Hot Stock to Track After Earnings: Sky Solar Holdings, Ltd. (NASDAQ:SKYS)

Sky Solar Holdings, Ltd. (NASDAQ:SKYS) reported earnings for the three months ended March 2016 on June 17, 2016. The company earned $-0.02 per share on revenue of $11.73M. Analysts had been modeling earning per share of $-0.06 with $13.45M in revenue.

Sky Solar Holdings, Ltd. (NASDAQ:SKYS) announced its financial results for the first quarter of 2016 ended March 31, 2016.

Highlights:

  • Q1 2016 total revenue of $11.7 million, up 14% over Q1 2015
  • Q1 2016 electricity revenue of $9.9 million, up 94% over Q1 2015
  • Q1 2016 Adjusted EBITDA1 of $5.4 million, compared to $7.0 million in Q1 2015
  • 133.1 MW of IPP assets in operation as of March 31, 2016, compared to 128.6 MW as of December 31, 2015
  • As of March 31, 2016, 24.1 MW under construction, 236.1 MW of shovel-ready projects, and 1.0 GW of solar parks in pipeline

Mr. Weili Su, Founder, Chairman and Chief executive officer of Sky Solar, commented, “While our overall installation during the quarter was modest as expected, this performance was generally due to our our ongoing strategic initiatives to unlock shareholder value. In addition, in early May, we announced the execution of a definitive agreement to acquire operating assets in the US, marking our first US transaction, a strategic market for Sky Solar in which we look forward to building a larger presence.”

First Quarter 2016 Financial Results

Revenue was $11.7 million, up 14.5% from $10.3 million in the same period of 2015.

Electricity sales were $9.9 million in the first quarter of 2016, up 94.0% from $5.1 million in the same period of 2015. The year-over-year growth in electricity sales was primarily due to the increase in the Company’s operational IPP assets globally. Electricity sales in the first quarter of 2016 was up 25.9% from $7.9 million in the fourth quarter of 2015, due to the same reason.

Systems and other sales were $1.8 million in the first quarter of 2016, down 65.0% from $5.1 million in the same period of 2015. The year-over-year decline in systems and other sales was primarily due to permit sales in Japan in the first quarter of 2015, while the Company did not record similar sales in the first quarter of 2016. Systems and other sales in the first quarter of 2016 were down 58.3% from $4.3 million in the fourth quarter of 2015, primarily due to the Company’s continuing shift toward IPP electricity sales.

Cost of sales and services were $6.4 million, compared to $3.1 million in the same period in 2015. The increase was mainly a result of the increased capacity of IPP solar parks during the first quarter of 2016.

Gross profit was $5.3 million, down 25.7% from $7.2 million in the same period in 2015. Gross margin decreased to 45.5% from 70.0% in the same period in 2015 because of the permits sales in Japan in first quarter 2015, which commanded a higher margin.

Selling, general and administrative (“SG&A”) expenses were $4.8 million, up 10.6% from $4.4 million in the same period in 2015 due to the increased project financing activities in South America.

Other operating income was $1.9 million, compared to $42 thousand in the same period of 2015. The increase in other operating income was due to income from the disposal of 1.8MW solar parks in Japan during the first quarter of 2016.

As a result of the above, operating profits decreased to $2.4 million in the first quarter of 2016, from $2.8 million in the same period in 2015.

Finance costs were $1.3 million, compared to $0.9 million in the same period of 2015. The increase in finance costs was primarily due to the increased average balance of bank loans in the first quarter in 2016.

Sky Solar Holdings, Ltd. earnings per share showed an increasing trend of 98.3% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 26%.Analysts project EPS growth over the next 5 years at 35%. It has EPS annual decline over the past 5 fiscal years of 0% when sales declined 0. It reported 48.8% sales growth, and 91.8% EPS growth in the last quarter.

The stock is trading at $3.12, up 178.57% from 52-week low of $1.12. The stock trades down -67.77% from its peak of $9.68 and % below the consensus price target of $6.5. Its volume clocked up at 0.11 million shares which is lower than the average volume of 0.91 million shares. Its market capitalization currently stands at $160.73M.

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