Suntech’s solar module sales increasing but ASPs at heavy discount to major rivals

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Major photovoltaics energy provider (PVEP) Shunfeng International Clean Energy reported a 19.5% increase in revenue for the first half of 2015 against a backdrop of profits falling 65.8%, compared to the prior year period.

The increase in revenue was primarily driven by its expanding PV power plant business and increased sales of solar products that includes wafers, cells and modules. 

However, the reduced profit was primarily due to a drastic decline in module ASPs which averaged US$0.50/W in the reporting period, down from US$62/W in the prior year period. 

The company also noted the drop in earnings was due to increased operating expenses at it continued to acquire companies and expand its international footprint. 

“We are pleased to report revenue growth of 19.5% year-on-year in the first half as we generated an increasing amount of power generation from our portfolio of solar power plants,” said Eric Luo, SFCE executive director and CEO. “During the first half of the year, we took concrete steps to expand our platform as a global provider of clean energy solutions. Through our joint venture with Nobao, a leader in ground source heat pump technology, and acquisition of Lattice Power, an LED lighting specialist, we formed the full complement of technologies to replace traditional energy with cost-competitive, integrated low carbon solutions.”

Shunfeng reported total revenue of RMB3,520.4 million (US$553.7 million) in the first half of 2015, 19.5% higher than the prior year period. 

Net profit was RMB172.5 million (US$27.1 million), down 65.8%, compared to the prior year period.

Solar product volume sales, primarily from subsidiary Suntech increased 19.6% to 1,193.4MW, up from 997.5MW in the first half of 2014. Total solar product sales were RMB3,018.5 million (US$474.7 million), up from US$441 million, a 7.7% increase from the prior year period. 

PV module sales to third parties increased 47.2% to 548.7MW as sales to international customers increased to 42.2% of the Group's total revenue, up from 30.7% in the prior year period. 

However, sales in China also increased as its largest customer in China accounted for approximately 11.2% of total revenue. Module selling prices have declined almost 20%, against a backdrop of industry ASP declines of no more than 10 to 15% in the last 12 months. 

Shunfeng’s module ASP’s ((US$0.50/W), are the lowest when compared to major rivals such as Trina Solar (US$0.60/W), Canadian Solar (US$0.60/W), Hanwha Q CELLS (US$0.59/W), JinkoSolar (US$0.57/W) and JA Solar (US$0.56/W) in the second quarter of 2015. 

Despite solar cell sales by volume being almost unchanged from the prior year period, Shunfeng reported a 16.1% decrease in solar cell revenue of US$22.4 million to US$116.7 million. The decline was primarily due to a decrease in 15.8% ASP decline to US$0.29/W, compared to US$0.35/W in the prior year period.

PV projects and downstream business

Shunfeng reported that solar power generation increased by 176% year-on-year to 512,751MWh, due to the increase in the number of grid-connected solar projects in operation, which increased from 890MW as of 30 June 2014 to 1,622MW as of 30 June 2015.

The expected annual designed capacity of its solar power plants in China was 2,267MW at the end of the first quarter with 1,939MW under construction.

The company completed the acquisition of S.A.G. in the second half of 2014, and its subsidiary, Meteocontrol, which provides solar power plant monitoring services had revenue of RMB48.1 million (US$7.5 million) in the reporting period. 

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