UPDATE 2-JA Solar follows rivals to profitability as China demand rises

Mon Mar 17, 2014 12:20pm EDT

* Posts first profit in 10 quarters

* Says Japan to drive growth in 2014

* Forecasts higher 2014 shipments

* Shares rise as much as 15 pct to 2-year high

By Sayantani Ghosh

March 17 (Reuters) - Strong demand from China propelled JA Solar Holdings Co Ltd to its first profit in 10 quarters, and the company forecast higher shipments for the year, sending its shares up as much as 15 percent to their highest in more than two years.

Solar companies such as Trina Solar Ltd, Canadian Solar Inc and JinkoSolar Holding Co Ltd have returned to profitability while others have cut losses, as panel prices stabilized after a four-year decline.

Withdrawal of consumer subsidies in top market Europe and excess manufacturing capacity in China had sent the solar market into an extended downturn.

"We continued to perform well in all of our key regions in the fourth quarter, notably China, which is proving to be one of the cornerstone markets of global solar demand," Chief Executive Baofang Jin said in a statement on Monday.

This year, China has a target of installing 14.5 gigawatts (GW) of solar generating capacity - close to Finland's entire power capacity.

Solar companies are also benefiting from power subsidies in Japan, which is banking on solar power to help meet the shortfall in supply after the Fukushima disaster in 2011 shattered public confidence in nuclear energy.

Baofang said Japan was expected to remain a major growth driver in 2014, and that the company was making steady inroads into the UK utility market.

"The growth from China and Japan is definitely sustainable as more than 80 percent of their revenue has come from the Asia Pacific region," S&P Capital analyst Angelo Zino said.

"More exposure to U.S. and Japan would also help JA solar in the near future."

JA Solar forecast full-year cell and module shipments between 2.7 GW and 2.9 GW for 2014, up from 2.1 GW in 2013.

JA Solar said it expected total shipments to be between 580 megawatt (MW) and 610 MW in the first quarter, down from 665.5 MW shipped in the fourth quarter.

The company posted a net profit of $23 million, or 32 cents per American depositary share (ADS), in the fourth quarter ended Dec. 31, compared with a net loss of $102.4 million, or $2.65 per ADS, a year earlier.

Revenue rose 33 percent to $357.3 million.

Rival Yingli Green Energy Holding Co Ltd, which is due to report quarterly results on Tuesday, warned earlier this month that it would miss its fourth-quarter gross margins forecast due to disposal of low-efficiency cell inventory and tax adjustments.

JA Solar's shares jumped to $13.14 in early trading but later gave up some gains to trade up 6 percent. They were among the most heavily traded stocks on the Nasdaq, with more than 13.5 million shares traded by 1145 ET.

The stock has more than doubled over the past year.

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