Back in December, when Yingli Green Energy (NYSE:YGE) and Solarfun Power (NASDAQ:SOLF) reported third-quarter results, I concluded that Yingli looked like "the more sound of the two solar shops." In the intervening time, Mr. Market has certainly voted the same way. Yingli shares have soared some 75%, whereas Solarfun sits at around the same level.
Now that Yingli's out with its fourth-quarter numbers, let's see how things are holding up for the integrated PV player.
Quarterly net revenue fell 20% sequentially, but rose 21% from the prior year's fourth quarter. I tend to put a lot more emphasis on sequential results, given the pace of growth in this industry. That's a tough hiccup, but not at all a surprise given the comments we saw from the likes of JA Solar (NASDAQ:JASO) and Suntech Power (NYSE:STP) about credit-strapped customers and idled production capacity.
More interesting is the breakdown of that revenue decline. It is almost entirely derived from lower selling prices for modules, rather than volume. Yingli clearly benefited from its nearly exclusive focus on selling to foreign (i.e., non-Chinese) customers. When the company talked up its "solid relationships" with European customers on the conference call, it wasn't blowing smoke.
As for the 2009 outlook, despite decided weakness in places like Spain, Yingli is still looking to roughly double 2008's shipment levels. This rapid growth hinges on a successful third-quarter ramp-up of the new 200-megawatt expansion. Yingli is targeting gross margins in the 22% to 24% range, which is comparable to that achieved in 2007 and 2008. Compared to thin-film shops Energy Conversion Devices (NASDAQ:ENER) and First Solar (NASDAQ:FSLR), that level of profitability is nothing to get excited about, but it's adequate.
On a final note, Fools should keep an eye on days sales outstanding. This figure, which reflects cash collections on accounts receivable, ballooned from 48 days in the third quarter to 75 days in the fourth. That number needs to come down for me to get comfortable with the company's cash-flow situation.
Related Foolishness:
- ECD is green in more ways than one.
- There's still some spring in this solar shop's step.
- It's mighty slow going over at this rival's operations.
