarter of 2008 gross profit was $96.4 million, an increase of 105.2% year-over-year. Gross margin for the core wafer to module business was 23.0% and consolidated gross margin was 22.2% for the first quarter of 2008.
On a GAAP basis, operating expenses for the first quarter of 2008 were $34.6 million or 8.0% of total net revenues. Income from operations was $61.8 million for the first quarter of 2008, an increase of 116.7% year-over-year. Operating margin was 14.2%. Net income was $55.8 million, an increase of 113.8% year-over-year, or $0.33 per diluted ADS.
In the first quarter of 2008, capital expenditures, which were primarily related to production capacity expansion and the construction of Suntech's new production facilities, totaled $63.2 million and depreciation and amortization expenses totaled $7.7 million.
As of March 31, 2008, Suntech had cash and cash equivalents of $1.0 billion, compared to $521.0 million as of December 31, 2007. The increase was primarily due to the completion of a $575 million convertible notes offering in March 2008. Inventory totaled $178.3 million as of March 31,2008 compared to $176.2 million as of December 31, 2007.
Business Outlook
Based on current operating conditions, Suntech expects revenues for the second quarter of 2008 to be in the range of $430 million to $440 million. Suntech expects minimal revenue contribution from KSL-Kuttler in the second quarter of 2008. Non-GAAP consolidated gross margin in the second quarterof 2008 is expected to be relatively consistent with the first quarter of2008.
For the full year 2008, Suntech reiterates its expectation for total PV module shipments of 530MW and revenues in the range of $1.9 billion to $2.1 billion. Within 2008, Suntech believes that approximately 40% of this will be achieved in the first half of 2008 and 60% in the second half of 2008. Suntech expects that greater quantities of reasonably priced silicon will become increasingly available from mid-2008. Suntech targets to reach 1GW of installed PV cell production capacity by year-end 2008.
Senior Management Hires
Mr. Boxun Zhang has been promoted to Director of Business and Financial Analysis, reporting directly to Chief Financial Officer Ms. Amy Yi Zhang. Mr. Zhang joined in Suntech in February 2006 as Financial Controller. He previously worked for Credit Suisse and was an underwriter for Suntech's IPO in December 2005. Earlier, Mr. Zhang was a Senior Auditor and Senior Consultant with PricewaterhouseCoopers. Mr. Zhang received an MBA degree from Cass Business School in London, UK.
Mr. Andrew Wang joined Suntech to assume Mr. Zhang's former role as Corporate Financial Controller. Mr. Wang brings over 15 years of experiencein accounting and finance primarily with multinational companies operating in China. Key career experiences include increasing levels of managerial responsibility beginning at Deloitte Touche Tohmatsu Shanghai CPA, Avery Dennison Corporation, and most recently at OTIS China (Holding) Ltd. as leader of accounting, internal controls and Sarbanes-Oxley compliance. Mr.Wang holds an MBA from Washington University in St. Louis, Missouri, USA.
First Quarter 2008 Highlights(1)
-- First quarter 2008 total net revenues grew 76.1% year-over-year to $434.5 million.
-- Consolidated gross margin increased to 22.2% for the first quarter 2008 compared to 19.0% for the first quarter of 2007. Non-GAAP(2) gross margin reached 22.5 % for the first quarter 2008, compared with 19.9% for the first quarter 2007.
-- Net income for the first quarter 2008 was $55.8 million or $0.33 per diluted American Depository Share (ADS). On a non-GAAP basis, Suntech's net income for the first quarter 2008 was $60.6 million or $0.35 per diluted ADS. Each ADS represents one ordinary share.
-- Suntech's PV cell production capacity was 540MW at the end of the first quarter of 2008. The Company is on track to reach 1GW PV cell production capacity by the end of 2008.
"We executed extremely well during the first quarter, despite the impact of the snowstorm, to deliver stronger than expected growth in net revenues and solid financial results," said Dr. Zhengrong Shi, Suntech's Chairman and CEO. "A vigorous demand environment in the major solar markets in Germany and Spain as well as in the emerging markets including South Korea and Italy drove strong pricing during the quarter. We expect demand to remain robust through 2008 and are virtually sold out for the full year."
Commenting on Suntech's silicon outlook, Dr. Shi said, "During the first quarter we leveraged the funds raised through our convertible senior notes offering to enhance our long term cost competitiveness with new and expanded polysilicon supply agreements and strategic investment in key suppliers. Our ability to secure reasonably priced silicon reflects our competitive strengths with respect to our leading market position, financial strength, and close relationships with upstream suppliers. We are confident that this improved silicon outlook will help us to achieve ourgoal of providing grid parity solar solutions."
"During the first quarter, we continued to hire impressive talent incurrent and developing international markets including Germany, Spain, France, Greece, Italy, South Korea and Australia. This will lay the infrastructure for the continued rapid growth in our business, and provide the flexibility to respond to changing market dynamics. We are confident that our strategy of developing a broad portfolio of superior quality solar products, world-class manufacturing facilities and techniques, deep sales channels and improving cost efficiencies will differentiate Suntech as a clear leader in the solar industry," concluded Dr. Shi.
