Profit on horizon for Yingli Green

Financial outlook brightens for solar power firm after 11 quarters of losses

Investors tied to solar power may expect big gains in the stock of Yingli Green Energy, as the world's largest solar-panel maker and supplier said it expected a profit for the current quarter after an industry shakeout and cost reductions.

Solar companies have stumbled for the past few years amid overcapacity and high punitive duties from the United States and Europe. Yingli hasn't generated a profit for the past 11 quarters.

But as the global solar panel industry revives and demand from emerging solar markets in South America and Asia has taken up the slack, the New York-listed solar giant registered a better performance from January through March.

Overall gross margins improved to 15.7 percent for the first quarter from 4.1 percent a year earlier. The company expects second-quarter margins of 14 to 16 percent, according to the company's filing.

"I have confidence in our ability to drive additional improvement moving forward, witnessing a strong demand from Japan and other emerging markets," said Miao Liansheng, chairman and founder of the company, also known as Yingli Solar, in a statement.

Miao, also the chief executive officer of the Baoding-based company in Beijing's neighboring Hebei province, said that a profit can be expected for the second quarter, hoping the World Cup marketing campaign will become a driving force of its business growth with penetration into the South American market.

With all eyes on the Brazilian World Cup with the big logo of Yingli Solar glittering around the fields, its shares also saw a shining surge on Tuesday.

Yingli Solar rose 12 percent to close at $3.95 on the New York Stock Exchange due to a "slight increase in the average selling price of photovoltaic modules and our ongoing efforts on cost reduction," according to the company's first-quarter filing.

Yingli Solar plans to increase its shipment volumes to about 4 gigawatts of installed solar panels in 2014, an increase of 27 percent over the previous year. At the same time, it is moving toward so-called distributed solar, which includes rooftop panels and other small installations.

Miao said that his company is adopting a downstream strategy to a renewable energy solutions provider with a 1-gigawatt downstream project pipeline across China.

"Based on the ongoing projects, we expect to develop approximately 400 megawatts to 600 mW of PV projects by the end of 2014," he said.

Lin Boqiang, director of the China Center for Energy Economic Research at Xiamen University, echoed Miao's optimism. "In today's solar industry, a more mature market enables price stability and steadily growing demand, so the solar growth is virtually of great potential," he said.

Market analyst group NPD Solarbuzz predicts that global demand will reach 49 gigawatts in 2014 with installations expected grow by more than 25 percent.

Finlay Colville, vice-president of NPD Solarbuzz, said the first quarter of this year will be the strongest with end-market demand hitting record levels, which was driven by "leading module suppliers and project developers that returned to profitability during 2013".

But investors still shied away as Yingli Solar has not yet swung back to profit as its peers such as Trina Solar did for the past quarter. The company's first-quarter net loss dropped to 341.8 million yuan ($54.87 million) from 611.8 million yuan, a year earlier.