Chinese solar companies look homeward to boost shipments
By Swetha Gopinath and Vishal Krishnan
(Reuters) - Money-losing Chinese solar panel makers Yingli Green Energy Holding Co and JA Solar Holdings Co Ltd are increasing shipments at home to make up for weak sales in western markets, further risking profitability for growth.
Panel prices are the lowest in China, but companies there are cutting prices to gain share in a market that is expected to be one of the largest next year due to government incentives.
"The pricing in China is some of the most cost competitive right now," said Avian Securities analyst Mark Bachman. "So it doesn't help gross margins to ship products into China."
Margins have disappeared for most Chinese solar companies over the past four years as panel prices have plunged 75 percent due to weak demand in Europe and a rapid capacity expansion.
Yingli expects revenue from China to grow to 40 percent from 28 percent in the third quarter, during which sales were $355.9 million.
The company expects gross margins of between break even and 2 percent in the fourth quarter, compared with negative 22.7 percent in the third. The company said it expects fourth-quarter shipments to rise in a low teen percentage from the third.
JA Solar's gross margin was negative 5.9 percent in the third quarter, during which shipments to China doubled from the preceding quarter.
"JA Solar's results echo announcements from its commodity module manufacturer peers this quarter in that revenue upside simply isn't meaningful when gross margin disappears," said Raymond James analyst Alex Morris. Continued...