JA Solar posts profit, raises sales forecast

NEW YORK Tue Aug 10, 2010 12:19pm EDT

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NEW YORK (Reuters) - JA Solar Holdings Co posted a quarterly profit, meeting Wall Street estimates, and raised its full-year sales forecast.

Sales in Europe for renewable energy systems have risen this year, but fears that falling subsidies will lead to an oversupply of solar modules in 2011 have kept shares of many companies under pressure. Still, JA Solar said it expects good sales to continue into next year.

"We are also seeing strong order visibility for 2011, with customers already placing orders and requesting volume commitments," Chief Executive Officer Peng Fang said.

"I think the numbers were quite solid," said Pavel Molchanov, analyst at Raymond James.

"JA Solar has been and still is one the best performing solar stocks" this year, he added.

But shares in JA Solar weakened, leading the declines that sent all the U.S.-listed solar companies' stocks lower.

The Shanghai-based company said net income was $28.9 million, or 18 cents per American Depositary share, versus a loss of $28.5 million, or 18 cents per share, a year earlier.

Excluding a charge for the company's investment in polysilicon maker Shunda Holdings, earnings per share of 23 cents were in line with analysts' average forecast, according to Thomson Reuters I/B/E/S.

Last week Suntech Power Holdings Co said it would take a $106 million to $126 million charge related to its stake in Shunda, contributing to an expected quarterly net loss for Suntech.

JA Solar's Revenue jumped fourfold to $351 million from a year earlier as shipments reached 311 megawatts, higher than its forecast of 275 MW.

JA Solar expects its full year sales to reach 1.35 gigawatts, up from its earlier forecast of 1.0 GW, as its cell production capacity rose to 1.8 GW by the end of 2010, compared with its previous forecast of 1.5 GW.

Module capacity is expected to reach 500 MW, and wafer capacity 300 MW by the end of the year.

Demand for modules is expected to far outstrip manufacturing capacity, the company said.

The company's gross margins widened to 23.1 percent in the second quarter from 22.9 percent in the first quarter. Margins would likely narrow to about 20 percent in the third quarter.

Shares in JA Solar fell 8.5 percent to $6.01 per share, erasing gains made earlier this month.

(Reporting by Matt Daily; Editing by Derek Caney, Dave Zimmerman and Robert MacMillan)

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