Roth on Sidelines with Yingli Green Energy (YGE); Leverage Will Continue to Limit Upside

Roth Capital keeps Yingli Green Energy (NYSE: YGE) at Neutral with a price target of $5.50 following recent quarterly results.

Analyst Philip SHen noted that YGE missed Roth's revenue and EPADS outlook of $647 million and negative $.20 per share, respectively. Despite the miss, the analyst observed a strong and diverse shipment outlook, commenting, In Q1, YGE expects module shipments to decline mid-20% QoQ (our current estimate of 715MW implies -23% QoQ) vs. prior ROTHe of 796MW and GMs of 14-16%. For 2014, management sees shipments of 4-4.2GW (including 400-600MW shipped to downstream projects) vs. prior ROTHe of 3.6GW. YGE’s shipment guidance implies growth of mp +28% YoY vs. CSIQ of mp +37% YoY, JKS of mp +59% YoY, and TSL of mp +43% YoY. 2014 shipment mix is expected ~29% China, ~16% US, ~15% EU, and ~40% ROW.

The company also highlighted a strong product pipeline of about 1-GW in China. YGE built 128MW of projects in China during 2013 and expects to complete an additional 400-600MW in 2014. The company plans to sell ~50% of these new projects by YE’14 (200-300MW implied). Additionally, YGE has a ~200MW pipeline of overseas projects (ex-China) and expects to complete 30-50MW in 2014. Management indicated current project IRRs are ~9-10% based on a system ASP of $1.30/W and expects IRRs to reach mid-teen percentages in 2014 and 2015, Shen said.

Bottom line: While NI profitability may be achievable for YGE, we remain Neutral, until we see greater earnings power.

For an analyst ratings summary and ratings history on Yingli Green Energy click here. For more ratings news on Yingli Green Energy click here.

Yingli Green Energy closed at $5.36 yesterday.

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