Recent Business Highlights
Products and Projects
-- Suntech established a 4MW module supply agreement with Enerray, an Italian designer, developer and manager of photovoltaic systems. The Suntech modules will be installed by Enerray in PV systems for the roof tops of large Italian industrial complexes.
-- Subsequent to the close of the quarter, Suntech signed an agreement with Hanau Energies SAS to supply a 4.5MW building integrated PV system (BIPV) to a farm located in Alsace, France. The project will be one of the largest BIPV installations ever built and will employ Suntech's 'Just Roof' modules to form complete weather proof roofs on five agricultural warehouses.
Global Offices and Acquisitions
-- Suntech Australia was opened in April 2008 to focus on sales and business development in Australia, New Zealand and the Pacific Islands.
-- Suntech recently closed an acquisition of KSL-Kuttler Automation Systems GmbH ("KSL-Kuttler"), a leading manufacturer of automation systems for the Printed Circuit Board (PCB) industry. KSL-Kuttler will design, develop and supply primarily automation equipment employed in Suntech's manufacturing process. KSL-Kuttler will continue to manufacture and supply equipment for the PCB industry.
Silicon Procurement and Investment
-- Suntech announced the second phase of a strategic cooperative agreement with Nitol Solar, an independent polysilicon producer. Suntech will acquire a minority interest in Nitol Solar for a total consideration of up to $100 million. In addition, in an amendment to the original 7-year silicon supply contract, Nitol Solar has agreed to substantially increase the aggregate committed volumes to be supplied between 2009 and 2015.
-- An eight-year polysilicon supply agreement was established with DC Chemical Co. Ltd. to supply Suntech polysilicon with a total value of approximately $631 million from 2009 to 2016.
-- Suntech strengthened its relationship with Hoku Scientific, Inc. through an investment of approximately $20 million in a private placement offering, which included an amendment to the existing supply agreement that accelerated the delivery time and increased volume to be delivered under the agreement.
Financing
-- On March 17, 2008, Suntech completed an offering of $575 million of 3.00% Convertible Senior Notes due 2013. In the first quarter of 2008, Suntech leveraged the funds to improve long-term silicon prospects with new and expanded polysilicon supply agreements with Nitol Solar, DC Chemical and Hoku Materials and strategic investments in Nitol Solar and Hoku. Suntech expects to continue utilizing these funds to secure long term supply of favorably priced silicon to support future development.
Industry Recognition
-- Suntech was named Frost & Sullivan's 2008 Solar Energy Development Company of the Year in recognition of unparalleled excellence in design and delivery of high-quality PV cells and modules and customization of energy solutions catering to a global client base.
First Quarter 2008 Results
Non-GAAP Non-GAAP
Net Revenues Gross Profit Gross
(in $ % of Net (in $ Margin
millions) Revenues millions) (%)
Standard PV Modules $432.9 99.6% $98.2 22.7%
- Wafer to Modules 414.7 95.4% 96.6 23.3%
- Cell to Modules 18.2 4.2% 1.6 8.5%
Others 1.6 0.4% (0.3) (16.6%)
Total Net Revenues $434.5 100% $97.9 22.5%
Total net revenues for the first quarter of 2008 were $434.5 million, representing an increase of 76.1% from the corresponding period in 2007.
Non-GAAP gross profit for the first quarter of 2008 was $97.9 million, an increase of 98.9% year-over-year. Non-GAAP gross margin for the Company's core wafer-to-module business was 23.3% and non-GAAP consolidated gross margin was 22.5%. The gross margin increased from the fourth quarter of 2007 primarily due to an increase in the average selling price driven by strong demand for Suntech's solar products, which was partly offset by increased silicon wafer costs.
Non-GAAP operating expenses in the first quarter of 2008 totaled $31.0 million or 7.1% of total net revenues. Operating expenses increased from the fourth quarter of 2007 primarily due to an increase in expenses associated with the expansion of Suntech's global sales network, marketing associated expenses, bank service charges due to increased financing costs and bank commission charges in China, and bad debt provision on certain long-aging receivables.
Non-GAAP income from operations for the first quarter of 2008 was $66.9 million, an increase of 86.5% year-over-year. Non-GAAP operating margin was 15.4%.
Net interest expense was $4.0 million in the first quarter of 2008 compared to net interest income of $1.1 million in the fourth quarter of 2007. The sequential increase in net interest expenses was primarily due to an increase in the short-term borrowing balance to facilitate daily operations, a decrease in interest income resulting from the reduction of the interest rate by the U.S. Federal Reserve Bank, and an increase in average borrowing costs due to the worsening global credit market.
Foreign currency exchange gain was $2.9 million in the first quarter of 2008 compared to a foreign currency exchange loss of $3.7 million in the fourth quarter of 2007. The foreign currency exchange gain in the first quarter of 2008 was primarily due to the appreciation of the Euro against the USD coupled with an increase in Euro-denominated sales.
Non-GAAP net income for the first quarter of 2008 was $60.6 million, an increase of 85.2% year-over-year, or $0.35 per non-GAAP diluted ADS.
On a GAAP basis, for the first quarter of 2008 gross profit was $96.4 million, an increase of 105.2% year-over-year. Gross margin for the core wafer to module business was 23.0% and consolidated gross margin was 22.2% for the first quarter of 2008.
