ReneSola Beats Zacks Estimate - Analyst Blog

ReneSola Ltd. reported second-quarter adjusted Earnings Per American Depositary Share (EPADS) of 42 cents per share, beating both the Zacks Consensus Estimate of 40 cents and year-ago quarterly loss of five cents.

Operational Results

ReneSola’s revenues rose to $253.9 million, increasing by 22.9% from $206.6 million in the first quarter of 2010 and by 207.4% compared to $82.6 million in the year-ago quarter. Revenue in the reported quarter also comfortably beat the Zacks Consensus Estimate of $246 million. The upside in results came from higher wafer average selling prices and increasing module shipments.

ReneSola shipped 258.3 MW from 242.4 MW (up 6.6%) in the first quarter of 2010 and 85.9 MW (up 200.7%) in the year-ago quarter. Solar wafer and module shipments were 226.9 MW and 15.4 MW, respectively.

ReneSola clocked a gross profit of $76.6 million and a gross profit margin of 30.2%, compared to $35.3 million and 17.1% in the first quarter of 2010. In the year-ago quarter the company clocked gross profit of $4.3 million and a gross profit margin of 5.1%. The significant improvement in the company's gross margin was driven by wafer processing cost reduction and a large decrease in polysilicon costs.

ReneSola overall recorded net income of $36.1 million compared to net income of $11.8 million in the first quarter of 2010 and net loss of $3.6 million in the year-ago quarter.

Financial Condition

ReneSola at second quarter-end 2010 had cash and cash equivalents of $171.2 million, compared with $106.8 million at fiscal-end 2009. Long-term borrowings increased to $189.1 million from $189.3 million at fiscal-end 2009. The company generated strong operating cash flows of $168.4 million in the first half of 2010 compared to $9.1 million generated in the year-ago period.

Guidance

ReneSola for fiscal 2010 expects revenues in the range of $1.0 billion-$1.05 billion and gross profit margin in the range of 25%-27%. For the second half of fiscal 2010, gross profit margin is expected in the range of 28%-30%. The company for the third quarter of 2010 expects total solar product shipments in the range of 280 MW-310 MW and revenues in the range of $300 million-$320 million.

By fiscal 2011 ReneSola plans to expand its wafer production capacity to 1.8 GW from the current annual capacity 1.2 GW, while expanding module production capacities to 600 MW from the current 375 MW.

The company expects wafer costs to reduce further to between $0.46 per watt to $0.48 per watt by the end of 2011.

Our Take

The fortunes of ReneSola look greener with a geographically-diversified customer base, ongoing expansion programs, subsidy programs, improving operating efficiencies, rising margins and material cost savings through its vertically-integrated production structure. We feel the Zacks #1 Rank (strong buy) stock would present a small window of opportunity for investors in the near term (1 to 3 months).

 

 
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