Justice Sirikah

Suntech Power Holdings Co. Ltd. (NYSE: STP) Q3 Results squeezed But Walks Over Street Views

by Justice Sirikah November 23, 2009
stp_logo.jpgShares of Suntech Power Holdings Co., Ltd. (NYSE: STP) assumed a momentary upswing mode late last week as investors took consolation from better-than-expected third quarter results even though both earnings and revenues had fallen on year-over-year terms during the period. Better yet, the maker of crystalline silicon photovoltaic modules had upped its fourth quarter and fiscal 2009 objected shipments on the preview of recovering global solar markets.

  At a conference call, the company’s chairman and CEO attributed the substantive pickup in demand “largely due to a seasonal rush before end of year policy adjustments and improving customer returns on investments in solar projects”. He also added that it was partly “due to customer recognition of Suntech’s attractive value proposition of exceptional product performance at a reasonable price”.

  Despite a 30 percent drop in net quarterly income from last year’s $42.6 million ($0.25 per share), the current third quarter figure of $29.8 million ($0.16 per share) came in more than twofold against the second quarter earnings of $10 million ($0.06 per share). The earnings figure for the period under review was also better than analysts’ average forecast of $0.08 per share.

  Consolidated net sales for the third quarter were at $473.1 million, 20 percent down from $594.40 million booked in the corresponding quarter of 2008. But as is the case with net income of the recent period, revenues for the just ended quarter also topped analysts’ expectations of $426 million, while exceeding the previous quarterly total of $321 million. According to Suntech, the gross margin for the core wafer to module business was 20 percent in the three months to September, versus 19.1 percent in the prior quarter.

  Looking into the future, Suntech is looking to at least 10 percent higher shipment in the fourth quarter compared to the third quarter.  It is also anticipating to ship between 640MW and 660 MW of PV modules for the full year 2009, instead of the previous lower estimate of 600MW. Moving ahead to 2010, Suntech predicted more or less than 75 percent shipment growth and aims to expand cell and module production capacity to 1.4 GW by the second half of the year. 

  Shares of the Suntech which recently revealed plans to construct its first U.S plant in Phoenix were trading at $15.64, 3.16 percent up from Friday’s closing price of $15.18.


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