Roth: Sky Solar Worth $8/Share After 88% Gain Last Week

Sky Solar Holdings Ltd (ADR) SKYS reported highly disappointing 4Q results and withdrew its full-year guidance. Roth Capital Partners’ Philip Shen maintained a Buy rating for the company, while reducing the price target from $10 to $8.

Wide Q4 Miss

Sky Solar delivered Q4 connection of ~11MW, as compared to its outlook of ~30MW. The company’s revenue came in at $12mn, significantly below the consensus and Roth estimates of $16mn. The miss was on account of poor electricity sales due to seasonality and weaker-than-expected connections.

The company’s GMs were at 37.9 percent, substantially below the consensus expectation of 62.9 percent and Roth estimate of 66.5 percent, on account of seasonality. Core EPS of -15c was meaningfully lower than consensus expectation of 3c and Roth estimate of 1c.

2016 Guidance Retracted

Management’s earlier guidance has suggested 250-270MW of gross deployments and 170MW of net deployments in 2016. “The company is now undergoing a strategic review to evaluate options to "unlock shareholder value" at a board meeting in April and as a result has retracted its 2016 guidance,” analyst Philip Shen wrote.

Estimates Lowered

The 2016 estimates for deployments and revenue have been reduced from 169MW to 55MW and from $102mn to $65mn. The GM and EPS estimates have been lowered from 66.2 percent to 61.3 percent and from 41c to -8c, respectively.