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JA SOLAR, founded in 2005 in China, is a manufacturer of high-performance photovoltaic (PV) products, with a business portfolio including wafers, cells, modules and photovoltaic power stations. The Company sells to over 100 countries and regions.
Historically, the Company has primarily been engaged in the manufacturing and sales of solar cells. Since 2009 the business has been expanded to silicon wafer manufacturing and manufacturing and sales of solar modules.
The Company also derives revenues through the provision of solar product processing services and project development services.
In 2017, JA SOLAR had a solar cell manufacturing capacity of 6,500 MW per annum. The Company manufactures solar cells from silicon wafers utilizing crystalline silicon technology, which converts sunlight into electricity through a process known as the photovoltaic effect.
According to the Annual financial report, JA SOLAR had a solar module manufacturing capacity of 7,000 MW per annum as of December 31^st 2017.
The silicon wafer manufacturing capability helps the Company to secure wafer supplies and reduce costs of silicon wafers for solar cell manufacturing. As of December 31^st 2017, the Company has had a silicon wafer manufacturing capacity of 2,700 MW per annum.
Historically, the Company has sold a significant portion of products to customers in China. In 2017, 51.5% of the Company´s total revenues were generated from sales to customers outside China. JA SOLAR has also developed cooperative relationships with a number of leading Chinese independent power producers and leading Chinese utility companies, such as China Power Investment Corporation and China Electric Power Construction Group Co., Ltd.  Since 2010, JA SOLAR has substantially increased the portion of the products sold to customers outside China. For the years ending December 31^st 2015, 2016 and 2017, approximately 57.0%, 48.6% and 51.5% of the total revenues were generated from customers outside China, respectively. For the years ending December 31, 2015, 2016 and 2017, there was one customer located in Japan, which accounted for 12.5 %, 4.0% and 2.6% of the total revenues, respectively.
In 2015, 2016 and 2017, the Company sold 3.94 GW, 4.92 GW and 7.50 GW of solar power products, respectively. The total revenues of the Company increased by 16% from RMB13.5 billion (US$2.1 billion) in 2015 to RMB15.7 (US$2.4 billion) billion in 2016 and following that RMB19.7 billion (US$3.0 billion) or by 25%, as a result of the improved worldwide solar market condition, increased shipment, and an increased proportion of module sales.
The average selling price per watt of the Company´s PV modules decreased from RMB3.5 in 2015 to RMB3.2 or by 9% in 2016 and further to RMB2.6 or by 19% in 2017. The average selling price per watt of the Company´s PV cells decreased from RMB1.9 in 2015 to RMB1.8 in 2016 or by 6% and further to RMB1.3 (US$0.20) or by 28% in 2017. The Company expects the prices of solar power products will continue to decline in the long run due to reduced manufacturing costs from improving technology and economies of scale.
For the year ended December 31^st 2017, total revenues and net income of the Company were RMB19.7 billion (US$3.0 billion) and RMB300.1 million (US$46.1 million), respectively.
Total revenues increased by 25% from RMB15.7 billion in 2016 to RMB19.7 billion (US$3.0 billion) in 2017. The increase was primarily due to an increase in output. Total revenues from sales in China increased by 17% from RMB8.1 billion in 2016 to RMB9.5 billion (US$1.5 billion) in 2017, which was primarily due to strong industry demand in China for solar power products. Total revenues from sales outside China increased by 32% from RMB7,656 million to RMB10,126.5 million (US$1,556.4 million) in 2017, primarily due to a rapid increase of industry demand for solar power products.
Cost of revenues increased by 29% from RMB13.4 billion in 2016 to RMB17.3 billion (US$2.7 billion) in 2017. The increase in the cost of revenues was primarily due to an increase in the total number of shipments.
The Company recorded a gross profit of RMB2.3 billion in 2016 and RMB2.4 billion (US$0.4 billion) in 2017 and represented a slight increase of 4% during 2017. Gross profit as a percentage of the total revenues decreased from 14.6% in 2016 to 12.3% in 2017, primarily due to a decrease of the average sales price for PV modules throughout the industry .
Total operating expenses were RMB1.7 billion (US$0.3 billion) in 2017 and RMB1.4 billion in 2016.
For the year ended December 31^st 2017, the revenues of the Company from sales of solar modules amounted to RMB18.4 billion (US$2.8 billion), or 93.3% of the total revenues. In 2017, the Company sold 7,143.1 MW of solar modules, compared to 4,606.6 MW in 2016. For the year ended December 31^st 2017, the revenues of the Company from sales of solar cells and other products amounted to approximately RMB0.9 billion (US$0.1 billion), or 4.6% of the Company´s total revenues. The Company sold 358.0 MW of solar cells in 2017, compared to 313.8MW in 2016.
For the year ended December 31^st 2017, the Company´s revenues from electricity generation amounted to RMB404.0 million (US$62.1 million), or 2.1% of the Company´s total revenues.
For the year ended December 31^st 2017, the Company did not generate any revenues from solar product processing services.
For the years ended December 31^st 2015, 2016 and 2017, the cost of revenues for solar modules accounted for 77.7%, 80.1% and 82.6% of the total revenues, respectively. The increase in costs of solar modules in absolute amounts from 2015 to 2017 is primarily due to the significant increase in sales volume of solar modules. The increases in costs of solar modules as a percentage of the total revenues from 2015 to 2017 were primarily due to a decrease in the average sales price for PV modules throughout the industry.
For the years ended December 31^st 2015, 2016 and 2017, the cost of solar cells and other products accounted for 5.0%, 4.7% and 4.4% of the total revenues, respectively. The decrease in the cost of solar cell and other products in absolute amounts and as a percentage of the total revenues from 2015 to 2017 is primarily due to a shift in JA SOLAR´s product mix to solar modules.
The company started electricity generation services in 2015. For the years ending December 31^st 2015, 2016 and 2017, the cost of revenues for electricity generation services was RMB30.0 million, RMB 88.0 million and RMB143.0 million (US$22 million), respectively. As a percentage of the total revenues, the cost of revenues for electricity generation services accounted for 0.2%, 0.6% and 0.7% for the years ended December 31^st 2015, 2016 and 2017, respectively, including depreciation of solar power project assets and costs associated with operating and maintenance of the power plants which came into use.
For the years ended December 31^st 2015, the cost of revenues for solar products processing services accounted for 0.1% of the total cost of revenues. For the years ended December 31^st 2016 and 2017, the Company did not incur any cost in revenues for solar products processing services. The continuous decrease in the cost of solar products processing in absolute amounts and as a percentage of the total revenues from 2015 to 2017 were primarily due to the decreased processing service, which is consistent with customer demands.
Research and development expenses primarily consist of research materials, compensation and benefits for research and development personnel. Research and development expenses decreased by 9% from RMB175.5 million (US$26.7 million) in 2016 to RMB160.1 million (US$24.6 million) in 2017 and as a percentage of the total revenues accounted for 1.1% in 2016 and 0.8% in 2017. The decrease in the absolute amount of research and development expenses was due primarily to a decrease in the numbers of research and development projects in 2017.
For the years ended December 31^st 2017, JA Solar had a total of 386 issued patents and 55 pending patent applications in China.