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JA Solar Announces Second Quarter 2017 Results

BEIJING, Aug. 22, 2017 (GLOBE NEWSWIRE) -- JA Solar Holdings Co., Ltd. (Nasdaq:JASO) ("JA Solar" or the "Company"), one of the world's largest manufacturers of high-performance solar power products, today announced its unaudited financial results for its second quarter ended June 30, 2017.

Second Quarter 2017 Highlights

  • Total shipments were 2,389.2 megawatts (“MW”), consisting of 2,147.5 MW of modules and 167.2 MW of cells to external customers, and 74.5 MW of modules to the Company’s downstream projects. External shipments were up 88.3% y/y and 68.3% sequentially
  • Shipments of modules were 2,147.5 MW, an increase of 89.3% y/y and 62.1% sequentially
  • Shipments of cells were 167.2 MW, an increase of 75.8% y/y and 233.1% sequentially
  • Net revenue was RMB 6.0 billion ($878.1 million), an increase of 44.7% y/y and 61.2% sequentially
  • Gross margin was 12.9%, a decrease of 240 basis points y/y and an increase of 120 basis points sequentially
  • Operating profit was RMB 255.1 million ($37.6 million), compared to RMB 188.0 million ($27.7 million) in the second quarter of 2016, and RMB 80.0 million ($11.8 million) in the first quarter of 2017
  • Net income was RMB 134.6 million ($19.9 million), compared to RMB 164.1 million ($24.2 million) in the second quarter of 2016, and RMB 8.1 million ($1.2 million) in the first quarter of 2017
  • Earnings per diluted ADS were RMB 2.87 or $0.42, compared to RMB 2.87 or $0.42 in the second quarter of 2016, and RMB 0.17 or $0.03 in the first quarter of 2017
  • Cash and cash equivalents were RMB 3.2 billion ($477.0 million), an increase of RMB 947.6 million ($139.8 million) during the quarter
  • Non-GAAP earnings1 per diluted ADS were RMB 2.87 or $0.42, compared to RMB 2.04 or $0.30 in the second quarter of 2016, and RMB 0.17 or $0.03 in the first quarter of 2017

Mr. Baofang Jin, Chairman and CEO of JA Solar, commented, "Second quarter results exceeded our expectations. Robust shipments in China, primarily attributable to accelerated activity ahead of subsidy reductions, drove our year-over-year double-digit revenue growth in the quarter. Additionally, better-than-expected average selling price and lower blended costs resulted in 120 basis-point sequential improvement in gross margin."

Mr. Jin continued, "We remain cautious on our business outlook as we enter the second half of 2017, given the slowdown in demand in our domestic market, coupled with the uncertainty around the Section 201 trade case in the U.S. While anticipated changes in incentives is expected to slow the Chinese market in the second half of the year, we continue to believe our balanced global footprint and flexible business model will enable us to adjust to evolving market conditions. Our team remains focused on prudently managing our working capital, strengthening our balance sheet and executing our business strategy to provide our customers with high-quality products.”

All shipment and financial figures refer to the quarter ended June 30, 2017, unless otherwise specified. All “year over year” or “y/y” comparisons are against the quarter ended June 30, 2016. All “sequential” comparisons are against the quarter ended March 31, 2017.

Total shipments were 2,389.2 MW, well above the guidance of 1,550 to 1,650 MW. This is mainly due to stronger than expected pull-in orders from the China market. External shipments of 2,314.7 MW increased 88.3% year over year and 68.3% sequentially.

External shipments breakdown by product (MW)

2016Q22017Q12017Q2QoQ%YoY%
Modules and module tolling1,134.21,325.12,147.562.1%89.3%
Cells and cell tolling95.150.2167.2233.1%75.8%
Total1,229.31,375.32,314.768.3%88.3%

External shipments breakdown by region (percentage)

2016Q22017Q12017Q2QoQ(pp)YoY(pp)
China63.9%39.7%59.2%19.50-4.70
APAC ex-China12.0%44.2%24.9%-19.3012.90
Europe3.7%5.5%5.1%-0.401.40
North America9.3%8.1%8.1%0-1.20
South America9.9%0.1%0.4%0.30-9.50
Others1.2%2.4%2.3%-0.101.10

Net revenue was RMB 6.0 billion ($878.1 million), an increase of 44.7% y/y and 61.2% sequentially.