On a GAAP basis, operating expenses for the first quarter of 2008 were $34.6 million or 8.0% of total net revenues. Income from operations was $61.8 million for the first quarter of 2008, an increase of 116.7% year-over-year. Operating margin was 14.2%. Net income was $55.8 million, an increase of 113.8% year-over-year, or $0.33 per diluted ADS.
In the first quarter of 2008, capital expenditures, which were primarily related to production capacity expansion and the construction of Suntech's new production facilities, totaled $63.2 million and depreciation and amortization expenses totaled $7.7 million.
As of March 31, 2008, Suntech had cash and cash equivalents of $1.0 billion, compared to $521.0 million as of December 31, 2007. The increase was primarily due to the completion of a $575 million convertible notes offering in March 2008. Inventory totaled $178.3 million as of March 31,2008 compared to $176.2 million as of December 31, 2007.
Business Outlook
Based on current operating conditions, Suntech expects revenues for the second quarter of 2008 to be in the range of $430 million to $440 million. Suntech expects minimal revenue contribution from KSL-Kuttler in the second quarter of 2008. Non-GAAP consolidated gross margin in the second quarterof 2008 is expected to be relatively consistent with the first quarter of2008.
For the full year 2008, Suntech reiterates its expectation for total PV module shipments of 530MW and revenues in the range of $1.9 billion to $2.1 billion. Within 2008, Suntech believes that approximately 40% of this will be achieved in the first half of 2008 and 60% in the second half of 2008. Suntech expects that greater quantities of reasonably priced silicon will become increasingly available from mid-2008. Suntech targets to reach 1GW of installed PV cell production capacity by year-end 2008.
Senior Management Hires
Mr. Boxun Zhang has been promoted to Director of Business and Financial Analysis, reporting directly to Chief Financial Officer Ms. Amy Yi Zhang. Mr. Zhang joined in Suntech in February 2006 as Financial Controller. He previously worked for Credit Suisse and was an underwriter for Suntech's IPO in December 2005. Earlier, Mr. Zhang was a Senior Auditor and Senior Consultant with PricewaterhouseCoopers. Mr. Zhang received an MBA degree from Cass Business School in London, UK.
Mr. Andrew Wang joined Suntech to assume Mr. Zhang's former role as Corporate Financial Controller. Mr. Wang brings over 15 years of experiencein accounting and finance primarily with multinational companies operating in China. Key career experiences include increasing levels of managerial responsibility beginning at Deloitte Touche Tohmatsu Shanghai CPA, Avery Dennison Corporation, and most recently at OTIS China (Holding) Ltd. as leader of accounting, internal controls and Sarbanes-Oxley compliance. Mr.Wang holds an MBA from Washington University in St. Louis, Missouri, USA.
Thursday, May 22, 2008
Earthquake victim committed suicide to give the survival opportunity to others
My dear friends,
http://solar-in-china.blogspot.com/ is my blog for China's solar energy industry, and I did not plan to talk about other issues here. But since the 8.0 magnitude earthquake hit Wenchuan China, all Chinese people have been following the rescue operation progress, and hundreds of thousand people went to join the rescue and disaster relief operation, the whole nation is moved by lots of heart-broken stories, and I would like to share such stories here with you.
Chinese governemnt agencies, companies, and individuals are donating to help the victims, but over ten million people are affected by the earthquake, the death toll is 41,353, and 274,683 people are injured, and 32, 666 people are missing by May 21st. Especially many children lost their parents, and many senior citizens lost their sons and daughters. These victims need our help, and I hope you may forward the earthquake information to your friends, and I hope you may pray for them, and help them in anyway if possible.
Now I would like to tell you a story about the earthquake.
The earthquake happened on May 12th, the rescuers came to Yingxiu, Wenchuan on May 15th, and found a old lady under the collapsed building. Yunfen Yang is 52 years old, and she is a retired doctor. 30 fireman and soldiers tried to save her with their bare hands, they did not have any tools, but it is hard for them to remove the collapsed things. At 9:40 am Yunfen Yang told the rescuers that "Please give up me, it is dangerous here, and go to rescue others." The rescue doctor told her that they would never give her up. Then Yunfen Yang took the broken glass with her right hand, and cut her left wrist first, then right wrist. The doctor tried to stop her, but Yunfen Yang is out of her touch. When the doctor shouted "No, and please do not" and cried, Yunfen Yang swallowed her gold ring also to end her life and to give the survival opportunity to others.
http://solar-in-china.blogspot.com/ is my blog for China's solar energy industry, and I did not plan to talk about other issues here. But since the 8.0 magnitude earthquake hit Wenchuan China, all Chinese people have been following the rescue operation progress, and hundreds of thousand people went to join the rescue and disaster relief operation, the whole nation is moved by lots of heart-broken stories, and I would like to share such stories here with you.
Chinese governemnt agencies, companies, and individuals are donating to help the victims, but over ten million people are affected by the earthquake, the death toll is 41,353, and 274,683 people are injured, and 32, 666 people are missing by May 21st. Especially many children lost their parents, and many senior citizens lost their sons and daughters. These victims need our help, and I hope you may forward the earthquake information to your friends, and I hope you may pray for them, and help them in anyway if possible.
