JA Solar Announces First Quarter 2016 Results

JA Solar Holdings Co., Ltd. , one of the world’s largest manufacturers of high-performance solar power products,recently announced its unaudited financial results for its first quarter ended March 31, 2016.

First Quarter 2016 Highlights

Total shipments were 1,128.3 megawatts (“MW”), consisting of 1,038.3 MW of modules and cells to external customers, and 90.0 MW of modules to the Company’s own downstream projects. External shipments were up +52.4% y/y and down -22.4% sequentially

Shipments of modules and module tolling were 919.4 MW, an increase of +57.4% y/y and decrease of 29.1% sequentially

Shipments of cells and cell tolling were 118.9 MW, an increase of +22.1% y/y and +188.6% sequentially

Net revenue was RMB 3.5 billion ($538.1 million), an increase of +44.4% y/y and decrease of 24.5% sequentially

Gross margin was 16.6%, an increase of 50 basis points y/y and decrease of 50 basis points sequentially

Operating profit was RMB 223.3 million ($34.6 million), compared to RMB 149.6 million ($23.2 million) in the first quarter of 2015, and RMB 260.1 million ($40.3 million) in the fourth quarter of 2015

Net income was RMB 158.0 million ($24.5 million), compared to RMB 35.0 million ($5.4 million) in the first quarter of 2015, and RMB 184.9 million ($28.7 million) in the fourth quarter of 2015

Earnings per diluted ADS were RMB 2.74 ($0.43), compared to RMB 0.59 ($0.09) in the first quarter of 2015, and RMB 3.39 ($0.53) in the fourth quarter of 2015

Cash and cash equivalents were RMB 2.3 billion ($362.1 million), a decrease of RMB 548.4 million ($85.0 million) during the quarter

Non-GAAP earnings1 per diluted ADS were RMB 2.33 ($0.36), compared to RMB 0.82 ($0.13) in the first quarter of 2015, and RMB 3.14 ($0.49) in the fourth quarter of 2015

Mr. Baofang Jin, Chairman and CEO of JA Solar, commented, “We are satisfied with our performance this quarter. We experienced the normal seasonal decline from the fourth quarter to first quarter, as expected, yet our results showed meaningful year over year growth. Revenue was up nearly 45% and non-GAAP EPS increased more than twofold. We saw the most strength in our domestic market, a natural consequence of the accelerated pace of activity we expected in the first half of the year. Notably, we expect to connect around 250 MW of projects before June 30, supporting our momentum in our downstream project development business. Although regulatory change will slow the China market in the second half, our balanced market footprint gives us plenty of sales opportunities around the world.”

Jin continued, “Our success in key markets is due to our high standards for product quality and our leading technology. Recent evidence of our leadership is our dominant ‘market share’ in the National Energy Administration’s ‘Front Runner’ Program. We are supplying 420 MW of highly advanced modules, including 150 MW of PERC modules, to the program Phase I totaling 950 MW in Datong, Shanxi province. Furthermore, we expect to increase our PERC capacity to 1.4 GW by the end of 2016. JA Solar is proud to play a key role in the transformation and improvement of China’s PV and manufacturing sectors.”

All shipment and financial figures refer to the quarter ended March 31, 2016, unless otherwise specified. All “year over year” or “y/y” comparisons are against the quarter ended March 31, 2015. All “sequential” comparisons are against the quarter ended December 31, 2015.

Total shipments were 1,128.3 MW, exceeding the high end of the previously announced guidance range of 1,000 to 1,100 MW. External shipments of 1,038.3 MW increased 52.4% year over year and decreased 22.4% sequentially.

Net revenue was RMB 3.5 billion ($538.1 million), an increase of 44.4% y/y and decrease of 24.5% sequentially. The sequential decrease in net revenue reflected seasonality in the PV industry.

Gross profit of RMB 575.4 million ($89.2 million) increased 48.8% y/y and decreased 26.6% sequentially. Gross margin was 16.6%, which compares to 16.1% in the year-ago quarter, and 17.1% in the fourth quarter of 2015. The sequential decrease in gross margin was mainly due to increasing wafer price during the quarter.

Total operating expenses of RMB 352.1 million ($54.6 million) were 10.1% of revenue. This compares to operating expenses of 9.9% of revenue in the year-ago quarter, and 11.4% of revenue in the fourth quarter of 2015.

Operating profit was RMB 223.3 million ($34.6 million), compared to RMB 149.6 million ($23.2 million) in the year-ago quarter, and RMB 260.1 million ($40.3 million) in the fourth quarter of 2015. Operating margin was 6.4%, compared with 6.2% in the prior year period and 5.7% in the previous quarter.

Interest expense was RMB 67.3 million ($10.4 million), compared to RMB 66.6 million ($10.3 million) in the year-ago quarter, and RMB 66.0 million ($10.2 million) in the fourth quarter of 2015.

The change in fair value of warrant derivatives was positive RMB 23.4 million ($3.6 million), compared with negative RMB 13.9 million ($2.2 million) in the year-ago quarter, and positive RMB 14.0 million ($2.2 million) in the fourth quarter of 2015. The warrants were issued on August 16, 2013 in conjunction with the Company’s $96 million registered direct offering.

Earnings per diluted ADS were RMB 2.74 ($0.43), compared to earnings per diluted ADS of RMB 0.59 ($0.09) in the year-ago quarter, and earnings per diluted ADS of RMB 3.39 ($0.53) in the fourth quarter of 2015.

Liquidity

As of March 31, 2016, the Company had cash and cash equivalents of RMB 2.3 billion ($362.1 million), and total working capital of RMB 2.3 billion ($361.3 million). Total short-term borrowings were RMB 2.2 billion ($339.5 million). Total long-term borrowings were RMB 3.2 billion ($499.1 million), of which RMB 576.7 million ($89.4 million) were due in one year.

Business Outlook

For the second quarter of 2016, the Company expects total cell and module shipments to be in the range of 1,400 to 1,500 MW, including approximately 100 MW of module shipments to the Company’s downstream projects. For the full year, the Company reiterates its prior shipment guidance of 5.2 to 5.5 GW, including 250 to 300 MW of module shipments to the Company’s downstream projects. Revenues will not be recognized for the modules shipped to the Company’s downstream projects as required by U.S. GAAP.