Why Sky Solar Soared Despite a Loss

Sky Solar Holding Ltd. (NASDAQ: SKYS) absolutely skyrocketed on Thursday despite missing estimates on both the top and bottom lines. What is important to look at in the annual report is the company’s pipeline.

Sky Solar said it had a net loss of $0.15 per share on $12.2 million revenue. That compares to consensus estimates from Thomson Reuters of $0.03 in earnings per share (EPS) on $15.85 million in revenue. In the same period of last year, it had a net loss per share of $1.31 and revenue of $8.17 million.

At the end of December 2015, this company owned and operated 128.6 megawatts (MW) of independent power producer assets (IPP), compared to 117.5 MW on September 30, 2015. This reflects all the incremental project additions in Japan.

Sky Solar had 28.2 MW of projects under construction at the end of 2015, compared to 36.0 MW under construction as of September 30, 2015. All the 28.2 MW of projects under construction are located in Japan.
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Sanjay Shrestha, CIO of Sky Solar and president of Sky Capital commented:

We are evaluating our overall strategy in Japan as we have one of the largest pipelines in the solar industry coupled with a sizable operating portfolio that carries very limited debt. In addition, while closing on transactions have taken longer than expected in the US market, we are very pleased with several ongoing initiatives in North America, which includes closing on operating assets, and acquiring a sizable pipeline from multiple parties.

On the books, the company had bank balances and cash of $26.3 million, trade receivables of $33.8 million and IPP solar park assets of $259.4 million.

Weili Su, founder, chairman and CEO of Sky Solar, commented:

While we initiated a number of partnership initiatives in 2015, our operating results for the full year were below our expectations. Management and the Board has undertaken thorough review of global operation in order to unlock shareholders value. Our view on the attractiveness of the solar market remains unchanged and we continue to see profitable opportunities for growth in the US market and in Japan.

Shares of Sky Solar were trading up 79% at $2.20 midday Thursday, with a consensus analyst price target of $11.50 and a 52-week trading range of $1.12 to $12.00.