Gross profit of RMB 770.8 million ($113.7 million) increased 22.7% y/y and 77.9% sequentially. Gross margin was 12.9%, which compares to 15.3% in the year-ago quarter, and 11.7% in the first quarter of 2017.

Total operating expenses of RMB 515.7 million ($76.1 million) were 8.7% of revenue. This compares to operating expenses of 10.7% of revenue in the year-ago quarter, and 9.6% of revenue in the first quarter of 2017.

Operating profit was RMB 255.1 million ($37.6 million), compared to RMB 188.0 million ($27.7 million) in the year-ago quarter, and RMB 80.0 million ($11.8 million) in the first quarter of 2017. Operating margin was 4.3%, compared with 4.6% in the prior year period and 2.2% in the previous quarter.

Interest expense was RMB 82.6 million ($12.2 million), compared to RMB 68.8 million ($10.1 million) in the year-ago quarter, and RMB 83.3 million ($12.3 million) in the first quarter of 2017.

The change in fair value of warrant derivatives was nil, compared with positive RMB 47.4 million ($7.0 million) in the year-ago quarter, and nil in the first quarter of 2017. The warrants were issued on August 16, 2013 in conjunction with the Company’s $96 million registered direct offering, and expired on August 16, 2016.
Earnings per diluted ADS were RMB 2.87 or $0.42, compared to earnings per diluted ADS of RMB 2.87 or $0.42 in the year-ago quarter, and earnings per diluted ADS of RMB 0.17 or $0.03 in the first quarter of 2017.

Liquidity
As of June 30, 2017, the Company had cash and cash equivalents of RMB 3.2 billion ($477.0 million), and total working capital of RMB 857.2 million ($126.5 million). Total short-term borrowings were RMB 3.3 billion ($491.7 million). Total long-term borrowings were RMB 2.8 billion ($419.4 million), of which RMB 792.1 million ($116.8 million) were due in one year.

Business Outlook
For the third quarter of 2017, the Company expects total cell and module shipments to be in the range of 1,600 to 1,700 MW. Nearly all will be external shipments.

For the full year 2017, the Company is raising its shipment outlook. Total cell and module shipments are now expected to range between 6.5 and 7.0 GW, up from 6.0-6.5 GW in the prior guidance. This includes 100-150 MW of module shipments to the Company's downstream projects, down from 200-250 MW in the previous guidance. Revenues will not be recognized for the modules shipped to the Company's downstream projects as required by US GAAP.

Update on Yangzhou Facility Fire and Production Capacity
The Company provided an update regarding the July 13 fire at the Company’s cell production facility in Yangzhou, Jiangsu province. There were no injuries in the incident. The Company maintains insurance coverage for its production equipment and is in the process of filing insurance claims related to the incident. The cause of the fire remains under investigation.

The Company estimates a loss in cell production capacity of 500 MW per annum as a result of the accident. Therefore, the Company expects its year-end cell capacity to be 6.5 GW, instead of the previous guidance of 7.0 GW. The Company now expects year-end module capacity to be 7.0 GW, instead of the previous guidance of 6.0 GW. Year-end wafer capacity guidance remains unchanged at 3.0 GW. The Company expects to restore the lost cell capacity by the first quarter of 2018.

All information regarding the impact of the fire is subject to change based on further evaluation and investigation.

Investor Conference Call / Webcast Details
JA Solar's management will host an earnings conference call on August 22, 2017 at 8:00 a.m. U.S. Eastern Time (8:00 p.m. China Time).

Dial-in details for the earnings conference call are as follows:

Phone NumberToll-Free Number
United States+1 8456750437+1 8665194004
Hong Kong+852 30186771+852 800906601
Mainland China+86 8008190121
+86 4006208038
Other International+65 67135090

Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call. The passcode is 66045523.

A replay of the conference call may be accessed by phone at the following numbers until August 30, 2017. To access the replay, please reference the conference ID 66045523.

Phone NumberToll-Free Number
United States+1 6462543697+1 8554525696
Hong Kong+852 30512780+852 800963117
Mainland China+86 8008700206
+86 4006322162
Other International+61 281990299

Currency Convenience Translation
The conversion of Renminbi into U.S. dollars in this release, made solely for the convenience of the reader, is based on the noon buying rate in the city of New York for cable transfers of Renminbi as certified for customs purposes by the Federal Reserve Bank of New York as of June 30, 2017, which was RMB 6.7793 to $1.00. No representation is intended to imply that the Renminbi amounts could have been, or could be, converted, realized or settled into U.S. dollars at that rate on June 30, 2017, or at any other date. The percentages stated in this press release are calculated based on Renminbi.