Now I would like to tell you a story about the earthquake.
The earthquake happened on May 12th, the rescuers came to Yingxiu, Wenchuan on May 15th, and found a old lady under the collapsed building. Yunfen Yang is 52 years old, and she is a retired doctor. 30 fireman and soldiers tried to save her with their bare hands, they did not have any tools, but it is hard for them to remove the collapsed things. At 9:40 am Yunfen Yang told the rescuers that "Please give up me, it is dangerous here, and go to rescue others." The rescue doctor told her that they would never give her up. Then Yunfen Yang took the broken glass with her right hand, and cut her left wrist first, then right wrist. The doctor tried to stop her, but Yunfen Yang is out of her touch. When the doctor shouted "No, and please do not" and cried, Yunfen Yang swallowed her gold ring also to end her life and to give the survival opportunity to others.
Polysilicon projects in Sichuan unaffected by earthquake
Shanghai. May 14. INTERFAX-CHINA - Polysilicon projects in Sichuan Province were unaffected by the 8.0 magnitude earthquake that rocked the province on May 12, according to local companies. Several polysilicon projects are either under operation or construction in Sichuan. Polysilicon is the raw material for photovoltaic (PV) products.
An official with Emei Semiconductor Material Factory, located in Sichuan's central city of Emeishan, told Interfax today that its polysilicon production was not affected by the quake. The official, who wished to remain anonymous, said the earthquake's only impact on the company has been transportation delays.
Emeishan City is about 196 kilometers away from Wenchuan County, which was the site of the epicenter of the earthquake.
Emei Semiconductor Material Factory has a polysilicon production line with an annual production capacity of 200 tons, and is China's first 200-ton polysilicon production line.
The official said that the company's other project under construction, located in the city of Leshan and which is close to Emeishan City, was not affected by the earthquake either.
The Leshan project has received investment from Dongfang Electric Corp.(DEC), and has an annual polysilicon production capacity of 1,500 tons. The project is expected to be completed by the end of this year.
An official with Sichuan-based Tongwei Group told Interfax that its1,000-ton polysilicon project, which is being constructed in Leshan City, was also unaffected. This project is expected to be completed in June.
Shanghai-listed Tianwei Baobian Electric Co. Ltd. (TWBB) announced today that Sichuan Xinguang Silicon Science and Technology Co. Ltd., a company in which it the second largest shareholder, was also unaffected by the earthquake.
Sichuan Xinguang Silicon Science and Technology suspended operations for the sake of safety in the wake of the quake, but will resume production as soon as possible.
In addition, TWBB said that the construction of two other polysilicon projects in Leshan City and Xinjin County, each with an annual production capacity of 3,000 tons, were not affected by the quake.
An official with Emei Semiconductor Material Factory, located in Sichuan's central city of Emeishan, told Interfax today that its polysilicon production was not affected by the quake. The official, who wished to remain anonymous, said the earthquake's only impact on the company has been transportation delays.
Emeishan City is about 196 kilometers away from Wenchuan County, which was the site of the epicenter of the earthquake.
Emei Semiconductor Material Factory has a polysilicon production line with an annual production capacity of 200 tons, and is China's first 200-ton polysilicon production line.
The official said that the company's other project under construction, located in the city of Leshan and which is close to Emeishan City, was not affected by the earthquake either.
The Leshan project has received investment from Dongfang Electric Corp.(DEC), and has an annual polysilicon production capacity of 1,500 tons. The project is expected to be completed by the end of this year.
An official with Sichuan-based Tongwei Group told Interfax that its1,000-ton polysilicon project, which is being constructed in Leshan City, was also unaffected. This project is expected to be completed in June.
Shanghai-listed Tianwei Baobian Electric Co. Ltd. (TWBB) announced today that Sichuan Xinguang Silicon Science and Technology Co. Ltd., a company in which it the second largest shareholder, was also unaffected by the earthquake.
Sichuan Xinguang Silicon Science and Technology suspended operations for the sake of safety in the wake of the quake, but will resume production as soon as possible.
In addition, TWBB said that the construction of two other polysilicon projects in Leshan City and Xinjin County, each with an annual production capacity of 3,000 tons, were not affected by the quake.
Wednesday, May 21, 2008
China Sunergy Announces Financial Results for the First Quarter 2008
First Quarter Revenues of US$77.0 Million, up 7.8% from the Previous Quarter; Shipments Amounting to 24.0MW; Net Income US$0.5 million; Net Operating Cash Inflow of US$60.7 million
NANJING, China, May 20 /Xinhua-PRNewswire/ -- China Sunergy Co., Ltd.(Nasdaq: CSUN), ("China Sunergy" or the "Company") a specialized solar cell manufacturer based in Nanjing, China, announced today its financial results for the first quarter of 2008.
First Quarter Financial Results
-- Revenues were US$77.0 million, representing 32.3% and 7.8% increase compared to the first quarter and the fourth quarter of 2007, respectively; revenues generated from solar cell sales were US$75.0 million, representing 49.5% and 10.8% increase compared to the first quarter and the fourth quarter of 2007, respectively.
