JA Solar's CEO Discusses Q1 2012 Results - Earnings Call Transcript

JA Solar Holdings, Co., Ltd. (JASO)

Q1 2012 Earnings Conference Call

June 5, 2012 8:00 am ET


Dr. Peng Fang – CEO

Min Cao – CFO

Ming Yang – VP of Business Development and Corporate Communications

Martin Reidy – Brunswick Group


Jesse Pichel - Jefferies & Company, Inc

Brandon Heiken - Credit Suisse

Karen Tai - Piper Jaffray & Co

Kelly Dougherty - Macquarie Research Equities

Mahesh Sanganeria - RBC Capital Markets

Yeuk-fai Edwin Mok - Needham & Company, LLC

Caleb Dorfman - Simmons & Company

Amy Song - The Goldman Sachs group, Inc

Pavel Molchanov - Raymond James

Pranab Kumar Sarmah - Daiwa Capital Markets

Jeff Osborne - Stifel Nicolaus & Company, Inc



Hello, and thank you for standing by for JA Solar’s First Quarter 2012 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management’s prepared remarks, there will be a question-and-answer session. Today’s conference is being recorded. If you have any objections, you may disconnect at this time.

I’d now like to turn the meeting over to your host for today’s conference, Mr. Martin Reidy of Brunswick Group.

Martin Reidy

Thank you. Welcome to JA Solar’s first quarter 2012 earnings conference call. Joining us from the Company today are Dr. Peng Fang, CEO; Mr. Min Cao, CFO; and Mr. Ming Yang, VP of Business Development and Corporate Communications.

As stated in the press release, the oversimplified translation of CNY into U.S. dollars, which is set at 6.2975 RMB to the dollar, is made solely for the convenience of the audience. References to dollars are the lawful currency of the USA.

The press release published today provides detailed financial tables for the conversion from CNY to USD. On this call, Dr. Fang will begin with an overview of our Q1 2012 results covering the business and market developments and outlook. Following that, Min will provide details of the Company’s financial performance.

After prepared remarks, we will open up for questions for the remainder of the call. And we expect the entire call to last approximately one hour.

Before we begin the formal remarks, I’d like to remind you that certain statements on today’s call, including statements regarding expected future financial and industry growth, are forward-looking statements that involve a number of risks and uncertainties that could cause actual results to differ materially. These statements are made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.

Factors that could cause actual results to differ into general, business and economic conditions in the solar industry; government support for the development of solar power; future shortage or availability of the supply of high purity silicon; demand for end-user products by consumers and inventory levels of such products in the supply chain; changes in demand from significant customers; changes in demand for our major markets; changes in product mix, capacity utilization, level of competition, pricing pressures, and declines in average selling prices; delays in the introduction of new product lines; continued success in technological innovation; shortage in supply of raw materials; availability of financing; exchange rate fluctuations; litigation and other risks as described in the Company’s SEC filings, included in its Annual Report on Form 20-F filed with the SEC.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results. You should not place undue reliance on these forward-looking statements. All information provided on today’s call speaks as of today’s date, unless otherwise stated, and the Company undertakes no duty to update such information, except as required under applicable law.

I will now turn the call over to Dr. Peng Fang, the CEO of JA Solar.

Dr. Peng Fang

Thank you, Martin, and thank you everyone for joining today’s call. The marketing environment has remained volatile in the first quarter with downward pricing pressure continue to squeezing margins across the industry. In this seasonally slow quarter; JA Solar recorded a shipment of 366 megawatt, which is above the high-end of our guidance of 350 megawatt.

It is clear that the long-term winners in the solar industry will be the companies who have the customer relationships that pick (indiscernible) and the financial strength to sustain through this current downturn. Over the past several quarters, JA Solar is focused on executing a strategy to scope with the external industry challenges and position ourselves for long-term market leadership and in Q1 we made important progress.

We maintained a healthy financial position and in average this to build our marketing share. Customers from various regions are increasingly relying on top tier suppliers who has the ability to navigate through the industry downturn. The only one to choose the companies that will be able to honor the long-term product warranties and these customers recognize that JA Solar is in a better position than many of our competitors. As a result, we have maintained a strong market position, thanks to our dependability and bankability while been conservative with our cash.

And we continue to push forward with important technologically innovations and not only reduced cost, but also enable us to manufacture high quality and high efficiency products that are better than our peers offerings and well suit to the changing market requirements.

This is obviously a challenging time for everyone in the solar industry, but at the end of this first quarter, I believe that we’re better positioned to weather the near-term challenges and emerging strongly when the market recovers.

Let’s look at some of the key metrics. Firstly, our shipments, this quarter despite we have Chinese New Year holiday shut down, we shipped 366 megawatt of solar cells and the modules above the top-end of our previous guidance of 320 megawatt to 350 megawatt. This is encouraging. Shipment was slightly down from Q4 because of the Chinese New Year holiday reduced our production capacity during the first quarter, which in turn influenced our shipments. Demand remains very strong, particularly to our high efficiency products, which now accounts for approximately 60% of our total cell productions.

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