$JASO - JA Solar: Q3 Beat, Up 2015 Capacity, Share Buyback; RBC TP $12

$JAS0 - JA Solar delivered a strong third-quarter and painted a bright outlook for the future.

Shipment in the third-quarter came in at 785.4MW, above the guided 730-760MW. JA Solar reported $492.2 million in sales, above the consensus $425.2 million. Earnings were $0.21 per share versus the expected $0.18.

JA Solar anticipates strong demand next year and now plans to expand its cell and module capacity by 20%. While China’s solar installation may fall short of the aggregation 13GW target due to delays in the provincial government level, JA Solar said its own capacity was fully booked for the fourth-quarter. JA Solar also said any unused quota from this year would be allocated in early 2015.

And to ease investor concerns over the unpredictable macro and industry conditions in China, JA Solar launched a $90 million share repurchase program.

The only weakness from the third-quarter was a slight decline in unit sales price, but that was only currency fluctation. “Blended ASP declined to $0.63 from $0.65 due to weaker EURO and Japanese Yen,” wrote RBC Capital Markets analysts Mahesh Sanganeria and Shawn Yuan.

The analysts updated their estimates but re-iterated their price target of $12:

We are lowering 4CQ14 estimates to $568M/$0.07 from $595M/$0.14. We reduced our estimate to reflect lower ASP and gross margin. We are also tweaking our CY15 estimates to $2,255M/$0.29 from $2,178M/$0.37. We increase revenue estimate to reflect higher module shipments and downstream project sales, but lower EPS estimate as we reduce gross margin estimate by 80 bps.

Shares of JA Solar jumped 8.85% to close at $8.49.

Tuesday was a good day for solar names. Apart from JA Solar’s strong earnings, which lift sentiments among all Chinese solar names, $SUNE - SunEdison agreed to buy wind developerFirst Wind Holdings Inc. for $2.4 billion. propelling its shares up 29.32%. $TSL - Trina Solar jumped 6.40%. $JKS - JinkoSolar rose 6.12%. $DQ - Daqo New Energy gained 5.07%.