Yingli to Maintain Stable Cash Flow by Following Principle of 'less investment, and quicker turnover'

published: 2015-09-15 17:52 | editor: | category: Analysis

Yingli announced its financial report for the second quarter of 2015 (2Q15) on September 8th. Total net revenues were US$438.1 million. Total PV module shipments slightly declined from 754.2MW last quarter to 727.9MW. Gross margin dropped from 14.1% previous quarter to 6.3%. Overall, Yingli suffered the biggest loss since 2014, with its net loss reaching approximately US$ 100 million.

                                                             Yingli Overall Financial Performances in 2Q15

                                                          Source: Yingli Financial Data of 2Q15

After Yingli found itself in financial difficulties in May, Yingli’s cash flow condition has become the most worrying part. Although the company has paid back medium-term notes of RMB 1.2 billion in May, people are still curious about whether they can pay off a total debt of RMB 1 billion by October. Liansheng Miao, Yingli’s Chairman and CEO, said in the telephone conference, that they have adopted and will follow a core principle of 'less investment and quicker turnover' in order to maintain a stable cash flow.

Yingli is trying different ways to gain more cash flow. So far, the most direct way is to reduce own-brand shipment and increase sales in the OEM business. Yingli mentioned in the telephone conference that in 3Q15, its OEM capacity will represent 20%-30% of its total capacity, while its own-brand production will account for 50%-60%. The utilization rate will be between 70% and 90%. Even though more OEM orders means lower gross margin, Yingli believes that as they continue to reduce own-brand manufacturing cost, the gross margin can be maintained at about 10% in 3Q15.

Yingli’s shipment to China represented 38% of its total shipment in 2Q15. However, Yingli still ship its products to multiple countries and has performed well in the emerging markets, such as Latin America, Southern Asia, and North Africa. In fact, Yingli has become a leading company in Latin America after winning a 240MW order in Chile lately. Yet, it’s expected that Yingli’s shipment will decline to 550MW-580MW in 3Q15. The total module shipment in 2015 is projected to drop from 3.6GW, forecasted in the beginning of 2015, to 2.5GW-2.8GW.

EnergyTrend believes that Yingli’s asset-liability ratio is as high as 98.8%, which is in a worse position compare to Suntech’s business that went downward instantly. Although Yingli’s anti-dumping and countervailing duty rate was lowered after July, the company’s large debt has put itself in a difficult position. Operation can’t be running properly even with a lower tariff rate. Therefore, Yingli can no longer be a leading PV company like it once was no matter if it can survive after the short-term debt is paid off in October or maintain the utilization rate through relying heavily on OEM.

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