Why Yingli Green Energy Holding Co. Ltd. (NYSE:YGE) Stock Slumped Almost 19% Today? | BNinvestors

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On Tuesday, Yingli Green Energy Holding Co. Ltd. (NYSE:YGE), reported Q2 2015 Results.

Yingli Green Energy Holding Co., slashed its outlook for shipments and said it will write down the value of its assets, resulting in a “significant” charge in the third quarter. Its American depositary receipts fell to the lowest on record, according to Bloomberg.

The Chinese manufacturer said it anticipates delivering 2.5 gigawatts to 2.8 gigawatts of panels this year, at least 22 percent below its previous guidance for 3.6 gigawatts, according to a statement on its website Tuesday. The net loss more than doubled to 598 million yuan ($94 million) in the second quarter from 285 million Yuan a year ago. Bloomberg Reports

Following this worst news, Yingli fell 19 percent to 59 cents at 10:56 a.m. in New York, after earlier sliding to 55 cents, the lowest intraday since trading began in June 2007.

Total Net Revenues

According to the report, Total net revenues were RMB2,716.1 million (US$438.1 million) in the second quarter of 2015, contrast to RMB2,905.8 million in the first quarter of 2015 and RMB3,408.9 million in the second quarter of 2014. Total PV module shipments (counting 43.2MW shipments for PV systems of the Companys own downstream PV projects) were 727.9MW in the second quarter of 2015, contrast to 754.2MW in the first quarter of 2015 and 887.9MW in the second quarter of 2014. Revenues were not recognized for 43.2MW of internal shipments as required by U.S. GAAP.

The decrease in total net revenues in the second quarter of 2015 contrast to the first quarter of 2015 was mainly due to a decrease of PV module shipments in the second quarter of 2015 and decline in the average selling price of PV modules, which was primarily due to higher proportion of our shipment to China market and the depreciation of Euro and Japanese Yen against Renminbi in the quarter.

Gross Profit and Gross Margin

Gross profit was RMB171.0 million (US$27.6 million) in the second quarter of 2015, contrast to RMB410.8 million in the first quarter of 2015 and RMB532.1 million in the second quarter of 2014.

Gross margin was 6.3% in the second quarter of 2015, contrast to 14.1% in the first quarter of 2015 and 15.6% in the second quarter of 2014. The decrease in gross profit and gross margin from the first quarter of 2015 to the second quarter of 2015 was mainly due to the decline in average selling price of PV modules and the improvement in unit manufacturing cost because of a lower utilization rate of production facilities in the second quarter of 2015. Gross margin on sales of PV modules was 7.9% in the second quarter of 2015.

Operating Expenses

Operating expenses reduced to RMB349.3 million (US$56.3 million) in the second quarter of 2015 from RMB477.2 million in the first quarter of 2015, and contrast to RMB618.1 million in the second quarter of 2014. The decrease in operating expenses from the first quarter of 2015 to the second quarter of 2015 was mainly due to the recognition of a gain from disposal of the land use rights held by Fine Silicon, a wholly owned partner of Yingli Green Energy.

Operating expenses as a percentage of total net revenues were 12.9 % in the second quarter of 2015, reduced from 16.4% in the first quarter of 2015 and 18.1% in the second quarter of 2014.

Operating Loss and Margin

Operating loss was RMB178.3 million (US$28.8 million) in the second quarter of 2015, contrast to operating loss of RMB66.4 million in the first quarter of 2015 and operating loss of RMB85.9 million in the second quarter of 2014.

Operating margin was negative 6.6% in the second quarter of 2015, contrast to negative 2.3% in the first quarter of 2015 and negative 2.5% in the second quarter of 2014.

EBITDA

On an adjusted non-GAAP basis, EBITDA (earnings before interest, tax expenses, depreciation and amortization) were RMB198.8 million (US$32.1 million) in the second quarter of 2015, contrast to RMB199.8 million in the first quarter of 2015 and RMB279.3 million in the second quarter of 2014.

