Chinese solar panel maker Yingli Green Energy Holding Co Ltd posted better-than-expected third-quarter profit on strong shipments, sending its shares up 9 percent.
Solar companies have struggled over the past 12 months as a glut of supplies on the global market has depressed prices, but Yingli's earnings showed the sector may be rebounding.
Improvement in credit markets helped lift Yingli's solar module shipments by 80 percent from the second quarter, and the company said it now expects full-year shipments of 490 MW to 500 MW, compared with a previous forecast of 450 MW to 500 MW.
Demand in Europe is far outstripping supply, company executives told a conference call, and the U.S. market improved in the third quarter.
Yingli's results bode well for its Chinese peers Suntech Power Holdings Co Ltd and Trina Solar, which are due to report quarterly results next week, said Simmons & Co analyst Burt Chao.
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Yingli's results reflect strong demand, strong pricing and the ability for these companies to meaningfully decrease costs and therefore expand margins, Chao said.
He said Yingli could reach margins of 25 percent next year and noted the company's positive outlook for average selling prices for panels to be flat or even rise in the first quarter of 2010.
Net income for the third quarter was $17.7 million, or 12 cents per American depositary share (ADS). Excluding one-time items, the company earned 18 cents per ADS.
Analysts on average were expecting 16 cents per ADS before items, according to Thomson Reuters I/B/E/S.
Total net revenue increased slightly to $326 million.
For 2009, The company narrowed its gross margin outlook to between 19 percent and 20 percent, from 18 percent to 20 percent previously.
Yingli shares were up 9.4 percent at $13.16 in midday trading on the New York Stock Exchange.
(Reporting by Matt Daily; additional reporting by Laura Isensee in Los Angeles and Supantha Mukherjee in Bangalore; Editing by Dave Zimmerman and John Wallace)