Bloomberg News, Reuters
Published: November 13, 2008
Published: November 13, 2008
NEW YORK: A Chinese solar cell maker, JA Solar Holdings, said the global economic slump had brought "panic" in the solar market, prompting it to cut its sales forecasts and sending its shares down nearly 30 percent, to a record low.
JA Solar's American depositary receipts dropped 96 cents, or 29 percent, to $2.38 in trading Wednesday on the Nasdaq composite index. They have fallen 90 percent this year to the lowest level since a share sale at $5 in 2007.
Sales of solar cells and panels have risen sharply in recent quarters as companies like JA Solar have increased production. But the global economic slowdown has since caused that growth to slow, leading to a supply glut.
"At this moment the market reaction has been panic," Samuel Yang, chief executive of JA Solar, said in a conference call Wednesday.
The company, which posted a quarterly loss from its ties to the defunct investment bank Lehman Brothers, said it had cut back on the output of solar cells and would seek to renegotiate its polysilicon supply contracts.
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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 to support our customers," Yang said, referring to average selling price. Europe is the largest market for photovoltaic solar equipment because of the subsidy programs set up by the German and Spanish governments.
"We do not believe in the 'disaster scenario' implied by the stock's sharp drop during today's session," Pavel Molchanov, an analyst at Raymond James, 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 that it would seek a 20 percent discount in the price it pays its suppliers for polysilicon in 2009, and that it had already won price concessions for 2008. The company will seek to push its contracted costs for silicon below the spot market price of $200 to $220 per kilogram, or $90 to $100 per pound.
The company cut its 2008 revenue forecast to between $849.5 million and $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 will 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 in the third quarter. In the same quarter a year ago it earned $24.4 million.
It 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.
JA Solar's American depositary receipts dropped 96 cents, or 29 percent, to $2.38 in trading Wednesday on the Nasdaq composite index. They have fallen 90 percent this year to the lowest level since a share sale at $5 in 2007.
Sales of solar cells and panels have risen sharply in recent quarters as companies like JA Solar have increased production. But the global economic slowdown has since caused that growth to slow, leading to a supply glut.
"At this moment the market reaction has been panic," Samuel Yang, chief executive of JA Solar, said in a conference call Wednesday.
The company, which posted a quarterly loss from its ties to the defunct investment bank Lehman Brothers, said it had cut back on the output of solar cells and would seek to renegotiate its polysilicon supply contracts.
Today in Business with Reuters
French minister's trans-Atlantic balancing act
Help for U.S. automakers looks unlikely
As factories close, Chinese workers suffer
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 to support our customers," Yang said, referring to average selling price. Europe is the largest market for photovoltaic solar equipment because of the subsidy programs set up by the German and Spanish governments.
"We do not believe in the 'disaster scenario' implied by the stock's sharp drop during today's session," Pavel Molchanov, an analyst at Raymond James, 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 that it would seek a 20 percent discount in the price it pays its suppliers for polysilicon in 2009, and that it had already won price concessions for 2008. The company will seek to push its contracted costs for silicon below the spot market price of $200 to $220 per kilogram, or $90 to $100 per pound.
The company cut its 2008 revenue forecast to between $849.5 million and $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 will 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 in the third quarter. In the same quarter a year ago it earned $24.4 million.
It 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.
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