UPDATE 2-Yingli quarterly profit tops Wall Street view

* Q2 EPS of 21 cts tops Wall St view of 19 cts

* Revenue up 81 pct to $398.1 mln

* Increases full-year gross margin forecast

* Shares slip 3.5 pct
(Adds earnings details, share price, analyst comment)

By Matt Daily

NEW YORK, Aug 19 (BestGrowthStock) – Chinese solar company Yingli
Green Energy Holding Co (YGE.N: ) posted higher-than-expected
second-quarter earnings on Thursday, but fears about weakening
solar panel prices next year knocked its shares lower.

The company, which is adding polysilicon production to its
portfolio of wafers, cells and photovoltaic modules, has been
helped by strong European sales ahead of planned cuts to green
energy subsidies there.

That helped keep average selling prices for its products
firm, the company said, and lift second-quarter gross margin to
a record 33.5 percent.

Even with an expected dip in margins likely in the second
half of 2010 when the company brings new polysilicon production
on line, it raised its full-year gross margin forecast by a
percentage point to a range of 28 to 30 percent.

While demand was likely to remain strong into 2011, company
executives told a conference call, average selling prices could
fall by the “high single digits” in percentage terms.

Concerns about 2011 demand, as well as the costs to ramp up
the output of polysilicon, weighed on the company’s shares,
which were down more than 3 percent.

“I think the major concerns for the industry in general are
around the pricing outlook for the first half of 2011,” said
John Hardy, analyst with Gleacher & Co, who has a “hold” rating
on the shares.

The company could produce up to 400 metric tonnes of
polysilicon this year and 2,000 metric tonnes in 2011. During
the production ramp up, its costs are likely to be as high as
$65 per kilogram, but that figure will drop to $40/kg upon
completion, and to $25 after nine months of production.

Prices for polysilicon, the key raw material that turns
sunlight to electricity inside most solar modules, have been
hovering near $55/kg in recent weeks.

But those prices have seen wide swings in recent years,
prompting many companies to seek to produce their own


Net income for the second quarter was $32.1 million, or 21
cents per share, compared with a year-earlier net loss of $57.6
million, or 44 cents a share.

The results topped the 19 cents a share that analysts on
average had forecast, according to Thomson Reuters I/B/E/S.

Revenue rose 81 percent to $398.1 million.

Like other Chinese solar companies, Yingli was hurt by the
weakness in the euro versus the U.S. dollar and Chinese
renminbi, recording a currency loss of $23.4 million.

Earlier this week, Yingli’s larger Chinese solar rival
Suntech Power Holdings (STP.N: ) reported a net loss of $174.9
million, or 97 cents per American depositary share, as it took
one-time charges to shut down its thin film business and for an
investment. [ID:nN18153584]

Shares of Yingli were down 3.5 percent at $10.86 on the New
York Stock Exchange on Thursday morning, bringing their
year-to-date loss to 30 percent.
(Reporting by Matt Daily; Editing by Lisa Von Ahn and Matthew

UPDATE 2-Yingli quarterly profit tops Wall Street view