8.3.2007: Meldung: Solarfun Power Holdings Co., Ltd: Fourth Quarter and Fiscal Year 2006 Results

Solarfun Power Holdings Co., Ltd.

Solarfun Power Reports Fourth Quarter and Fiscal Year 2006 Unaudited Financial Results

Wednesday March 7, 7:12 am ET
Fourth Quarter 2006 Highlights:
-- Net revenue increased 207.0% to RMB244.7 million (US$31.4 million)(1) compared to the fourth quarter of 2005 and increased 33.9% compared to the third quarter of 2006
-- Net income was RMB33.0 million (US$4.2 million), or RMB1.30 per basic ADS (US$0.17 per basic ADS), an increase of 224.5% from the fourth quarter of 2005 and 36.6% from the third quarter of 2006
-- PV module shipments totaled 7.8MW, up from 2.5MW in the fourth quarter of 2005, and up from 5.6MW in the third quarter of 2006
Full Year 2006 Highlights:
-- Net revenue increased 279.7% to RMB630.9 million (US$80.8 million) compared to fiscal year 2005
-- Net income increased 635.1% to RMB105.9 million (US$13.6 million), or RMB4.76 per basic ADS (US$0.61 per basic ADS)
-- PV module shipments totaled 19.0MW, up from 5.2 MW in fiscal year 2005

SHANGHAI, China----Solarfun Power Holdings Co., Ltd., an established manufacturer of both PV cells and PV modules in China, today announced unaudited financial results for the fourth quarter and full fiscal year of 2006.


For the fourth quarter of 2006, the Solarfun recorded total net revenue of RMB244.7 million (US$31.4 million) and net income of RMB33.0 million (US$4.2 million), or RMB1.30 per basic ADS (US$0.17 per basic ADS). Total net revenue for fiscal year 2006 was RMB630.9 million (US$80.8 million) and net income was RMB105.9 million (US$13.6 million), or RMB4.76 per basic ADS (US$0.61 per basic ADS).

Yonghua Lu, Chairman and Chief Executive Officer, commented, "2006 was a landmark year in the history of our company and culminated in our successful listing on NASDAQ in December.

The offering itself helped us raise US$135.5 million, which should leave us in a strong position to continue our plans to expand our production lines and procure silicon supply. Our financial results reflect our strong position, despite continued challenges, especially in terms of sourcing stable supplies of raw materials at reasonable prices. We set records in terms of both revenue and net income for the fourth quarter and full fiscal year as we added PV production capacity and diversified our customer base. Since the IPO, we have also made significant headway in a few areas of focus. First, we are pleased to report that we completed construction and started operation on our third and fourth cell production lines in early March. Second, we received UL certification for our PV modules last week. We believe this will allow us to broaden our geographical reach more effectively, and in particular, penetrate the U.S. market."

"As we head into 2007, we will continue to work on securing silicon supply and expanding our international marketing efforts, especially in the US and in European countries such as Italy and Spain. In the near term, we believe there will be a reduction in gross margin from the end of 2006 as a result of a drop in price levels due to both seasonality in the market and uncertainty regarding renewable energy policies in some countries. However, on an annual basis, we believe our growth will remain robust. Looking out longer-term in 2007, we believe we will see a rebound in demand as the new solar-related regulatory policies and incentive programs in our target markets become finalized."

Fourth Quarter 2006 Results

Solarfun"s total net revenue for the fourth quarter increased 207.0% to RMB244.7 million (US$31.4 million) from RMB79.7 million in the fourth quarter of 2005, and increased 33.9% from RMB182.8 million in the third quarter of 2006. Growth in net revenue in the fourth quarter was primarily due to an increase in production volumes and strong overall demand, and was partially offset by a decline in average selling price ("ASP"). Total PV module shipments and ASP were 7.8MW and US$3.96 per watt, respectively, in the fourth quarter of 2006, compared to 5.6MW and US$4.04 per watt, respectively, in the third quarter of 2006. During the fourth quarter, Solarfun derived approximately 99.8% of total net revenue from PV modules.

Gross profit for the fourth quarter was RMB65.6 million (US$8.4 million), representing an increase of 326.0% from RMB15.4 million in the fourth quarter of 2005 and an increase of 26.4% from RMB51.9 million in the third quarter of 2006. The gross margin increased to 26.8% from 19.3% in the fourth quarter of 2005, and dropped slightly from 28.4% in the third quarter of 2006. The sequential decrease was largely attributable to an increase in the cost of silicon and a decrease in the ASP in the fourth quarter of 2006.

Income from operations for the fourth quarter was RMB35.3 million (US$4.5 million), or 14.4% of total net revenue, which compares with RMB11.1 million, or 13.9% of total net revenue in the fourth quarter of 2005, and RMB30.2 million, or 16.5% of total net revenue in the third quarter of 2006. The year-over-year increase was primarily due to the higher gross margin. The sequential increase in operating profit was mainly due to increased PV module shipments and was offset by the decrease in gross margin, higher selling expenses, and higher general and administrative expenses as a result of the continued business growth.