Interest Expense

Interest expense was RMB242.1 million (US$39.1 million) in the second quarter of 2015, contrast to RMB236.8 million in the first quarter of 2015 and RMB232.4 million in the second quarter of 2014. The weighted average interest rate was 6.75% in the second quarter of 2015, contrast to 6.76% in the first quarter of 2015 and 6.25% in the second quarter of 2014.

Foreign Currency Exchange Loss (Gain)

Foreign currency exchange loss was RMB10.3 million (US$1.7 million) in the second quarter of 2015, contrast to foreign currency exchange loss of RMB130.6 million in the first quarter of 2015 and foreign currency exchange gain of RMB2.8 million in the second quarter of 2014. The decrease in foreign currency exchange loss from the first quarter of 2015 was mainly due to less fluctuation of the exchange rates between Euros and Renminbi in the second quarter of 2015.

Income Tax Expense

Income tax expense was RMB232.6 million (US$37.5 million) in the second quarter of 2015, contrast to income tax expense of RMB0.5 million in the first quarter of 2015 and income tax expense of RMB1.2 million in the second quarter of 2014. The noteworthy improvement in income tax expense in the second quarter of 2015 mainly resulted from  RMB200.0 million of valuation allowance on deferred tax assets recognized in this quarter and areversal of deferred income tax assets of Fine Silicon, a wholly-owned partner of Yingli Green Energy .

Net Loss

Net loss was RMB598.1 million (US$96.5 million) in the second quarter of 2015, contrast to RMB363.2 million in the first quarter of 2015 and RMB285.2 million in the second quarter of 2014. Loss per ordinary share and per ADS was RMB3.29 (US$0.53), contrast to RMB2.00 in the first quarter of 2015 and RMB1.64 in the second quarter of 2014.

On an adjusted non-GAAP basis, net loss was RMB596.9 million (US$96.3 million) in the second quarter of 2015, contrast to RMB353.0 million in the first quarter of 2015 and RMB275.0 million in the second quarter of 2014. Adjusted non-GAAP loss per ordinary share and per ADS was RMB3.28 (US$0.53) in the second quarter of 2015, contrast to RMB1.94 in the first quarter of 2015, and RMB1.58 in the second quarter of 2014.

Downstream Development in 2015

In China, the Company began the construction of 78 MW of PV projects and connected 94 MW of PV projects to the grid in the second quarter 2015. As of June 30, 2015, the Company had over 400 MW of PV projects under construction across a dozen provinces in China.

In July, the Company was selected to develop and construct a 50 MW PV project in Shanxi Province, China, which will be one of the key demonstration projects of National Energy Administrations Top Runner program.

In consideration of Chinas nationwide delay in subsidy allocation, long-term operation of large ground-mounted PV stations would require noteworthy capital. Accordingly, the Company has adopted a more prudent approach to downstream project development business and is in active negotiations with certain leading corporations about potential sale of the PV projects developed by the Company. The Company has about 100MW of PV projects sold or close to sale to those parties.

Business Outlook for Third Quarter and Fiscal Year 2015

Third Quarter of 2015

Based on current market conditions, the Companys current operating conditions, estimated production capacity and forecasted customer demand, the Company anticipates its PV module shipments to be in the estimated range of 550 MW to 580 MW for the quarter ending September 30, 2015.

Fiscal Year 2015

Based on current market conditions, the Companys current operating conditions, estimated production capacity and forecasted customer demand, the Company anticipates its total PV module shipments to be 2.5 GW to 2.8 GW for the fiscal year ending December 31, 2015.

YGE stock is now trading at $0.61, having a volume of 2,311,546 shares. The year-to-date (YTD) performance of YGE stock reflects that it is -72.92% below last year. During the past month, the stock loses -28.54%, bringing three-month performance to -50.05% and six-month performance to -73.73%. For this stock, beta value at 2.32 represents it is too much volatile.

Yingli Green Energy Holding Company Limited is a supplier of vertically integrated photovoltaic (PV) module. The Company’s products and services cover the entire PV industry value chain, ranging from crystalline polysilicon ingots and wafers, PV cells and PV modules to the manufacture of PV systems and the installation of PV systems.