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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)

  2016Q2 2017Q1 2017Q2 QoQ% YoY%
Modules and module tolling 1,134.2 1,325.1 2,147.5 62.1 % 89.3 %
Cells and cell tolling 95.1 50.2 167.2 233.1 % 75.8 %
Total 1,229.3 1,375.3 2,314.7 68.3 % 88.3 %

External shipments breakdown by region (percentage)

  2016Q2 2017Q1 2017Q2 QoQ(pp) YoY(pp)
China 63.9 % 39.7 % 59.2 % 19.50 -4.70
APAC ex-China 12.0 % 44.2 % 24.9 % -19.30 12.90
Europe 3.7 % 5.5 % 5.1 % -0.40 1.40
North America 9.3 % 8.1 % 8.1 % 0 -1.20
South America 9.9 % 0.1 % 0.4 % 0.30 -9.50
Others 1.2 % 2.4 % 2.3 % -0.10 1.10

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 Number Toll-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 Number Toll-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, 2016 Mar. 31, 2017 Jun. 30, 2017 Jun. 30, 2017  
  RMB'000 RMB'000 RMB'000 USD'000  
           
Net revenues 4,113,592   3,692,405   5,953,211   878,145    
Cost of sales (3,485,300 ) (3,259,070 ) (5,182,372 ) (764,441 )  
Gross profit 628,292   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 operations 187,955   80,017   255,107   37,630    
Interest expense (68,804 ) (83,274 ) (82,617 ) (12,187 )  
Change in fair value of warrant derivatives 47,417     -      -      -     
Other income, net 30,878   22,516   13,654   2,014    
Income before income taxes 197,446   19,259   186,144   27,457    
Income tax expense (33,357 ) (11,136 ) (51,536 ) (7,602 )  
Net income 164,089   8,123   134,608   19,855    
Less: income attributable to noncontrolling interest 388     -      -      -     
Net income attributable to JA Solar Holdings 163,701   8,123   134,608   19,855    
           
Net income per share attributable to ordinary shareholders:          
  Basic 0.57   0.03   0.57   0.08    
  Diluted 0.57   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    
  Diluted 234,443,142   234,300,567   234,333,946   234,333,946    
           
Comprehensive income          
Net income 164,089   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 income 142,021   9,205   133,822   19,739    
Income attributable to noncontrolling interest 388     -      -      -     
Comprehensive income attributable to JA Solar Holdings 141,633   9,205   133,822   19,739    
           
NON-GAAP RECONCILIATION          
           
GAAP net income attributable to JA Solar Holdings 163,701   8,123   134,608   19,855    
Change in fair value of warrant derivatives (47,417 )   -      -      -     
Non-GAAP net income attributable to JA Solar Holdings 116,284   8,123   134,608   19,855    
           
Non-GAAP net income per share attributable to ordinary shareholders:          
  Basic 0.41   0.03   0.57   0.08    
  Diluted 0.41   0.03   0.57   0.08    
           
Non-GAAP weighted average number of shares outstanding:          
  Basic 234,290,842   234,290,842   234,311,611   234,311,611    
  Diluted 234,443,142   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, 2016 Jun. 30, 2017 Jun. 30, 2017  
  RMB'000 RMB'000 USD'000  
         
Net revenues 7,583,306   9,645,616   1,422,804    
Cost of sales (6,379,652 ) (8,441,442 ) (1,245,179 )  
Gross profit 1,203,654   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 operations 411,243   335,124   49,434    
Interest expense (136,077 ) (165,891 ) (24,470 )  
Change in fair value of warrant derivatives 70,864     -      -     
Other income, net 47,159   36,170   5,335    
Income before income taxes 393,189   205,403   30,299    
Income tax expenses (71,126 ) (62,672 ) (9,245 )  
Net income 322,063   142,731   21,054    
Less: income/(loss) attributable to noncontrolling interest 1,705     -      -     
Net income attributable to JA Solar Holdings 320,358   142,731   21,054    
         
Net income per share attributable to ordinary shareholders:        
  Basic 1.12   0.61   0.09    
  Diluted 1.12   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 income 322,063   142,731   21,054    
  Foreign currency translation adjustments, net of tax (22,208 ) 296   43    
Other comprehensive loss (22,208 ) 296   43    
Comprehensive income 299,855   143,027   21,097    
Income/(loss) attributable to noncontrolling interest 1,705     -      -     
Comprehensive income attributable to JA Solar Holdings 298,150   143,027   21,097    
         
NON-GAAP RECONCILIATION        
         
GAAP net income attributable to JA Solar Holdings 320,358   142,731   21,054    
Change in fair value of warrant derivatives (70,864 )   -      -     
Non-GAAP net income attributable to JA Solar Holdings 249,494   142,731   21,054    
         
Non-GAAP net income per share attributable to ordinary shareholders:        
  Basic 0.87   0.61   0.09    
  Diluted 0.87   0.61   0.09    
         
Non-GAAP 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    
         


JA Solar Holdings Co., Ltd.  
Condensed Consolidated Balance Sheets  
(Unaudited)  
         
  Dec. 31, Jun. 30,  
  2016 2017 2017  
  RMB'000 RMB'000 USD'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

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