China Sunergy Announces Financial Results for the Third Quarter 2007

China Sunergy Announces Financial Results for the Third Quarter 2007

November 19, 2007

    NANJING, China, Nov. 19 /Xinhua-PRNewswire/ -- China
Sunergy Co., Ltd. (Nasdaq: CSUN), a specialized solar cell
manufacturer based in Nanjing, China, announced today its
financial results for the third quarter 2007.

    Quarterly Results:
    -- Revenues grew 33.1% on a year-over-year basis, and
declined 12.9%
       sequentially to US$49.0 million; although core cell
revenue increased
       15.5% sequentially from US$40.1 million to US$46.3
million.
    -- Gross profit and gross margin were US$1.0 million
and 2.1%,
       respectively.
    -- Quarterly net loss was US$4.4 million.
    -- GAAP basic and diluted net loss attributable to
holders of ordinary
       shares was $0.11 per ADS.
    -- Shipments amounted to approximately 16.6 megawatts
(MW), representing a
       48.5% increase year-over-year and an 8% increase
sequentially.
    -- Quarterly production of 17.8 MW of solar cells
represented a 39%
       increase on a year-over-year basis and a decline of
11% sequentially.

    "China Sunergy continued to face a tight
polysilicon supply environment during the quarter, and
despite proactive efforts to address these challenges, our
results were still negatively impacted," remarked Mr.
Tingxiu Lu, Chairman of China Sunergy. "While we made
important progress for the long-term by solidifying our
supply chain and diversifying our customer base
geographically, we do expect short-term pressures to
remain."

    Third Quarter and Recent Operational Highlights:
    -- Mass commercial production of high-efficiency
selective emitter cells
       commenced in mid-November.
    -- Average selective emitter efficiency continued to
improve from 16.5% in
       the third quarter to 17.1% in October and 17.5% for
the month-to-date
       November 2007.
    -- A maximum conversion efficiency of 18.2% was
achieved on pilot runs of
       selective emitter cells during November 2007.
    -- A 68MW wafer supply agreement and a 106 metric ton
(MT) virgin
       polysilicon supply contract were signed for the
remainder of 2007, 2008
       and 2009;
    -- A 30MW solar cell sales agreement was signed for
2008; and
    -- Significant progress made developing sales in
overseas markets,
       particularly Europe.

    "Although I am largely not satisfied with our
financial performance during the third quarter, we am
excited with the important advances with our selective
emitter technology and the significant steps taken to
strengthen our company for the future, such as the signing
of supply and sales agreements. I believe all these
initiatives form a solid foundation for 2008 and
beyond," commented Allen Wang, CEO of China Sunergy.

    Business Review

    Revenue, Shipment and Production

    During the third quarter of 2007, revenues grew 33.1%
on a year-over-year basis, and decreased 12.9% on a
quarter-over-quarter basis to US$49.0 million. The decline
in revenues was primarily attributed to the reduction of
polysilicon sales, which was partly off-set by the
sequential increase in core cell sales from US$40.1 million
to US$46.3 million, or 15.5% over the quarter.

    Sales from solar cells, polysilicon sales and module
sales accounted for 94.7%, 2.3% and 3.0%, respectively.
Shipments, including 0.4MW for module sales, amounted to
approximately 16.6 MW, compared to 11.4MW during the third
quarter 2006 and 15.8MW during the second quarter of 2007.


            Revenue and Shipment Comparison between Q3 and
Q2 2007

                                                 Q3        
        Q2
                                                      Value
            Value
                                           Volume*  
(US$mm)  Volume*  (US$mm)
    Core cell sales                          16.2     46.3 
   14.3     40.1
    OEM                                        --       -- 
    1.1      0.5
    Polysilicon sales                        4.47      1.1 
   55.1     14.4
    Module sales                              0.4      1.5 
    0.4      1.2

     * All volumes are expressed in MW except for
Polysilicon sales expressed
       in metric tons.


    During the third quarter the Company increased its
quarter-on-quarter sales of core cell products by 15.5%.
The percentage of overall cell sales in overseas markets,
particularly Europe, increased from 29.0% to 42.7%
sequentially, primarily driven by sales to Germany. This
lowered the overall percentage of sales in the China market
to 52.3% in the third quarter, down from 58.5% in the second
quarter and further demonstrates the significant progress
made by the Company to reduce reliance on China-based
customers.

    Polysilicon trading revenue and volume declined as we
increased polysilicon to wafer conversion on OEM basis to
improve our operating efficiency.

    Mono-crystalline 125-millimeter cells accounted for a
lower proportion of overall production and sales at 55.0%
and 65.0% (in terms of volume) respectively as we increased
production and sale of multi-crystalline to cater for the
increasing demands of European customers.