-- Gross profit was US$7.1 million compared to US$9.6 million and US$4.6 million during the first quarter and the fourth quarter of 2007, respectively. Gross margin was 9.2%, compared to 16.6% and 6.4% during the first quarter and the fourth quarter of 2007, respectively.
-- Quarterly net income was US$0.5 million, compared to net income of US$5.4 million and a net loss of US$2.3 million in the first quarter and fourth quarter of 2007, respectively.
-- Basic and diluted net earnings attributable to holders of ordinary shares were US$0.01 per ADS compared to a net income of US$0.17 and a net loss of US$0.06 per ADS in the first quarter and the fourth quarter 2007, respectively.
Commenting on the quarter, Allen Wang, CEO of China Sunergy remarked:"Despite the three-week interruption to our operations caused by the snowstorms in January, and the higher wafer costs during the quarter, wemanaged to turn around and get back to profitability in the first quarter.Our improved financial performance was largely a result of the higher ASP achieved by successfully ramping our high efficiency cell production levels, and the steady improvements made to our internal operations. In particular, I am delighted to report that the working capital management and control measures we began putting in place at the end of last year have improved our cashflow and liquidity position."
First Quarter and Recent Operational Highlights
-- Quarterly production of 22.6 megawatts ("MW") of solar cells represented a 13.0% increase on a year-over-year basis and a 1.3% increase sequentially. The relatively small increase over the fourth quarter of 2007 was due to the impact of the heavy snow storm in January 2008.
-- Shipments of our solar power products amounted to approximately 24.0 MW, representing a 31.1% increase on a year-over-year basis and a 3.4% increase sequentially.
-- Shipments of high efficiency cells during the first quarter of 2008 amounted to 9.1 MW, or 39% of total core cell shipments, up from 0.8 MW, or 3.6% of total core cell shipments, during the fourth quarter of 2007.
-- Average selective emitter cell conversion efficiency slightly decreased to 17.2% from 17.3% in the fourth quarter 2007.
-- Conversion of P-type lines to high efficiency ("HP") lines continued to progress smoothly. We have already completed the conversion of two mono-crystalline P-type lines and cells produced on these HP lines achieved an average conversion efficiency rate of over 16.8% during the first quarter of 2008.
-- Stricter working capital management and controls yielded a net operating cash inflow of US$60.7 million; the controls included more restrictive policies on pre-payments to suppliers, and tighter payment terms for receivables and payables, as well as better inventory management.
"I am increasingly optimistic about our long-term future, particularlygiven the success we are achieving with our high efficiency cells and thepositive impact they are having on our margins this year." Continued Dr.Wang, "I believe we are now in a better position to manage ourprofitability along with the various development programs we have for highefficiency cells."
Technological Developments
During the quarter the Company continued to make progress with theproduction of its high-efficiency cell technology.
Average selective emitter cell conversion efficiency decreased to 17.2%from 17.3% in the fourth quarter of 2007 due to the interruption toproduction caused by the snow storm in January 2008. A maximum conversionefficiency of 18.5% was recorded during the quarter.
The Company is continuing to upgrade its current P-type cell productionfacilities by converting existing mono-crystalline P-type lines to HP linesand will complete the conversion of its remaining two mono-crystallineP-type lines to HP-type lines by the end of the second quarter.
The Board has approved the establishment of a R&D center in Shanghaiwith an initial investment of US$8.0 million. The R&D center will focus onthe development of new high efficiency cell types, particularly N-typecells. The construction of the R&D center is scheduled to be completedduring the first half of 2009.
First Quarter 2008 Financial and Business Review
Revenues, shipment and production
During the first quarter of 2008, revenues increased 32.3% on ayear-over- year basis, and 7.8% sequentially to US$77.0 million.
Sales from solar cells, modules and processed cells under OEMarrangements and other sales accounted for 97.4%, 2.1%, 0.3% and 0.2%, oftotal revenues, respectively. Shipments, including 0.4 MW for module salesand 0.4 MW of solar cells processed under OEM arrangements, amounted toapproximately 24.0 MW, compared to 18.3 MW during the first quarter of 2007and 23.2 MW during the fourth quarter of 2007.
Revenues and Shipment Comparison between Q1 2008 and Q4 2007
Q1 2008 Q4 2007
Value Value
Volume* (US$mm) Volume* (US$mm)
Solar cell sales 23.2 75.0 22.4 67.7
Polysilicon sales -- -- 0.8 0.7
Module sales 0.4 1.6 0.8 3.1 OEM 0.4 0.2 -- --
Other sales 0.2 -- --
* All volumes are expressed in MW except for polysilicon sales which are expressed in metric tons.
During the first quarter of 2008, the Company increased its quarter-on-quarter sales of solar cell products by 10.8% as compared to the previousquarter. The percentage of solar cell sales in overseas markets as to thetotal solar cell sales was 37.4% in the first quarter of 2008 compared to24.1% and 40.6% in the first quarter and the fourth quarter of 2007,respectively.
Of the 23.2 MW of core cells shipped during the first quarter, 9.1 MWwere in the form of high efficiency cells (which we define as cells with aconversion efficiency rate of 17% and above) and 14.1 MW in the form ofnormal P-type cells. Of the 9.1 MW of high efficiency cells shipped, 4.0 MWwere selective emitter cells and 5.1 MW were HP cells (which we define asP-type cells with conversion efficiency rate of 17% and over).
