jasolar.gifNasdaq-listed Chinese solar energy company JA Solar shocked investors with a massive shortfall in revenues and warned it was unlikely to achieve the results given in its 2009 guidance back in March.

The big miss shows that despite the favourable political backdrop for solar energy in many countries, it may take some time for the benefits to feed through to the top — and bottom — lines of some of China's solar plays.

JA Solar reported Q1 revenues of $33.9m, a 79% drop from the year-earlier Q1, and a a gross loss of $20.9m against a profit of $34.5m a year earlier. Analysts had been expecting sales to be around four times higher and the loss four times smaller, so it was quite an upset.

The company tried to pin much of the blame on the weak economy and last year's credit crunch, which hit this industry hard as many solar energy projects were delayed lack of finance. Samuel Yang, CEO of JA Solar said:

The first quarter of 2009 was the most challenging quarter for JA Solar since the company was founded in 2005. The global industry conditions were particularly difficult, with the market affected by worse than normal seasonality, a weak macro-economic environment and the continuing impact of the credit crisis resulting in some issues with customer project financing.”

But recent months have seen an easing in credit conditions, the arrival of the Obama administration in the US that wants to encourage renewable energy and the green shoots of recovery supposedly visible in many parts of the globe.

Against this more favourable backdrop, investors are no doubt scratching their heads to understand why JA Solar has turned more bearish just now and has withdrawn its 2009 guidance, which was for revenue of $830m to $952m, published only two months earlier. Indeed, the company says it will not produce any new guidance “until the company has better visibility of the global solar market conditions in the coming quarters.”

Some analysts, unperturbed by JA Solar's dismal Q1 result, have upgraded the stock on expectation that the worst is now behind it and demand will rebound. Indeed, this belief that the worst has passed has recently caused investors to pile into the US-listed Chinese solar plays, causing the Chinese Solar Stocks Index to gain more than 50% in the last month.

But it is worrying nonetheless that at least one Chinese solar company admits that it has no clear idea as to how how many PV modules it is going to sell this year.

One explanation may be that JA Solar, unlike its more internationally focused rivals, is heavily dependent on the Chinese market, which accounted for 77% of revenue in Q1. The collapse in Chinese demand thus hit JA Solar particularly hard and the Chinese solar market is less mature than many in the west, which presumably reduces visibility.

Suntech, which we wrote about earlier, also has reported a sizable fall in Q1 revenues and a drop in income, but the figures exceeded what Wall Street was expecting. Echoing JA Solar's comments, it has put expansion plans on hold because of “limited demand visibility”.

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