Shares of ReneSola (NYSE: SOL) fell 2.45 percent Tuesday even though the company posted a second-quarter net profit that nearly quadrupled to $23.3 million.
The Shanghai-based solar-wafer company reported a net income of $23.3 million, or 38 cents per American depositary share, compared with $5.9 million, or 12 cents per American depositary share, in the year-ago quarter. Analysts had expected earnings of 32 cents per share on revenue of $141.3 million, according to Thomson Financial.
Second-quarter revenue also beat expectations, soaring to $173 million from $44.5 million in the same period last year.
In spite of higher silicon costs, the company said it increased its gross margin to 24.7 percent, or 22.4 percent under the Equity Accounting Method, from 22.1 percent in the first quarter and 21.2 percent in the second quarter of 2007. ReneSola attributes the gain to its reduction of the amount of silicon it uses in its wafers to 6.24 grams per watt from 5.3 grams per watt in the first quarter.
The company also said it made "significant advancements" in the ability to use alternative silicon materials, including metallurgical-grade silicon, for future wafer production.
ReneSola raised its guidance for the year, forecasting revenue of between $640 million and $670 million based on an expected production output of between 340 and 350 megawatts. The company previously projected revenue of between $570 million and $590 million and production of 330 to 340 megawatts of wafers.
The company said it expects to have the capacity to produce up to 1 gigawatt by the end of 2009 and to manufacture between 650 and 750 megawatts of wafers next year.
During a conference call Tuesday, ReneSola also announced an agreement to supply approximately 1.5 gigawatts of wafers over more than eight years to Suntech Power, according to Lazard Capital Markets, which added that the company has contracts for the sale of 60 to 60 percent of its expected production in 2009.
Shares fell 44 cents to close at $17.49 per share, then fell another 1 percent, or 17 cents, to reach $17.32 per share in after-hours trading.
ReneSola earnings come a day after Chinese solar-panel manufacturer Trina Solar posted that its quarterly results more than doubled. The earnings missed Wall Street expectations, although the company's revenue exceeded analyst estimates (see Reuters).
In a research note Monday, Lazard analyst Sanjay Shresha said he expects China Sunergy, to post its earnings Friday. Suntech Power Holdings, which is expected to report results Wednesday will also perform decently in earnings this week, said Shresha.
"We expect generally in-line to positive earnings from Asian solar companies reporting [this] week," he wrote. "With relatively tight poly in the near term, strong poly coverage and silicon recycling will be a competitive advantage. Scale, higher efficiency, low processing cost, and quality will be key to long-term success."
Specifically, he forecast that Suntech will have "limited" growth this year because of its silicon supply, but said that the company is "setting a stage for excellent growth into 2009."
Here is some other solar news that broke this week:
- California semiconductor-equipment manufacturer Applied Materials (NSDQ: AMAT) has signed a $220 million deal to sell solar-wafering equipment to Chinese solar-wafer company LDK Solar (NYSE: LDK). Applied Materials, which claims the contract is the largest ever awarded for wafering systems, is scheduled to begin shipping the systems to LDK's facility in Xinyu City, China, in the beginning of next year. The deal will help LDK hit its previously announced goal of reaching 3.2 gigawatts of annual wafer capacity in 2010.
- No. 1 thin-film manufacturer First Solar (NSDQ: FSLR) said Tuesday it is expanding its manufacturing plant in Perrysburg, Ohio with the addition a fourth production line. Upon completion in the second quarter of 2010, the plant will have a production capacity of about 192 megawatts, according to the company. The expansion, which will also include a research and development space, is expected to benefit from state and local incentives. First Solar, which makes cadmium-telluride films, plans to reach 1 gigawatt of capacity by 2009. The company's stock rose $1.82, or 0.71 percent, to close at $258.74 per share Tuesday.
- Concentrix Solar plans to produce approximately 10 megawatts of concentrating-solar panels next year, the company told Greentech Media on Tuesday. The Freiburg, Germany-based company last week said it planned to begin commercial production of its new generation of panels, which had achieved a record efficiency of 23 percent in a trial in Seville, Spain in September. The new factory in Freiburg is expected to reach a capacity of 25 megawatts next month, and the company hopes to ramp up to 50 megawatts of capacity "as soon as possible," said spokeswoman Silke Hajunga.
- One of Taiwan's largest solar-wafer makers, Green Energy Technology, announced Monday that it plans to bring its thin-film panel to the market in December. The move adds the company to the list of those vying to give market dominating thin-film maker First Solar (NSDQ: FSLR) some competition. But unlike First Solar, which uses Cadmium-telluride films, Green Energy Technology is developing film from amorphous silicon. Prometheus Institute, which is a Greentech Media partner, expects amorphous-silicon films – such as those made by the equipment that Applied Materials and Oerlikon manufactures – to make up the largest chunk of the thin-film market by 2012. Applied Materials is supplying Green Energy with the machinery to make thin-film panels. The company has already racked up requests to provide four times the amount of its 2009 thin-film capacity, according to Bloomberg. Green Energy is planning to reach 50 megawatts by the end of next year, the news agency reported.