Forward-looking Statements
This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by words such as "may," "expect," "anticipate," "aim," "intend," "plan," "believe," "estimate," "potential," "continue," and other similar statements. Statements other than statements of historical facts in this announcement are forward-looking statements, including but not limited to, our expectations regarding the expansion of our manufacturing capacities, our future business development, and our beliefs regarding our production output and production outlook. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the Company and the industry. Further information regarding these and other risks is included in Form 20-F and other documents filed with the Securities and Exchange Commission. The Company undertakes no obligation to update forward-looking statements, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.

About JA Solar Holdings Co., Ltd.
JA Solar Holdings Co., Ltd. is a leading manufacturer of high-performance solar power products that convert sunlight into electricity for residential, commercial, and utility-scale power generation. The Company is one of the world’s largest producers of solar power products. Its standard and high-efficiency product offerings are among the most powerful and cost-effective in the industry. The Company distributes products under its own brand and also produces on behalf of its clients. The Company shipped 5.2 GW of solar power products in 2016. JA Solar is headquartered in Beijing, China, and maintains production facilities in Shanghai, Hebei, Jiangsu and Anhui provinces in China, as well as Penang, Malaysia and Bac Giang, Vietnam.

For more information, please visit www.jasolar.com.

1 JA Solar adjusts net income attributable to the Company's ordinary shareholders to exclude changes in fair value of certain warrants granted to certain investors in a registered direct offering (the "Offering") closed on August 16, 2013.

JA Solar Holdings Co., Ltd.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
For three months ended
Jun. 30, 2016Mar. 31, 2017Jun. 30, 2017Jun. 30, 2017
RMB'000RMB'000RMB'000USD'000
Net revenues4,113,592 3,692,405 5,953,211 878,145
Cost of sales(3,485,300)(3,259,070)(5,182,372)(764,441)
Gross profit628,292 433,335 770,839 113,704
Selling, general and administrative expenses(396,294)(312,858)(480,065)(70,813)
Research and development expenses(44,043)(40,460)(35,667)(5,261)
Total operating expenses(440,337)(353,318)(515,732)(76,074)
Income from operations187,955 80,017 255,107 37,630
Interest expense(68,804)(83,274)(82,617)(12,187)
Change in fair value of warrant derivatives47,417 - - -
Other income, net30,878 22,516 13,654 2,014
Income before income taxes197,446 19,259 186,144 27,457
Income tax expense(33,357)(11,136)(51,536)(7,602)
Net income164,089 8,123 134,608 19,855
Less: income attributable to noncontrolling interest388 - - -
Net income attributable to JA Solar Holdings163,701 8,123 134,608 19,855
Net income per share attributable to ordinary shareholders:
Basic0.57 0.03 0.57 0.08
Diluted0.57 0.03 0.57 0.08
Weighted average number of shares outstanding:
Basic 234,290,842 234,290,842 234,311,611 234,311,611
Diluted234,443,142 234,300,567 234,333,946 234,333,946
Comprehensive income
Net income164,089 8,123 134,608 19,855
Foreign currency translation adjustments, net of tax(22,068)1,082 (786)(116)
Other comprehensive loss(22,068)1,082 (786)(116)
Comprehensive income142,021 9,205 133,822 19,739
Income attributable to noncontrolling interest388 - - -
Comprehensive income attributable to JA Solar Holdings141,633 9,205 133,822 19,739
NON-GAAP RECONCILIATION
GAAP net income attributable to JA Solar Holdings163,701 8,123 134,608 19,855
Change in fair value of warrant derivatives(47,417) - - -
Non-GAAP net income attributable to JA Solar Holdings116,284 8,123 134,608 19,855
Non-GAAP net income per share attributable to ordinary shareholders:
Basic0.41 0.03 0.57 0.08
Diluted0.41 0.03 0.57 0.08
Non-GAAP weighted average number of shares outstanding:
Basic234,290,842 234,290,842 234,311,611 234,311,611
Diluted234,443,142 234,300,567 234,333,946 234,333,946


