Why Hanhwa SolarOne (HSOL) Is Up Today (Update)

NEW YORK (TheStreet) -- Hanhwa SolarOne  (HSOL) popped 13.5% to $3.70, up 44 cents from its previous close of $3.26, at the close of the trading day on Thursday after the company, which manufactures photovoltaic cells and panels, reported a narrower fourth-quarter net loss compared to last year.

Hanwha's net loss narrowed to $3.6 million, or 4 cents per American Depositary Share (ADS), compared to $107.6 million, or $1.27 per ADS, in the same period one year earlier. Net revenue soared 60% year over year to $213.9 million. 

Panel shipments surged 77% to 352.2 megawatts, but shipments in the first quarter should remain flat due to seasonal weakness in China and North America. The company expects to ship 1.5-1.6 gigawatts of panels in 2014, up from 1.3 gigawatts last year. Hanhwa SolarOne expects gross margins in the range of 15% to 20%. 

Gross margin was 14.1% in the fourth quarter, up from -31.3% in the same period one year earlier thanks to greater panel prices and reduced costs.

The stock had a volume of 11,638,075, nearly six times its average of 1,999,810. It hit a high of $4.23 and a low of $3.57 for the day. The stock holds a one-year high of $5.70 and a one-year low of 86 cents.

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TheStreet Ratings team rates HANWHA SOLARONE CO LTD as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate HANWHA SOLARONE CO LTD (HSOL) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, unimpressive growth in net income, generally high debt management risk, disappointing return on equity and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

    • HANWHA SOLARONE CO LTD's earnings per share declined by 45.9% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, HANWHA SOLARONE CO LTD reported poor results of -$2.97 versus -$1.81 in the prior year.
    • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 46.8% when compared to the same quarter one year ago, falling from -$51.26 million to -$75.22 million.
    • The debt-to-equity ratio is very high at 2.83 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, HSOL has a quick ratio of 0.70, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
    • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, HANWHA SOLARONE CO LTD's return on equity significantly trails that of both the industry average and the S&P 500.
    • The gross profit margin for HANWHA SOLARONE CO LTD is currently extremely low, coming in at 14.84%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, HSOL's net profit margin of -40.55% significantly underperformed when compared to the industry average.
    • You can view the full analysis from the report here: HSOL Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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