JA Solar Holdings Co. Ltd. (JASO - Analyst Report) posted second-quarter 2016 adjusted earnings of 30 cents per diluted American Depository Share (ADS), missing the Zacks Consensus Estimate of 59 cents by a wide margin of 49.2%. Earnings, however, improved from the year-ago figure of 27 cents by 11.1%.

JA SOLAR HOLDGS Price, Consensus and EPS Surprise

JA SOLAR HOLDGS Price, Consensus and EPS Surprise | JA SOLAR HOLDGS Quote

Total Revenue

JA Solar’s revenues in the reported quarter were $619 million, missing the consensus mark of $689 million by 10.2%. However, the reported figure improved 51.9% from the year-ago level. The improvement in revenues was driven by strong shipments to key markets, primarily to its domestic market China.

Q2 Shipments

Total shipments in the second quarter of 2016 were 1,380.3 megawatts (“MW”). External shipments were 1,229.3 MW, up 55.5% year over year.

The year-over-year improvement in external shipments was attributable to a 58.1% upside in module shipment as well as a 29.6 rise in cells and cell tolling.

The increase in shipments came on the back of strong demand from China, which constituted 63.9% of the quarter’s total shipment. Shipments to America jumped to 9.3% of the total, from 0.6% in the year-ago quarter. Europe, however, witnessed a considerable drop, having contributed 3.7% to total shipments, compared with 14.8% a year ago. Asia-Pacific (excluding China) markets also witnessed a slowdown with shipments constituting 12% of the total, a considerable drop from 31.9% a year ago.

Highlights of the Release

Gross profits were $94.5 million, up 41.4% year over year. Gross margin, however, contracted 110 basis points year over year to 15.3%.

Total operating expenses of $66.3 million represented 10.7% of revenues, up 42.6% from the year-ago quarter.

Interest expenses were $10.4 million, up from $9.4 million a year ago.
 

Financial Condition

At the end of second-quarter 2016, JA Solar had a cash balance of $303 million, compared with $445.1 million at 2015-end. Total long-term borrowings were $489.3 million as of Jun 30, 2016.

Guidance

JA Solar expects to ship 1.2–1.3 gigawatts (“GW”) of cells and modules in the third quarter of 2016.

For 2016, the company maintained its earlier expectation to ship 5.2–5.5 GW of cells and modules. It anticipates module shipment of about 250–300 MW to its downstream projects.

Peer Releases

SolarCity Corp. (SCTY - Snapshot Report), the largest U.S. rooftop solar installer, posted adjusted loss of $2.32 per share in the second quarter of 2016, narrower than the Zacks Consensus Estimate of a loss of $2.43. However, the figure was much wider than the year-ago loss of $1.61, thanks to the company’s rising expenses.

First Solar Inc. (FSLR - Analyst Report) reported second-quarter 2016 earnings of 87 cents a share, beating the Zacks Consensus Estimate of 58 cents by 50%. The reported number also surged 67.3% from the prior-year figure of 52 cents on the back of higher sales and gross profits.

SunPower Corp. (SPWR - Analyst Report) reported second-quarter 2016 adjusted loss of 33 cents per share, wider than the Zacks Consensus Estimate of a loss of 31 cents by 6.5%. In the year-ago quarter, the company had reported earnings of 9 cents.

Zacks Rank

JA Solar presently carries a Zacks Rank #3 (Hold).