Gross profit, gross margins and average selling price ("ASP")
Gross profit for the quarter was US$7.1 million, which led to a blendedgross margin of 9.2%, up from 6.4% in the previous quarter, as a result of thegross margin contribution from higher ASP resulting from the shipment of agreater volume of high efficiency cell products. The sequential increase ingross margin on solar cell sales from 6.3% to 8.8% was mainly attributable tohigher ASP as a result of increased shipment of high efficiency cells andstronger product demand from customers. However, our gross margin decreasedby 7.4% compared to the first quarter of 2007, mainly due to higher wafercosts.
Margin Breakdown
Gross margin
Q1 2008 Q4 2007
Solar cell sales 8.8 % 6.3 %
Polysilicon Sales -- 12.2 %
Module sales 11.7 % 7.8 %
OEM 65.1 % --
Other sales 90.3 % --
Blended 9.2 % 6.4 %
Blended ASP for the first quarter of 2008 rose from US$3.02 per watt inthe previous quarter to US$3.23 per watt due to a greater portion of highefficiency cells, strong product demand and the strengthening of theRenminbi against U.S. dollar. The blended ASP for the first quarter of 2007was US$2.95.
Wafer costs
Wafer costs continued to account for a large portion of our overallmanufacturing costs. In the first quarter of 2008, wafer costs rose toUS$2.64 per watt compared to US$2.23 and US$2.54 per watt in the firstquarter, and the fourth quarter of 2007, mainly due to the strengthening ofthe Renminbi against the U.S. dollar and an increase in the average costper wafer in Renminbi terms. Wafer costs per watt as a percentage of totalproduction costs per watt increased from 87.8% in the first quarter of 2007and 90.1% in the fourth quarter 2007 to 90.3% in the first quarter 2008.Other production costs, which mainly consisted of other raw materials,labor, depreciation and utilities, were US$0.28 per watt and largely thesame as those in the first quarter and the fourth quarter of 2007.
SG&A, operating profit and net income
Our SG&A expenses in the first quarter of 2008 were US$4.4 million,compared to US$2.8 million period-over-period and US$5.3 millionsequentially. The share based compensation charges were US$0.7 million,compared to US$0.1 million in the first quarter and the fourth quarter of2007.
Due primarily to higher gross margin, the Company made an operatingprofit of US$2.2 million. This compares to an operating profit of US$6.5million and an operating loss of US$1.2 million for the first and fourthquarters of 2007, respectively.
With a higher gross margin, the Company improved its net income toUS$0.5 million in the first quarter of 2008 compared to a net loss ofUS$2.3 million in the previous quarter. However, our net income decreasedby US$4.9 million period-over-period, mainly due to higher raw materialcosts and operating expenses.
Balance sheet and cash flow
As of March 31, 2008, the Company had cash and cash equivalents of US$110.4 million. Net operating cash in flow for the first quarter was US$60.7 million, mainly attributable to stricter control over prepayments to raw material suppliers, better management of both receivables and payables, and stricter enforcement of payment terms as well as better inventory management. In the first quarter of 2008, depreciation was US$1.3 million and capital expenditures were US$12.7 million. The capital expenditures were related to prepayments made for equipment relating to the expansion of our selective emitter cell lines.
Commenting on the financial results, Kenneth Luk, CFO of China Sunergy, said: "We continue to look for cost effective ways to strengthen our balance sheet and improve liquidity. Going forward, we will continue to do whatever we can to strengthen our cashflow, so that we can be in a better position to expand our production capacity, fund R&D, secure long-term supply contracts and pay down bank loans."
Outlook
Given the success of our first quarter production of HP cells, the company will convert the two remaining mono-crystalline P-type lines to HP lines. With the exception of one multi-crystalline P-type line, this conversion is expected to be completed by the end of the first half of2008. In addition, all four of our new selective emitter lines are expected to be in mass production during the fourth quarter of 2008. This will bring our total capacity to 320 MW by the end of the year based on six-inch wafers.
The Company maintains its full year 2008 production target at 125-145MW, with approximately 65 to 85 MW expected to come from high efficiency cell products. These high efficiency cell products are projected to comprise of approximately 25-35 MW of selective emitter cells and 40-50 MW of HP cells.
The Company anticipates its gross margin for the second quarter to be between 9% and 10%, and production volume in the range of 30-32 MW.
Recent Management Updates
During the quarter, China Sunergy announced the appointment of three new independent directors. Mr. Steven Morgan, 57, Mr. Wang Wenze, 66, and Ms. Jian Li, 55, joined the Company's board of directors on May 13th, 2008. Each brings with them approximately 25 years of experience and unique strengths in advisory roles.
Additionally, as of June 30th, 2008, Mr. Alan Smith, an independent director on the board of directors, will be stepping down from his role.
NANJING, China, May 20 /Xinhua-PRNewswire/ -- China Sunergy Co., Ltd.(Nasdaq: CSUN), ("China Sunergy" or the "Company") a specialized solar cell manufacturer based in Nanjing, China, announced today its financial results for the first quarter of 2008.
