More Losses in the Chinese Solar Space (CSUN, CSIQ, YGE)

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Another Chinese maker of PV solar cells, China Sunergy Co., Ltd. (NASDAQ:CSUN), has reported a loss for the first quarter of 2009. The company’s net loss per diluted ADS came to -$0.40. On a non-GAAP basis the loss was -$0.33, worse than analysts’ expectations of -$0.26. Revenues were down 14.4% sequentially, to $37 million, just a little below expectations of $36.46 million. These numbers are even weaker than those posted by Canadian Solar Inc. (NASDAQ:CSIQ) and Yingli Green Energy Holding Company Limited (NYSE:YGE).

Operationally, the company can’t seem to get it right. Shipments for the quarter were almost 70% higher than in the fourth quarter of 2008, but the average selling price fell so far that margins turned negative. But the company is used to that: the negative gross margin in the fourth quarter of 2008 was 33.1%, worse even that the first quarter negative margin of 23.7%. That kind of performance might lead to a change in management in any other country but China.

China Sunergy expects to ship 35-40 megawatts of production in the second quarter at a positive gross margin “in the low single digits.” No word on net margins, but don’t expect a positive result there. For the full year, the company reiterated guidance of 150-200 megawatts of capacity and gross margin of 15%-20% for the second half of the year.

China Sunergy shares are off about 7.5% in pre-market trading, at $3.58. The company’s 52-week trading range is $1.33-$12.55.

Paul Ausick
May 27, 2009