Jetion Solar Holdings (LON:JHL), the China based manufacturer of high quality solar cells and modules, issued highly promising interim results for the six months ended 30th June 2010 in what amounted to a very difficult period for manufacturers in the solar space.
With two new lines installed in the period, both of which are now at full capacity, sales volumes were up 123.7% to 83MW resulting in revenue of US$146.7m (H1 2009: US$55.9m). Gross profit was US$ 28.0m (H1 2009: US$ 10.1m) with a 1% improvement in the gross margin largely due to the altered product mix in favour of more profitable solar modules against lower margin cells. Pre-tax profit was US$4.8m (H1 2009:US$3.2m) and basic earnings per share 5.44 cents against 3.28 cents in the comparable period.
There was a distinct change to the geographical mix with export sales volume increasing to 79.5MW from 11.6MW and China sales volume decreasing to 3.5MW from 25.5MW. As stated previously, the business mix also changed with a material uplift in solar module output to 84.1MW (H1 2009: 11.3MW) compared with cell output at 60.1MW (H1 2009: 41.7MW).With over 90% of group sales denominated in Euros, they unfortunately incurred a significant foreign exchange loss of US$13.2m on Euro assets. Since the period end they have reduced the holding of foreign currency and increasingly use forward foreign exchange contracts to manage currency exposure. The reduction in subsidies provided to PV installers has resulted in downward pressure on the price of solar modules, particularly in Germany the Group’s most important market. Unfortunately since May 2010 there has also been an increase in wafer prices putting further pressure on margins in the second half of this year. However, despite this, reassuringly they remain confident of meeting expectations for the full year. During the second half of the year they have already installed two new lines and expect two further lines to complete installation by the end of October, almost all of which we expect to be fully utilized. The balance sheet remains strong with net assets of US$130m (c£82m) at the half year end which compares with a current market cap c£43m of which only US$4.6m is Intangibles or Goodwill. They had cash balances and pledged bank deposits of US$107.7m at the half year end partially offset by an increase in bank loans to…
