Summary:

After a rocky start, Solarfun may finally be winning the respect of investors. Its stock is up 8 percent in Wednesday trading after delivering earnings that showed revenue in the first quarter of 2008 had grown six-fold from the same period a year ago. Net profit […]

After a rocky start, Solarfun may finally be winning the respect of investors. Its stock is up 8 percent in Wednesday trading after delivering earnings that showed revenue in the first quarter of 2008 had grown six-fold from the same period a year ago. Net profit of 32 cents a share (versus a one-cent loss a year earlier) was twice as large as analysts were forecasting.

And that gain looks pretty good, considering that the stock has been on a tear in the past week in anticipation of a strong earnings report today. As of yesterday, SOLF had risen 69 percent over seven trading sessions.

Wall Street hasn’t always been so bullish on Solarfun. The Shanghai-based company listed its shares on Nasdaq in December 2006, and for most of its first year on the public markets, it traded near or below its $12.50 offering price. After shooting up to $37 a share in January, the stock had fallen below $10 a share in March.

Now the company is showing promise of real growth. In a statement, CEO Harold Hoskens said “customer demand is robust, pricing for our products remains strong, and we have good control of our operating expenses and improved working capital management.” First-quarter module shipments totaled 40.3 megawatts (MW), sold at an average price of $4.07, up from the previous quarter’s average of $3.85.

The company sees prices holding around $4 this year. It also expects to ship between 160 and 180 MW of photovoltaic modules, a slightly higher target than its previous guidance of 160 MW. A 120 MW-capacity plant in Qidong is schedule to begin production next quarter, raising Solarfun’s annual manufacturing capacity as high as 360 MW a year.

The only negative note was in gross margins, which fell to 16.5 percent from 17.2 percent a year ago because of higher silicon prices. Still, there are signs that Solarfun, which lagged other solar stars for some time, could join their ranks this year.

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