27 Nov

Analyzing Yingli Solar’s Leverage and Liquidity Position

WRITTEN BY Alexis Tate

Interest expenses

For 2Q17, Yingli Solar’s (YGE) interest expenses came in at $24.4 million—compared to $22.7 million in 1Q17 and $23.9 million in 2Q16. Yingli Solar reported its average interest rate for 2Q17 at 5.11%—compared to 5.17% in 1Q17 and 5.09% in 2Q16.

Analyzing Yingli Solar’s Leverage and Liquidity Position

Among other solar (TAN) companies, as of June 2017, Canadian Solar’s (CSIQ) interest expenses came in at ~$26.7 with an interest coverage ratio of 3.1 (the number of times the company can pay interest with its current earnings). JA Solar Holdings (JASO) reported $12.4 million with an interest coverage of 3.09.

Yingli Solar’s debt structure

On June 30, 2017, Yingli Solar had ~$368.44 million in long-term debt and ~$1.33 billion in short-term borrowings on its books.

According to the latest quarterly filings, Yingli Solar still hasn’t paid back the noteholders two MTNs (medium-term notes) amounting to nearly $215 million—one due on May 12, 2016, and other due on October 13, 2015. On September 1, 2017, Yingli Solar announced that the noteholder has started legal proceedings to recover the MTN amount due.

Since the solar power industry is very capital intensive, companies like Yingli Solar, SunPower (SPWR), and First Solar (FSLR) should raise capital at low rates in order to maintain liquidity.

Liquidity

On June 30, 2017, Yingli Solar had ~$97.1 million in cash and cash equivalents on its balance sheet. The figure is more than $60.6 million at the end of 1Q17 mainly due to increased PV module shipments in 2Q17. Yingli Solar had cash and cash equivalents worth $100.8 million at the end of 3Q16.

As of June 30, 2017, the company had $47.5 million in restricted cash—compared to $54.4 million as of March 31, 2017.

Yingli Solar had $1.33 billion of short-term debt on its books at the end of 2Q17—compared to nearly $1.29 billion at the end of 1Q17. Its long-term debt at the end of 2Q17 was ~$368.44 million—compared to $361.92 million at the end of 1Q17.

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