First Quarter Financial Results
-- Revenues were US$77.0 million, representing 32.3% and 7.8% increase compared to the first quarter and the fourth quarter of 2007, respectively; revenues generated from solar cell sales were US$75.0 million, representing 49.5% and 10.8% increase compared to the first quarter and the fourth quarter of 2007, respectively.
-- Gross profit was US$7.1 million compared to US$9.6 million and US$4.6 million during the first quarter and the fourth quarter of 2007, respectively. Gross margin was 9.2%, compared to 16.6% and 6.4% during the first quarter and the fourth quarter of 2007, respectively.
-- Quarterly net income was US$0.5 million, compared to net income of US$5.4 million and a net loss of US$2.3 million in the first quarter and fourth quarter of 2007, respectively.
-- Basic and diluted net earnings attributable to holders of ordinary shares were US$0.01 per ADS compared to a net income of US$0.17 and a net loss of US$0.06 per ADS in the first quarter and the fourth quarter 2007, respectively.
Commenting on the quarter, Allen Wang, CEO of China Sunergy remarked:"Despite the three-week interruption to our operations caused by the snowstorms in January, and the higher wafer costs during the quarter, wemanaged to turn around and get back to profitability in the first quarter.Our improved financial performance was largely a result of the higher ASP achieved by successfully ramping our high efficiency cell production levels, and the steady improvements made to our internal operations. In particular, I am delighted to report that the working capital management and control measures we began putting in place at the end of last year have improved our cashflow and liquidity position."
First Quarter and Recent Operational Highlights
-- Quarterly production of 22.6 megawatts ("MW") of solar cells represented a 13.0% increase on a year-over-year basis and a 1.3% increase sequentially. The relatively small increase over the fourth quarter of 2007 was due to the impact of the heavy snow storm in January 2008.
-- Shipments of our solar power products amounted to approximately 24.0 MW, representing a 31.1% increase on a year-over-year basis and a 3.4% increase sequentially.
-- Shipments of high efficiency cells during the first quarter of 2008 amounted to 9.1 MW, or 39% of total core cell shipments, up from 0.8 MW, or 3.6% of total core cell shipments, during the fourth quarter of 2007.
-- Average selective emitter cell conversion efficiency slightly decreased to 17.2% from 17.3% in the fourth quarter 2007.
-- Conversion of P-type lines to high efficiency ("HP") lines continued to progress smoothly. We have already completed the conversion of two mono-crystalline P-type lines and cells produced on these HP lines achieved an average conversion efficiency rate of over 16.8% during the first quarter of 2008.
-- Stricter working capital management and controls yielded a net operating cash inflow of US$60.7 million; the controls included more restrictive policies on pre-payments to suppliers, and tighter payment terms for receivables and payables, as well as better inventory management.
"I am increasingly optimistic about our long-term future, particularlygiven the success we are achieving with our high efficiency cells and thepositive impact they are having on our margins this year." Continued Dr.Wang, "I believe we are now in a better position to manage ourprofitability along with the various development programs we have for highefficiency cells."
Technological Developments
During the quarter the Company continued to make progress with theproduction of its high-efficiency cell technology.
Average selective emitter cell conversion efficiency decreased to 17.2%from 17.3% in the fourth quarter of 2007 due to the interruption toproduction caused by the snow storm in January 2008. A maximum conversionefficiency of 18.5% was recorded during the quarter.
The Company is continuing to upgrade its current P-type cell productionfacilities by converting existing mono-crystalline P-type lines to HP linesand will complete the conversion of its remaining two mono-crystallineP-type lines to HP-type lines by the end of the second quarter.
The Board has approved the establishment of a R&D center in Shanghaiwith an initial investment of US$8.0 million. The R&D center will focus onthe development of new high efficiency cell types, particularly N-typecells. The construction of the R&D center is scheduled to be completedduring the first half of 2009.
First Quarter 2008 Financial and Business Review
Revenues, shipment and production
During the first quarter of 2008, revenues increased 32.3% on ayear-over- year basis, and 7.8% sequentially to US$77.0 million.
Sales from solar cells, modules and processed cells under OEMarrangements and other sales accounted for 97.4%, 2.1%, 0.3% and 0.2%, oftotal revenues, respectively. Shipments, including 0.4 MW for module salesand 0.4 MW of solar cells processed under OEM arrangements, amounted toapproximately 24.0 MW, compared to 18.3 MW during the first quarter of 2007and 23.2 MW during the fourth quarter of 2007.
Revenues and Shipment Comparison between Q1 2008 and Q4 2007
Q1 2008 Q4 2007
Value Value
Volume* (US$mm) Volume* (US$mm)
Solar cell sales 23.2 75.0 22.4 67.7
Polysilicon sales -- -- 0.8 0.7
Module sales 0.4 1.6 0.8 3.1 OEM 0.4 0.2 -- --
Other sales 0.2 -- --
* All volumes are expressed in MW except for polysilicon sales which are expressed in metric tons.
During the first quarter of 2008, the Company increased its quarter-on-quarter sales of solar cell products by 10.8% as compared to the previousquarter. The percentage of solar cell sales in overseas markets as to thetotal solar cell sales was 37.4% in the first quarter of 2008 compared to24.1% and 40.6% in the first quarter and the fourth quarter of 2007,respectively.
