Solarfun Power turns profit in 3Q, shares rise

AP News
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Posted: Nov 18, 2009 10:47 AM

Chinese solar cell maker Solarfun Power Holdings Co. Ltd. on Wednesday said it turned a third-quarter profit, driven by significantly cheaper cost of goods sold and record quarterly shipments.

Shares of the company rose 48 cents, or 8.2 percent, to $6.31 in morning trading.

Rising demand pushed third-quarter shipments up 59 percent to a record high of 102.6 megawatts. Bolstered shipments coupled with a 36 percent decline in the cost of revenue helped widen margins and outweigh the negative impact of declining selling prices.

Prices of solar cells have been hurt by weaker prices for polysilicon, a key ingredient used in the making of solar cells.

Quarterly earnings rose to 136.6 million renminbi ($20 million), or 2.53 renminbi per American Depository Share (37 cents per ADS), compared with a loss of 44.3 million renminbi, or 0.86 renminbi per ADS, during the same period last year.

Analysts polled by Thomson Reuters estimated a profit of 15 cents per ADS, on average. Analysts typically exclude one-time items.

Revenue dropped 29 percent to 986.8 million renminbi ($144.6 million), down from 1.27 billion renminbi in the prior-year period. Analysts forecast an average revenue of $145.1 million.

Looking ahead to the fourth quarter, Solarfun projected a 5 percent sequential decline in average selling prices, and a sequential rise in shipments to 110 megawatts. The trend of climbing demand and dipping prices is expected to continue into the first quarter of 2010.

For the full year 2010, Solarfun president Peter Xie said, "We expect to see a healthy demand environment in 2010. The preliminary shipment target for 2010 is 500 MW."