Yingli Reports 11th Straight Loss, Surges on Sales Forecast

Yingli Green Energy Holding Co., the world’s largest solar-panel maker, surged the most in more than five months after narrowing losses and reiterating its 2014 forecast.

Investors shrugged off another quarter without a profit, betting on improving margins. Yingli’s American depositary receipts, each worth one ordinary share, surged 12 percent to $3.95 at the close in New York, the most since Jan. 2.

“We have seen significant uptick in the demand from China as well as emerging markets in South America, Southeast Asia and Africa,” Chief Executive Officer Liansheng Miao said today on a conference call with analysts.

The company shipped 630.8 megawatts of capacity in the quarter, and reiterated its full-year forecast of 4 gigawatts to 4.2 gigawatts, after selling a record 3.2 gigawatts last year, the Baoding, China-based company said today in a statement. Profit margins widened following increased sales to higher-price markets including Japan, where shipments increased 30 percent from the previous quarter.

Second-quarter shipments are expected to be 870 megawatts to 950 megawatts.

Yingli pushed back its timeline for profitability to chase a bigger share of the solar-panel market, relying on low-margin sales to Chinese customers. Industry peers Trina Solar Ltd., JinkoSolar Holding Co. and JA Solar Holdings Co. have all reported a profit for at least the past two consecutive quarters.

Investor Fears

Some investors fear the company won’t be profitable quickly enough, Gordon Johnson, an analyst at Axiom Capital Management in New York, said today in a telephone interview.

“This company has a history of making these grandiose projections -- they’d talked about being profitable in Q2, and it looks like they’re not going to be profitable for the rest of the year,” Johnson said. “They’re doing anything they can to get their stock up so they can raise more equity.”

The first-quarter net loss narrowed to 341.8 million yuan ($55 million), or 35 cents an ADR, from 611.8 million yuan, or 63 cents, a year earlier. The loss compared with the average $36.9 million net loss of four analysts’ estimates compiled by Bloomberg.

Gross margins improved to 15.7 percent from 4.1 percent a year earlier. The company expects second-quarter margins of 14 to 16 percent. Yingli hasn’t reported a profit for 11 consecutive quarters.

How Long

Chief Financial Officer Wang Yiyu said in March Yingli wouldn’t be profitable until the July-September period, a quarter later than he predicted in January. Its last reported profit was in the second quarter of 2011.

The company raised about $80 million in April, and it may require additional capital from U.S. investors, said Johnson, who rates Yingli’s ADRs a sell with a 12-month price target of $2.

“The question is how long U.S. investors are going to allow that to happen,” Johnson said. “The thought that Yingli could do even one capital raise to me was out of the question, and they did it.”

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