JA Solar shows continued growth in Q1 results

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The first quarter of 2016 was generally strong for large Chinese PV makers, with booming sales in China and the United States, which are expected to be the two largest markets this year. JA Solar was no exception to this trend.

In its Q1 results released today, the company reported a 44% year-over-year increase in revenues to $538 million with 1.13 GW of PV cell and module shipments. Profitability was also healthy, with a 6.4% operating margin and a net income of $24.5 million, despite rising wafer prices.

Much of JA Solar’s success is due to the strong Chinese market. China installed 7.14 GW during the first quarter – far more than any nation has ever installed in one quarter – and 60% of JA Solar’s shipments were domestic. Other Asian markets were also strong contributors and represented another 27% of JA Solar’s sales, 1/3 of which was into Japan.

In recent years JA Solar has completed its transformation from a PV cell maker to an integrated PV cell and module maker, and around 90% of the company’s Q1 shipments were modules. Like all of the largest PV makers JA Solar has expanded downstream into project development, however during Q1 the company only shipped 90 MW to its own projects.

With its success in sales, JA Solar is expanding its manufacturing. Earlier this month the company opened a new factory in Hebei Province to produce its 60-cell and 72-cell modules with an annual capacity of 1.5 GW, and in February signed a contract for a 300 MW module line for a factory in Brazil.

There was no mention of the Brazilian factory in JA’s quarterly results. JA estimates that it currently has 500 MW of overseas capacity, and management cryptically stated that it has the flexibility to expand this to 800 MW to 1 GW this year.

JA Solar also plans to double its Passivated Emitter Rear Contact (PERC) high-efficiency cell capacity to 1.3-1.4 GW by the end of 2016, and has placed a large order with Meyer Burger for PERC tools.

The company expects shipment volumes to increase to 1.4-1.5 GW during Q2, and to complete 250 MW of PV projects by the end of the quarter. China’s feed-in tariff is scheduled to decline at the end of June, however JA management confirmed that it has also hear rumors that this may be extended to the end of August.

JA Solar expects China to remain its largest market during Q2, at over 55% of sales. The company notes that there is little visibility into Q3, as key details of compensation have not been released by the government, however the company still expects the market to total 17-20 GW over the full year.

Backed by these expectations, JA Solar has maintained its prior guidance to ship 5.2-5.5 GW during 2016 nearly half of which will be domestic, and including 250-300 MW to its downstream projects.