Yesterday, Yingli Green Energy
Not only was revenue up 81.4% from last year despite a weak Euro, gross margins were up to a record 33.5%. Revenue and gross margin trends in solar tell the story of who is giving up margin for sales and who has pricing power. It appears Yingli is a cut above competitors Sunpower
|
Company |
Revenue Growth (Y/Y) |
Gross Margin |
Gross Margin Change (Y/Y) |
|---|---|---|---|
|
Yingli |
81.4% |
33.5% |
+15.2% |
|
Solarfun |
105.1% |
21% |
+27.2% |
|
Sunpower |
28.4% |
22.9% |
+9.3% |
|
First Solar |
11.8% |
48.3% |
(8.4%) |
Source: Company press releases.
Yingli still can't match First Solar's thin film cost per watt, but improving efficiency is pushing it in the right direction. Yingli's new PANDA line started production on 19% conversion efficiency cells in July. R&D is also working to improve efficiency of multicrystalline silicon cells in collaboration with Innovalight. This shows the advantage of being a cost leader and playing efficiency catch-up as opposed to efficiency leader Sunpower who is trying to play cost catch-up.
As usual, investors were concerned about the outlook for 2011 and pricing in particular. Yingli said on the conference call it has demand for twice as many panels as it can produce but pricing might be down "high single digits". This should partly be attributed to Yingli's focus on maintaining market share in China where prices aren't as high as they currently are in Europe.
While Yingli may not have the growth potential of Solarfun but as a bigger and more established player in the solar market Yingli's risk profile is lower. Considering the market's response Yingli's stock may be stuck for a while but as 2011 comes into focus I expect a bounce as investors become a little less skittish about the future.
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