Chinese solar cell products maker China Sunergy Co Ltd on Friday said it expects to return to profitability in the second quarter, sending its shares up as much as 10 percent.
The company also said quarterly solar-cell shipments "slightly" exceeded its prior view of 35 megawatt (MW) to 40MW.
This comes a day after SunPower Corp reported second-quarter results that blew past estimates, while China's LDK Solar Co Ltd raised second-quarter forecasts for both shipments and revenue.
Analysts on average currently expect China Sunergy to post a loss of 15 cents a share, before items, according to Reuters Estimates.
The positive news comes even as a dearth of financing for renewable energy projects combined with a pullback in solar tax breaks in Spain have led to a flood of solar panels on the market, driving down prices and profits across the industry.
Hurt by falling average selling prices and its inventory of high-cost wafers, China Sunergy had reported a negative gross margin of 23.7 percent for the first quarter.
The company, which had previously guided toward second-quarter margins in the low single digits, now expects margins to come in at about 9 percent.
In May, the company began to purchase lower-cost polysilicon wafers at spot market prices, which, it said, would bring down the inventory cost in the coming quarters.
Polysilicon is a key raw material for the company which makes photovoltaic solar products that turn sunlight into electricity.
Prices of polysilicon rose to $500 a kilogram last year as solar manufacturers scrambled to buy supplies due to shortages, but new production capacity and shrinking demand has pushed those prices near the $50 mark in recent weeks.
China Sunergy, along with Solarfun Power Holdings Co Ltd, Canadian Solar Inc and LDK Solar got squeezed by this steep drop in prices, forcing them to take inventory write-downs.
China Sunergy shares rose as much as 10 percent to a high of $5.47, before paring some gains to trade up 9 percent at $5.41 Friday morning on Nasdaq.
The stock, which has so far quadrupled since touching a year-low in November 2008, is still off nearly 60 percent from its August 2008 year-high.