JA Solar Holdings Co., Ltd.
Condensed Consolidated Statements of Operations
(Unaudited)
For six months ended
Jun. 30, 2016Jun. 30, 2017Jun. 30, 2017
RMB'000RMB'000USD'000
Net revenues7,583,306 9,645,616 1,422,804
Cost of sales(6,379,652)(8,441,442)(1,245,179)
Gross profit1,203,654 1,204,174 177,625
Selling, general and administrative expenses(708,769)(792,923)(116,962)
Research and development expenses(83,642)(76,127)(11,229)
Total operating expenses(792,411)(869,050)(128,191)
Income from operations411,243 335,124 49,434
Interest expense(136,077)(165,891)(24,470)
Change in fair value of warrant derivatives70,864 - -
Other income, net47,159 36,170 5,335
Income before income taxes393,189 205,403 30,299
Income tax expenses(71,126)(62,672)(9,245)
Net income322,063 142,731 21,054
Less: income/(loss) attributable to noncontrolling interest1,705 - -
Net income attributable to JA Solar Holdings320,358 142,731 21,054
Net income per share attributable to ordinary shareholders:
Basic1.12 0.61 0.09
Diluted1.12 0.61 0.09
Weighted average number of shares outstanding:
Basic 234,290,842 234,301,342 234,301,342
Diluted 234,482,552 234,317,372 234,317,372
Comprehensive income
Net income322,063 142,731 21,054
Foreign currency translation adjustments, net of tax(22,208)296 43
Other comprehensive loss(22,208)296 43
Comprehensive income299,855 143,027 21,097
Income/(loss) attributable to noncontrolling interest1,705 - -
Comprehensive income attributable to JA Solar Holdings298,150 143,027 21,097
NON-GAAP RECONCILIATION
GAAP net income attributable to JA Solar Holdings320,358 142,731 21,054
Change in fair value of warrant derivatives(70,864) - -
Non-GAAP net income attributable to JA Solar Holdings249,494 142,731 21,054
Non-GAAP net income per share attributable to ordinary shareholders:
Basic0.87 0.61 0.09
Diluted0.87 0.61 0.09
Non-GAAP weighted average number of shares outstanding:
Basic234,290,842 234,301,342 234,301,342
Diluted234,482,552 234,317,372 234,317,372


JA Solar Holdings Co., Ltd.
Condensed Consolidated Balance Sheets
(Unaudited)
Dec. 31,Jun. 30,
201620172017
RMB'000RMB'000USD'000
ASSETS
Current assets:
Cash and cash equivalents 2,569,402 3,233,663 476,991
Restricted cash 836,761 1,137,672 167,816
Accounts receivable 2,753,678 3,063,867 451,945
Notes receivable 563,144 473,661 69,869
Inventories 2,460,488 2,431,682 358,692
Advances to suppliers 282,369 267,858 39,511
Other current assets 799,314 552,080 81,436
Total current assets 10,265,156 11,160,483 1,646,260
Property and equipment, net 5,219,501 5,595,275 825,347
Project asset 2,338,648 2,671,375 394,049
Advances to suppliers 97,429 56,538 8,340
Prepaid land use rights 524,208 531,723 78,433
Long-term investment 69,022 71,717 10,579
Other long term assets 517,292 700,988 103,401
Total assets 19,031,256 20,788,099 3,066,409
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings 2,912,866 3,333,565 491,727
Accounts payable 2,635,525 3,406,588 502,499
Advances from customers 610,718 1,072,069 158,139
Current portion of long term borrowings 525,256 792,123 116,844
Accrued and other liabilities 1,966,475 1,698,903 250,601
Total current liabilities 8,650,840 10,303,248 1,519,810
Long-term borrowings 2,701,438 2,050,914 302,526
Other long term liabilities 1,217,648 1,829,175 269,818
Total liabilities 12,569,926 14,183,337 2,092,154
Total JA Solar Holdings shareholders' equity 6,461,130 6,604,562 974,225
Noncontrolling interest 200 200 30
Total shareholders' equity 6,461,330 6,604,762 974,255
Total liabilities and shareholders’ equity 19,031,256 20,788,099 3,066,409

Contact: The Blueshirt Group Ralph Fong Phone: +1 (415) 489-2195 Email: ralph@blueshirtgroup.com

Source:JA Solar Holdings Co., Ltd.