Upgrading JA Solar to Strong Buy Following Q4 Earnings

3/13 - "We believe JASO is attractive for the following reasons: 1) it has solid supply agreements for silicon wafers that covers 100% of our 2008 and 2009 sales estimate; 2) It has a solid customer base that is increasingly more diverse geographically. 100% of the output is sold out at fixed pricing; 3) JASO has a cost advantage as the lowest processing cost producer in the industry at $0.19/W."

"4Q07 results came in at EPS $0.09 on sales $144 MM. Consensus was at EPS $0.09 on sales $118MM. Pro-forma EPS was $0.19 (this excludes $0.05 options expense and $0.05 foreign currency exchange losses). Shipments increased 15% Q/Q to 50.2MW."

"Guidance for 2008 was increased to 340MW production output up from 325MW. Capacity by the end of 08 was also increased to 500MW (up from 425MW)...JASO has secured silicon at fixed pricing for 100% of their expected output in 2008. In addition they have secured silicon for 600MW output in 2009. Management is looking to increase their supply for 2008."

"We are upgrading to Strong Buy from BUY while maintaining our price target of $28 based on a multiple of 16x our 2009 EPS estimate."