UPDATE 1-Yingli profit soars, shares drop on '09 outlook

(Adds dateline, analyst comment, share activity, byline)

By Nichola Groom

LOS ANGELES, Aug 6 (Reuters) - Solar power company Yingli Green Energy Holding Co Ltd (YGE.N) said on Wednesday quarterly earnings more than tripled, and raised its revenue outlook for the year, on strong global demand for renewable energy.

The company's stock, however, slid 7 percent on concerns that Yingli could be stuck paying high prices for its key raw material, polysilicon, while an expected pullback in government subsidies in Spain could hamper demand.

Second-quarter net income was renminbi 207.2 million, or RMB 1.60 per share, compared with RMB 63.2 million, or RMB 38 per share, in the same period last year, the Baoding, China-based company said.

Net revenue rose 121 percent to RMB 1.99 billion.

Profit in the latest quarter was equal to $30.2 million, or 23 cents per share, Yingli said.

Revenue was $289.7 million, above Wall Street analysts' average estimate of $234.27 million, according to Reuters Estimates.

Yingli Chief Executive Liansheng Miao said the company benefited from operational efficiencies and demand from emerging photovoltaic solar markets including Korea, Italy, France, Belgium, the United States and China.

Investors, however, are concerned that a cloudy outlook for key subsidies in Spain and the United States could create difficulties for solar companies, and Yingli said on Wednesday that its 2009 contracts have not been fully priced yet.

"People are concerned that there is going to be sort of a tumultuous demand environment, married with their lack of polysilicon procurement," said American Technology Research analyst John Hardy, who has a "buy" rating on Yingli shares. "So they still could be having to pay expensive prices for polysilicon while the demand is less certain."

Polysilicon is the solar industry's key raw material, but it has been in short supply in recent years as demand has spiked. Yingli said prices should start to move down in the fourth quarter, but the company currently has the highest polysilicon costs in the industry, according to Piper Jaffray analyst Jesse Pichel.

Yingli expects net revenue of $1.05 billion to $1.11 billion for 2008, up from a previous view of $969 million to $1.02 billion.

Wall Street analysts, on average, had been expecting revenue of $1.038 billion, according to Reuters Estimates.

Module shipments are expected to be between 270 megawatts (MW) and 280 MW, up from a prior target of 255 MW to 265 MW.

Yingli shares were down $1.23, or 7.2 percent, at $15.76 in early afternoon trade on the New York Stock Exchange. (Reporting by Nichola Groom, editing by Phil Berlowitz)