Yingli Green Energy Earnings Preview:Watching Downstream Progress …

February 28, 2014 by  
Filed under Green Energy News

Yingli Green Energy (NYSE:YGE), China’s largest solar panel manufacturer, is expected to report its Q4 2013 earnings in early March. The company has witnessed a turnaround over the last few quarters, benefiting from healthy growth in volumes and an increasingly conducive pricing environment. During Q3 2013, the company’s quarterly revenues rose by 8% sequentially to around $596 million, while adjusted losses narrowed from around $52 million to $37 million.

Although we do not expect Yingli to return to profitability this quarter, we expect losses to narrow owing to strong panel shipments to markets such as China and the United States, as well as stabilizing average selling prices. The two key factors that we will be watching for are the company’s progress in the downstream solar sector and its efforts in reducing costs.

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Costs In Focus

Yingli has made good progress in controlling its costs over the last few quarters. During Q3 2013, both non-silicon as well as silicon costs fell by around $0.01 sequentially to $0.44 and $0.09, respectively. [1] This has been primarily due to two reasons. Firstly, the company has been steadily improving the efficiency of its solar cells. Higher conversion efficiencies help to cut down on the quantity of polysilicon and other raw materials that are used to manufacture each watt of panel capacity. Secondly, Yingli has been running its manufacturing facilities at above their rated capacity. The company had guided for panel shipments of between 3.2 GW and 3.3 GW for FY 2013,  exceeding its rated 2.45 GW name-plate capacity. Higher capacity utilizations result in better allocation of fixed manufacturing costs, and are therefore likely to have a positive impact on gross margins.

Progress In the Downstream Solar Business

While the solar panel business has become somewhat commoditized over the last few years, the solar project development business has been thriving. This so-called “downstream” business is benefiting from relatively low panel and equipment costs, which are making solar power an increasingly viable alternative to conventional sources of energy. The downstream business also has healthy margins compared to the panels business, since it involves providing value added services such as design and construction, in addition to supplying the equipment.  However, Yingli’s presence in this space has been marginal. In 2012, the company’s systems business accounted for less than 2% of overall revenues.

However, the company has made notable progress in ramping up its project order book during the last couple of months. In early December 2013, it signed a deal to develop and sell around 300 megawatts (MW) of solar power projects to China Merchants New Energy (CMNE), a Chinese project developer. [2] Yingli was also part of a three-party consortium that will design and build a total of around 233 MW of power plants in Algeria for a subsidiary of the country’s state run electric utility company. [3] The company also signed a joint venture agreement to develop and construct solar power plants with the Datong Coal Mine Group in the Shanxi province in Northern China. [4] We will be interested in hearing the company’s progress on these projects as well as its future plans for the downstream solar business.


  1. Q3 2013 Earnings Supplementary Presentation, Yingli Green Energy, November 2013 [↩]
  2. Yingli and CMNE Agree 300 MW China PV project tie-up, PV Tech, December 2013 [↩]
  3. Yingli Consortium Wins 233 MW Projects In Algeria, Clean Technica [↩]
  4. Yingli forms JV with Chinese state-owned coal mining company, PV Tech, January 2014 [↩]

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