Of the 23.2 MW of core cells shipped during the first quarter, 9.1 MWwere in the form of high efficiency cells (which we define as cells with aconversion efficiency rate of 17% and above) and 14.1 MW in the form ofnormal P-type cells. Of the 9.1 MW of high efficiency cells shipped, 4.0 MWwere selective emitter cells and 5.1 MW were HP cells (which we define asP-type cells with conversion efficiency rate of 17% and over).
Gross profit, gross margins and average selling price ("ASP")
Gross profit for the quarter was US$7.1 million, which led to a blendedgross margin of 9.2%, up from 6.4% in the previous quarter, as a result of thegross margin contribution from higher ASP resulting from the shipment of agreater volume of high efficiency cell products. The sequential increase ingross margin on solar cell sales from 6.3% to 8.8% was mainly attributable tohigher ASP as a result of increased shipment of high efficiency cells andstronger product demand from customers. However, our gross margin decreasedby 7.4% compared to the first quarter of 2007, mainly due to higher wafercosts.
Margin Breakdown
Gross margin
Q1 2008 Q4 2007
Solar cell sales 8.8 % 6.3 %
Polysilicon Sales -- 12.2 %
Module sales 11.7 % 7.8 %
OEM 65.1 % --
Other sales 90.3 % --
Blended 9.2 % 6.4 %
Blended ASP for the first quarter of 2008 rose from US$3.02 per watt inthe previous quarter to US$3.23 per watt due to a greater portion of highefficiency cells, strong product demand and the strengthening of theRenminbi against U.S. dollar. The blended ASP for the first quarter of 2007was US$2.95.
Wafer costs
Wafer costs continued to account for a large portion of our overallmanufacturing costs. In the first quarter of 2008, wafer costs rose toUS$2.64 per watt compared to US$2.23 and US$2.54 per watt in the firstquarter, and the fourth quarter of 2007, mainly due to the strengthening ofthe Renminbi against the U.S. dollar and an increase in the average costper wafer in Renminbi terms. Wafer costs per watt as a percentage of totalproduction costs per watt increased from 87.8% in the first quarter of 2007and 90.1% in the fourth quarter 2007 to 90.3% in the first quarter 2008.Other production costs, which mainly consisted of other raw materials,labor, depreciation and utilities, were US$0.28 per watt and largely thesame as those in the first quarter and the fourth quarter of 2007.
SG&A, operating profit and net income
Our SG&A expenses in the first quarter of 2008 were US$4.4 million,compared to US$2.8 million period-over-period and US$5.3 millionsequentially. The share based compensation charges were US$0.7 million,compared to US$0.1 million in the first quarter and the fourth quarter of2007.
Due primarily to higher gross margin, the Company made an operatingprofit of US$2.2 million. This compares to an operating profit of US$6.5million and an operating loss of US$1.2 million for the first and fourthquarters of 2007, respectively.
With a higher gross margin, the Company improved its net income toUS$0.5 million in the first quarter of 2008 compared to a net loss ofUS$2.3 million in the previous quarter. However, our net income decreasedby US$4.9 million period-over-period, mainly due to higher raw materialcosts and operating expenses.
Balance sheet and cash flow
As of March 31, 2008, the Company had cash and cash equivalents of US$110.4 million. Net operating cash in flow for the first quarter was US$60.7 million, mainly attributable to stricter control over prepayments to raw material suppliers, better management of both receivables and payables, and stricter enforcement of payment terms as well as better inventory management. In the first quarter of 2008, depreciation was US$1.3 million and capital expenditures were US$12.7 million. The capital expenditures were related to prepayments made for equipment relating to the expansion of our selective emitter cell lines.
Commenting on the financial results, Kenneth Luk, CFO of China Sunergy, said: "We continue to look for cost effective ways to strengthen our balance sheet and improve liquidity. Going forward, we will continue to do whatever we can to strengthen our cashflow, so that we can be in a better position to expand our production capacity, fund R&D, secure long-term supply contracts and pay down bank loans."
Outlook
Given the success of our first quarter production of HP cells, the company will convert the two remaining mono-crystalline P-type lines to HP lines. With the exception of one multi-crystalline P-type line, this conversion is expected to be completed by the end of the first half of2008. In addition, all four of our new selective emitter lines are expected to be in mass production during the fourth quarter of 2008. This will bring our total capacity to 320 MW by the end of the year based on six-inch wafers.
The Company maintains its full year 2008 production target at 125-145MW, with approximately 65 to 85 MW expected to come from high efficiency cell products. These high efficiency cell products are projected to comprise of approximately 25-35 MW of selective emitter cells and 40-50 MW of HP cells.
The Company anticipates its gross margin for the second quarter to be between 9% and 10%, and production volume in the range of 30-32 MW.
Recent Management Updates
During the quarter, China Sunergy announced the appointment of three new independent directors. Mr. Steven Morgan, 57, Mr. Wang Wenze, 66, and Ms. Jian Li, 55, joined the Company's board of directors on May 13th, 2008. Each brings with them approximately 25 years of experience and unique strengths in advisory roles.
Additionally, as of June 30th, 2008, Mr. Alan Smith, an independent director on the board of directors, will be stepping down from his role.
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