Net income for the fourth quarter was RMB33.0 million (US$4.2 million), representing a 224.4% increase year-over-year and a 36.6% increase from the third quarter of 2006. Basic earnings per ADS for the fourth quarter of 2006 were RMB1.30, or US$0.17 per ADS.

Full Year 2006 Financial Results

For the full 2006 fiscal year, the Company"s total net revenue increased 279.7% to RMB630.9 million (US$80.8 million) from RMB166.2 million in 2005. The Company derived approximately 95.8% of its total net revenue from PV modules. The increase was mainly due to a large increase in production volumes and strong overall demand.

Gross profit for 2006 was RMB184.4 million (US$23.6 million), representing an increase of 601.1% from RMB26.3 million in 2005. The gross margin increased significantly to 29.2%, compared with 15.8% in 2005. This increase was primarily due to the ramp-up of Solarfun"s PV cell production capabilities, which has allowed the Company to use its own PV cells for module production. Income from operations for 2006 was RMB113.8 million (US$14.6 million), or 18.8% of total net revenue. This represents a 602.5% increase from RMB16.2 million in 2005, when operating income was only 9.7% of total revenue.

Net income for 2006 was RMB105.9 million (US$13.6 million), representing a 635.0% increase from the previous year. Basic earnings per ADS were RMB 4.76 (US$0.61 per ADS) in 2006 compared to RMB1.32 in 2005.

Financial Position

As of December 31, 2006, the Company had cash and cash equivalents of RMB1,137.8 million (US$145.8 million), and working capital of RMB1,482.7 (US$190.0 million). Total bank borrowings totaled RMB410.9 million (US$52.7 million), of which RMB15.0 (US$1.9 million) were long-term bank borrowings.

Business Outlook for 2007

Based on current operating and other conditions, Solarfun estimates that it will achieve the following for the full 2007 fiscal year:

* Net revenue of US$265 million to US$285 million, representing year-over-year growth of 228% to 252%.
* PV product shipments of 80-90MW, representing year-over-year growth of 254% to 298%.
* An increase of annualized total PV cell production capacity from 60MW at the end of 2006 to 240MW by the end of 2007.

Recent Events

Completed IPO listing on NASDAQ:

In December 2006, the Company completed its IPO, generating net proceeds of US$135.5 million, net of listing expenses. The Company intends to use the proceeds to expand its existing PV cell production lines, purchase raw materials and to meet general working capital requirements. Upon the consummation of the IPO in December 2006, all of the Company"s outstanding 79,644,754 Series A Preference Shares were automatically converted into 79,644,754 ordinary shares.

Sales agreement for PV modules with UB Garanty Project SL:

In January 2007, the Company entered into a sales agreement for PV modules with UB Garanty Project S.L. in Spain. Under the terms of this agreement, the Company will sell approximately 140MW of photovoltaic modules to UB Garanty Project S.L. over the next three years. The contract is expected to have an estimated value of between US$40 million and US$50 million in 2007.

Installation of PV cell production lines:

The Company finished installing and commenced operations on its third and fourth PV cell production lines in early March, 2007. These two lines bring the Company"s annualized PV cell production capacity up to 120 MW.

Receipt of UL Certification for photovoltaic modules:

Solarfun received a certificate of compliance from Underwriters Laboratories (UL) for twenty of the Company"s PV modules in early March. The UL certification demonstrates the quality of Solarfun"s products and should help the Company in its international sales development, especially in the US, which is one of the biggest markets in the world for solar power.

Underwriters Laboratories is an independent, not-for-profit product-safety testing and certification organization in the U.S. that is recognized around the world for setting safety standards for electronic products.


About Solarfun

Solarfun Power Holdings Co., Ltd. is an established manufacturer of both PV cells and PV modules in China. Established in August 2004, Solarfun conducts substantially all of its business through its operating subsidiary in the People"s Republic of China (PRC), Jiangsu Linyang Solarfun Co., Ltd., or Linyang China, and two majority-owned subsidiaries of Linyang China, Shanghai Linyang Solar Technology Co., Ltd., which provides system integration services in China, and Sichuan Leshan Jiayang New Energy Co., Ltd., a manufacturer of PV modules. Solarfun sells its products both through third-party distributors and directly to system integrators. For further information, visit the Company"s website at http://www.solarfun.com.cn .

1) This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates for the convenience of readers. Unless otherwise noted, all translations from RMB to U.S. dollars for the entities with the functional currency of RMB are made at a rate of RMB 7.8041 to US$1.00, the effective noon buying rate as of December 31, 2006 in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York.




Contact:

Solarfun Power Holdings Co., Ltd.
Kevin Wei, 8621-6307-0222 Ext.620
Chief Financial Officer
IR@solarfun.com.cn
or
Christensen
Hong Kong:
Tip Fleming, 852 2117 0861
tfleming@ChristensenIR.com
or
US:
Mahboob Hossain, 480-614-3014
mhossain@ChristensenIR.com

Source: Solarfun Power Holdings Co., Ltd.
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