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The leaders are starting to separate themselves from the rest of the pack in the solar sector. One of the clear leaders emerging in China is Yingli Green Energy (NYSE: YGE ) , which was one of the few companies in solar to have a good earnings report.
Revenue increased 27.4% from the first quarter to $680.6 million as module shipments grew 36.6%. Gross margin fell to 22.1%, but the company’s vertical integration and leading margin helped insulate it from the problems that plagued LDK Solar (NYSE: LDK ) and JA Solar (Nasdaq: JASO ) in the second quarter.
Of course, there is an asterisk. As a vertically integrated module producer, Yingli wasn’t nearly as affected by the fall of solar cell and polysilicon prices in the quarter that plagued LDK and JA Solar. So while those companies see margins rising in the second half of the year, Yingli expects gross margins to fall to the mid- to high teens in the third quarter.
China is becoming a large demand source that is expected to grow in coming quarters. The feed-in tariff recently instituted in China will drive demand in the future, according to management, who expects 14% to 16% of sales to come from China in 2011, up from just 4% in 2010.
North America is also a market Yingli has put a major focus on, and it’s starting to pay off. Shipments have reached 250 MW in North America, and Yingli claims to have about a 15% share of the U.S. solar market.
Chinese leaders pull ahead
We should see similar results when Trina Solar (NYSE: TSL ) reports earnings tomorrow morning. Yingli and Trina are two of the largest, most vertically integrated Chinese manufacturers and should be winners as the sector continues to shake out.
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