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Yingli Green (YGE) Reports Narrower-than-Expected Q4 Loss

Solar panel manufacturer Yingli Green Energy Holding Company Ltd. YGE, or Yingli Solar, reported an operating loss of 72 cents per American Depositary Share (“ADS”) in fourth-quarter 2015, narrower than the Zacks Consensus Estimate of a loss of $2.60. The reported loss was also narrower than the year-ago loss of $4.90 per ADS.

Also, the company reported a loss of $1.97 per share in 2015, wider than a loss of $1.17 per share in 2014.

Revenues

Total revenue was $325.7 million, down 41.4% from the fourth quarter of 2014. Revenues also missed the Zacks Consensus Estimate of $440 million.

In 2015, the company reported revenues of $1,538.5 million, down 88.1% year over year.

Highlights of the Release

Total PV module shipments were 504.5 megawatts (“MW”) in the fourth quarter of 2015, compared with 939.2 MW in the fourth quarter of 2014.

Gross margin in the reported quarter contracted 500 basis points year over year to 11.8%. Operating expenses increased to $211.3 million from $125.5 million in the fourth quarter of 2014.

Operating loss in the fourth quarter of 2015 was $172.9 million, wider than the operating loss of $32.2 million in the year-ago quarter.

Interest expenses were $38 million in the reported quarter, compared with $43.3 million in the year-ago period.

Financial Highlights

The company had cash & cash equivalents of $191.5 million as of Dec 31, 2015, compared with $172.3 million as of Dec 31, 2014.

Long-term debt excluding current portion was $371.4 million as of Dec 31, 2015, down from $460.7 million as of Dec 31, 2014.

Guidance

For the first quarter of 2016, Yingli Green expects PV module shipments in the range of 480–510 MW. For the full year, the company expects PV shipment to be approximately 2.6–3.0 gigawatts.

Other Solar Company Releases

SunPower Corp. SPWR reported first-quarter 2016 adjusted loss of 42 cents per share, wider than the Zacks Consensus Estimate of a loss of 23 cents by 82.6%. In the year-ago quarter, the company had reported earnings of 5 cents.

First Solar Inc. FSLR reported first-quarter 2016 earnings of $1.66 a share, sweeping past the Zacks Consensus Estimate of 91 cents by 82.4%. The reported number was also a reversal of the prior-year loss of 61 cents, reflecting higher sales, gross profits, operating income and lower expenses.

Canadian Solar Inc. CSIQ reported first-quarter earnings of 37 cents per share, beating the Zacks Consensus Estimate of 13 cents by a whopping 184.6%. Reported earnings, however, plunged 64.4% from the year-ago figure of $1.04 per share.

Our View

Yingli Solar, one of the world’s leading solar panel manufacturers, has failed to generate profits since 2011. In this scenario, the company will find it difficult, if not impossible, to pay down its outstanding debt, which will result in cross-defaults, putting it at liquidation risk.

Zacks Rank

Yingli Solar currently has a Zacks Rank #3 (Hold).

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