Yingli Green to add 300MW of capacity; tops $1B in annual revenues, achieves record module shipments

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In a move to bring its production capacity up to 1GW by the end of 2010, Yingli Green Energy will add 300MW of monocrystalline-silicon-related solar manufacturing capabilities at its Baoding headquarters campus in China. The expansion news came as the company announced record PV module shipments for its recently completed fourth quarter and fiscal-year 2009.

The vertically integrated company will build ingot, wafer, cell, and module lines, and the solar cells will be based on the high-efficiency mono-c-Si technology developed through the Project Panda collaboration (which also includes the Energy Research Centre of the Netherlands [ECN] and equipment supplier Amtech Systems).

To help finance the new construction and buildout, the company has received a five-year project loan of RMB 1.5 billion ($219 million) and a working capital credit facility of RMB 250 million ($36 million), both granted by the Bank of Communications, Hebei Branch (BOCOM).

“Shared anticipation of global PV industry growth, the robust flow of orders and inquiries that we have already received in 2010 and our global growth strategy are the main motivations for this strategic capacity expansion plan,” said Liansheng Miao, chairman/CEO of Yingli Green. “We believe this expansion will allow us to meet the increasing demand for our bankable, cost-effective products and further drive down costs through increased cell conversion efficiency and the larger scale of manufacturing.”

“On the Project Panda pilot line, we have already successfully produced next-generation cells with an average efficiency rate of 18% or higher,” he continued. “Looking ahead, we expect to increase the average efficiency rate to at least 18.5% on the commercial production lines by the end of this year. Combined with the existing 600MW production capacity in Baoding and the 100MW capacity under construction in Hainan Province, this new expansion project is expected to bring our total production capacity to 1 GW by the end of 2010.”

The company’s revenues reached RMB 2,350.9 million ($370.8 million) for the fourth quarter, reflecting a 15.7% increase in its Yingli Solar-branded module shipment volume compared to the previous period—a record high.

Gross profit for the quarter more than matched the previous quarter, reaching RMB 750.4 million ($109.9 million), resulting in an improved gross margin of 29.6%.

The company attributed the quarterly increase in gross margin primarily to the continuous decline in the blended cost of polysilicon, decreasing polysilicon usage per watt, continuous reduction in nonpolysilicon cost, and the relatively flattish average selling price in the fourth quarter.

Operating income for the quarter was RMB 111.1 million ($16.3 million), although a net loss was registered during the final quarter of RMB44.8 million (US$6.6 million), compared to a net income of RMB 120.8 million ($17.6 million) recorded in the third quarter.

Fiscal-year results showed the company topping the billion-dollar mark in sales, with total net revenues reaching RMB 7,254.9 million ($1,062 million), driven by a 86.6% year-over-year increase in module shipments to 525.3MW.

Although the annual gross profit was RMB 1,714.4 million ($251.2 million), with a gross margin of 23.6%, Yingli still ended up in the red, with a net loss of RMB 459.2 million ($67.3 million) in FY09, in large part due to lower module ASPs.
Chairman/CEO Miao (pictured at left) said he was “very pleased to close 2009″–what he called a “challenging year”–“with a strong fourth quarter. Two main factors contributed to our solid shipment growth. First, by satisfying vigorous demand for our highly bankable and cost-effective products, we have enhanced cooperation with our top existing customers. Second, we were able to attract an influx of orders from new customers with our strong brand, well-established reputation, and integrated service model.”

“Looking into 2010, in view of the shared anticipation of global industry growth and the robust flow of purchase orders and inquiries that we have already received, we are confident in our ability to achieve our full-year PV module shipment guidance of 950MW to 1GW. This confidence is further supported by our planned capacity expansion.”

“In spite of the expected cuts in feed-in tariff subsidies in Germany in the middle of the year, which may put pressure on the module price, we expect to experience a sustainable growth in the German market in 2010 by capitalizing on our solid position and extensive customer base in that market. In addition, we are expanding our footprint rapidly in the U.S., Spain, Italy, China and other emerging markets to further drive our growth.”

Vishal Shah of Barclays Capital wrote in an investment note issued after the earnings call that “Yingli remains the best-in-class vertically integrated Chinese module manufacturer and is poised to gain market share, in our opinion. However, concerns about potential oversupply as well as rising opex, (and) interest expense could continue to remain an overhang on the shares.”

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