We would like to highlight China Sunergy Co., Ltd. (NASDAQ: CSUN). The company is engaged in designing, developing, manufacturing and selling solar cells. It manufactures solar cells from silicon wafers utilizing crystalline silicon solar cell technology to convert sunlight directly into electricity through a process known as the photovoltaic effect. It sells its solar cell products to Chinese and overseas module manufacturers and system integrators, who assemble its solar cells into solar modules and solar power systems for use in various markets.
In the company’s recent news,
China Sunergy Co., Ltd. reported better than expected second quarter financial results this morning. Revenues rose to $111.6 million, an increase of 98.6% year-over-year and 44.9% sequentially. Net income was $3.1 million, or 8 cents per ADS, compared to a net loss of $3.5 million for the same period last year, and an improvement of 520% sequentially from $0.5 million. Analysts were looking for earnings of 3 cents per ADS on revenues of $94.7 million.
“I am pleased to report another quarter during which we have grown revenues, improved margins and strengthened our balance sheet,” said Dr. Allen Wang, CEO of China Sunergy. “The important steps we have taken over the past year to improve operational efficiency and develop market leading products are beginning to show genuine improvements to our bottom line and this gives me confidence that we are better positioned than ever for future growth. Although we managed to improve margins during the first half of the year, we still face a number of potential challenges in the second half, in particular wafer costs and wafer quality. Despite these challenges I am confident that our improving supply pipeline, declining wafer costs, and higher conversion efficiencies, will strengthen our gross margin from the end of this year and into 2009.”
The company forecasts a slight improvement in financial metrics in the third quarter. Average selling price (ASP) per watt is expected to be $3.40 - $3.50, compared to $3.37 per watt in the second quarter. Production volume is expected to be 35-37 MW, vs. 35 MW in Q2. Profit margin, which was 10.6% during the second quarter, is expected to remain in a range of 9-11%.
Wafer costs are the biggest concern in the near term. Wafer costs per watt of $2.79 rose 19% year-over-year and account for 91.2% of total production costs of $3.06 per watt. “Our contract with REC will help us to reduce overall wafer costs from 2009, we remain cautious about the overall market outlook for wafer prices in the second half of this year,” said Kenneth Luk, CFO of China Sunergy. “However, the expected increase in high efficiency cell production will enable us to at least partially offset any increase in wafer cost”.
Shares of CSUN closed at $9.93 yesterday and have traded in a 52-week range of $4.83 - $11.60. With 39.9 million ADS outstanding, CSUN has a market cap of $396 million at yesterday’s closing price. Several Chinese solar companies, including LDK, CSIQ, SOL, and STP, have reported earnings recently that have surprised to the upside. The entire sector has responded positively as a result. Solarfun (SOLF) is the last significant member of the group to report, due next Wednesday morning.
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Forward-Looking Statement:
This release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. Risks and uncertainties applicable to the company and its business could cause the company's actual results to differ materially from those indicated in any forward-looking statements.
