On November 9, 2010 Solarfun Power Holdings Company, Ltd. (Qidong, China) released financial results for the third quarter of 2010, reporting record net revenues of USD$327 million, an increase of 24.7% from the second quarter of 2010. Solarfun also recorded record PV module shipments of 224MW during the quarter, with a healthy gross margin of 22.7%, however the company posted a net loss on a GAAP basis of USD$3.8 million, largely due to a loss in the value of convertible bonds. Additionally, on November 9, 2010 Solarfun announced that it intends to offer USD$67.8 million in American Depositary Shares, with each share representing five ordinary shares in the company. "We are pleased with the results we achieved in the third quarter, particularly our record shipments and revenues as well as our increased gross margin, operating cost control and continued strong return on equity," stated Solarfun President Peter Xie. "In the first nine months of 2010, we have achieved non-GAAP earnings per basic ADS of US$1.70. We continue to see healthy market demand in the fourth quarter and beyond, and with increased scale and further vertical integration in 2011, we believe we will continue to be well-positioned for further profitable growth.”
Solarfun sees net loss in 3Q 2010 amid long-term growth and profitability
Despite Solarfun's impressive production and sales, the company incurred a loss in the fair change value of its convertible bonds of USD$41.7 million, which contributed to the erasing of GAAP profits during the quarter. However, Solarfun has seen strong long-term growth and profitability, and its current quarterly revenues of USD$327 million represent a 121% increase from the third quarter of 2009. The company has raised its shipment guidance for the full year 2010 from 750MW to 785MW.
Solarfun diversifies sales
Solarfun is one of several Chinese PV manufacturers to report record revenues in the third quarter of 2010, as global sales of PV modules continue to be driven by a strong German market. In 2011 circumstances may be different, with many analysts predicting that German demand will stabilize or even fall as a result of cuts to the nation's feed-in tariff, and demand expected to shift to other markets. Solarfun diversified its sales in the third quarter, with Germany's share dropping from 63% to 53% of Solarfun's module shipments, and the share of shipments headed to Italy, the United States, the Netherlands and Canada increasing.
Solarfun is a highly vertically integrated manufacturer, and has seen significant growth in manufacturing capacities in 2010. The company currently has annual production capacities of 360MW of silicon ingots, 400MW of wafers, 500MW of PV cells and 900MW of modules, with significant capacity expansions planned for 2011. Solarfun's module manufacturing costs using internal wafers saw a small increase during the quarter from USD$1.12/watt to USD$1.16/watt, after several consecutive quarters of decline. Solarfun credits this increase with higher polysilicon costs.
Slight decreases in 4Q 2010 output
Solarfun predicts that it will ship between 205 and 215MW of PV modules in the fourth quarter of 2010. The company says this decline in sales will be due to the conversion of some of its PV cell lines to selective emitter technology, and a reduction in the use of externally sourced cells in an attempt to reduce prices.
