There's been a lot of financial improvement for Chinese solar companies this year, but not everyone has enjoyed the same level of success. For every Trina Solar (NYSE: TSL) and Canadian Solar (CSIQ 11.18%) -- which are now solidly profitable -- there's a money-losing JA Solar (NASDAQ: JASO) or Yingli Green Energy (NYSE: YGE).
ReneSola's (SOL +0.00%) results yesterday fell somewhere in the middle. Revenue jumped 11.1% sequentially to $419.3 million and gross margin was up to 8.1%, but net loss was $200.3 million when you include a $194.7 million impairment charge for a polysilicon factory upgrade gone wrong. If we adjust for that, the company's loss was just $5.6 million, within shouting distance of a profit.
How does ReneSola stack up?
One of the challenges for ReneSola is that it was a major polysilicon and wafer producer but not a major module maker until recently. When the polysilicon and wafer business became oversupplied, margins dropped and it didn't have anywhere to sell product. So, the transition to a module maker has increased margins, but they still lag behind industry leaders.
Just how does ReneSola stack up to the leaders and laggards I mentioned above?
|
Revenue |
Gross Margin |
Net Income (Loss) | |
|---|---|---|---|
|
Renesola |
$419.3 million |
8.1% |
($5.6 million)* |
|
Canadian Solar |
$490.9 |
20.4% |
$27.7 million |
|
Trina Solar |
$548.4 million |
15.2% |
$9.9 million |
|
JA Solar |
$287.3 million |
11.3% |
($14.7 million)* |
|
Yingli Green Energy |
$596.3 million |
13.7% |
($38.5 million) |
Note: Adjusted or non-GAAP loss.
You can see that gross margins are even lower than JA Solar and Yingli Green Energy and in the fourth quarter management only expects gross margin to be 9% to 11%. That's not likely enough to swing ReneSola to a profit.
Foolish bottom line
ReneSola has made strides in 2013, but it's not the best Chinese solar stock by a long shot. I like both Canadian Solar and Trina Solar better, partly because they both have exposure to project development.
Solar is all about risk vs. reward right now and ReneSola is just too high a risk for me.
