WRAPUP 2-JA Solar, Trina results soar; JA margins disappoint

Tue Feb 22, 2011 1:15pm EST

* JA Solar, Trina Solar earnings, revenue rise sharply

* JA Solar margins disappoint, stock down 7.2 percent

* JA, Trina forecast dramatic rise in shipments in 2011

By Nichola Groom

LOS ANGELES, Feb 22 (Reuters) - Chinese solar equipment makers JA Solar Holdings Co Ltd (JASO.O) and Trina Solar Ltd (TSL.N) reported sharply higher fourth-quarter earnings and revenue on Tuesday, but increased raw material costs pressured JA Solar's gross margins and sent its shares down more than 7 percent.

The companies also said shipments would jump at least 50 percent in 2011, and Trina's stock rose more than 1 percent.

The strong results come on the heels of blowout earnings reports from solar players SunPower Corp SPWRA.O and Yingli Green Energy Holding Co Ltd (YGE.N) last week [nN17272362] [nL3E7DI0VE].

Earlier on Tuesday, however, German solar company Q-Cells QCEG.DE shied away from giving an earnings outlook for 2011, sending its stock down 4.2 percent [nLDE71K0KU].

Demand for solar panels has remained strong, assuaging investor fears of a sharp drop in shipments this year following cuts in government support in Germany, the industry's top market.

"Shipments were excellent for both companies, both in Q4 and in the guidance for 2011," Raymond James analyst Pavel Molchanov said. "These are low-cost manufacturers, and they are continuing to take market share."

JA Solar's net income jumped nearly sixfold to 783.3 million Renminbi ($118.7 million), or 59 cents per share, from 135.9 million Renminbi ($22.3 million), or 14 cents per share, a year earlier.

Analysts on average were expecting earnings of 48 cents a share, according to Thomson Reuters I/B/E/S.

Revenue more than doubled to $584.3 million, but gross margin fell to 19.2 percent from 22.5 percent in the third quarter.

"Wafer pricing has been a definite pressure point" for JA Solar, which is still ramping up its own manufacturing of that product, Molchanov said. Companies that produce solar wafers, cells and modules -- including Trina -- are able to cut costs more easily than competitors with fewer products, he said.

Trina Solar's fourth-quarter profit nearly tripled to $145.3 million, or $1.87 per American Depositary Share, from $48.8 million, or 74 cents per ADS, a year earlier. Analysts had been expecting $1.09 per ADS.

Revenue more than doubled to $641.8 million, topping the analysts' average estimate of $525.3 million.

For 2011, Changzhou, China-based Trina said shipments of photovoltaic modules would rise by 65.6 percent to 70.3 percent from 2010 to between 1.75 gigawatts and 1.8 GW. It expects first-quarter shipments to be slightly higher than those in the fourth quarter, but forecast a fall in gross margin.

JA Solar said cell and module shipments would exceed 2.2 GW in 2011, a rise of about 50 percent from 2010. The company has signed sales contracts accounting for about 90 percent of its expected shipments for the year.

JA shares were down 7.2 percent at $7.90 on Nasdaq, while Trina ADS were up 1.2 percent at $29.76 on the New York Stock Exchange. (Reporting by Nichola Groom, additional reporting by Matt Daily in New York and Bhaswati Mukhopadhyay in Bangalore; Editing by Derek Caney and Lisa Von Ahn)

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