Why Construction Engineering Company Emeren Shares Are Sinking Today

Emeren Group Ltd SOL shares are trading lower by over 9% after the company reported Q3 FY23 results.

Revenue of $13.95 million, missing the consensus of $28.29 million.

The revenue declined 42% Y/Y, mainly due to the timing of the final government approval for a 53 MW solar NTP project portfolio in Hungary.

However, the company benefited from the IPP assets, mainly the 50 MW UK Branston project and 156 MW portfolio of China rooftop solar assets, which generated $9.4 million in revenue in the quarter with strong margins. 

Gross profit rose to $5.7 million from $4.5 million a year ago, with a margin of 40.8% vs. 18.9% in Q3 FY22.

Adjusted EBITDA loss stood at $(0.2) million, vs. $2.7 million prior year.

Loss per ADs of $(0.17) missed the consensus of EPS of $0.07.

At the end-Q3, cash and cash equivalents stood at $59.2 million. 

Outlook: For FY23, SOL expects revenue of $110 million-$113 million (vs. consensus: $155.48 million) due to project timing, net income of $3 million-$4 million, and gross margin of around 25% to 28%. 

For Q4, SOL sees revenue of $50 million-$53 million (vs. $80.48 million estimate), a gross margin of 21% to 25%, and a net income of $4 million-$5 million. 

Price Action: SOL shares are down 9.13% at $2.3807 on the last check Wednesday.