    Key Supply and Sales Agreements

    Executing on the previously announced strategy, China
Sunergy recently signed two wafer and polysilicon raw
material supply agreements, following the three wafer
supply contracts and framework agreements that the Company
signed in the second quarter. These consist of a total
wafer volume of 68MW and virgin polysilicon volume of
106MT, signed with:

    -- A leading Taiwan based wafer provider, for a high
quality supply of
       approximately 68 megawatts of mono-crystalline
156-millimeter wafers
       for 2007, 2008 and 2009.  The scheduled shipments
are to begin in late
       November 2007 and expire in December 2009;

    -- Luoyang Zhonggui High-tech Co., Ltd.
("Zhonggui"), a leading Chinese
       polysilicon manufacturing company, for the supply of
approximately 106
       metric tons ("MT") of high-quality virgin
solar-grade multi-
       crystalline polysilicon from late 2007 to early
2008.

    In addition, the Company recently signed significant
sales contracts with:

    -- aleo solar AG ("aloe"), a leading German
solar module manufacturer,
       to supply at least 30 MW of high quality silicon
solar cells in 2008.

    -- Canadian Solar Inc., a leading China-based module
manufacturer, for a
       total volume of 25MW of solar cells for delivery in
2008.

    Technological Developments

    During the quarter the Company continued to make
significant progress with the development of its selective
emitter technology. Average selective emitter efficiency
continued to improve from 16.5% in the third quarter to
17.1% in October and 17.5% for the month-to-date November
2007. A maximum conversion efficiency of 18.2% was achieved
on pilot production runs during November 2007.

    Following the successful commercial roll-out of our
selective emitter cells we will refocus our R&D
resources onto the development of new types of
high-efficiency cells. The development of our N-type cells
continues to move along smoothly.

    Financial Review

    Gross profit for the quarter was US$1.0 million, which
led to a gross
margin decrease to 2.1% from 4.9% sequentially and 17.1% on
year-over-year
basis.


                               Margin Breakdown

                                           Gross margin
                                      Q3                 
Q2
    Core cell sales                  1.5 %              
5.9 %
    OEM                               --               
29.9 %
    Polysilicon sales               27.0 %              
1.5 %
    Module sales                     0.8 %              
1.9 %
    Blended                          2.1 %              
4.9 %


    The sequential gross margin contraction on core cell
sales from 5.9% to 1.5% was mainly attributed to; prolonged
tight polysilicon supply (that increased overall raw
material costs and compromised wafer quality), higher
inventory provisions, and lower ASP for off specification
cells that more than off-set the increase in blended ASP.

    Blended ASP for the third quarter rose from $2.82 per
watt to $2.85 per watt due to the strong demand and pricing
environment and the strengthening of the RMB and Euro in
which more than 90% of our sales were denominated.

    Wafer costs continued to account for a large portion of
overall manufacturing costs. In Q3, wafer costs rose to
US$2.45 per watt compared to US$2.35 per watt in the second
quarter. Wafer costs per watt as a percentage of total
production costs per watt increased from 88.4% to 89.2%.
Other production costs, which mainly consisted of; other
raw materials, labor, depreciation and utilities, were
US$0.30 per watt and largely the same as the first two
quarters of this year.

    Our SG&A expenses increased from $3.0 million to
$4.2 million sequentially mainly due to an increase in
salary and other expenses.

    R&D expenses declined from US$1.4 million to US$0.4
million mainly on decreased quantity of raw materials used
in our research activities as selective emitter cell
production was migrated from pilot to commercial
production.

    Due primarily to lower gross margin and rising
administration expenses, the Company incurred an operating
loss of US$3.6 million. This compares to an operating
profit of US$4.0 million and an operating loss of US$1.6
million for Q3 06 and Q2 07, respectively.

    Interest expenses rose slightly from US$1.9 million to
US$2.0 million. IPO proceeds generated an interest income
of US$0.6 million.

    With lower gross margin and higher operating expenses,
the Company incurred a net loss of US$4.4 million for the
quarter.

    Balance sheet

    As of September 30, 2007, the Company had cash and cash
equivalents of US$76.4 million. Net operating cash outflow
for the third quarter was US$23.8 million, which was mainly
attributable to the Company increasing advance payments to
suppliers by US$11.0 million to secure silicon wafers and
polysilicon, and an inventory increase of US$7.6 million
from June 30, 2007 to September 30, 2007. In the third
quarter of 2007 depreciation was US$1.0 million and capital
expenditures were US$6.5 million. The capital expenditures
were related to production enhancement during the quarter.

    Outlook

    The Company targets to produce 20 MW in the December
quarter which implies an annual production target of
approximately 78 MW of solar cells. Of this production
volume, the Company targets to produce 1.5 MW of
high-efficiency selective emitter cells. The Company
maintains its 2008 production target of 160-170 MW with
30-40 MW to be our high efficiency selective emitter
cells.

    Litigation

    The Company has been made aware that three purported
class action complaints were filed in the United States
alleging violations by the Company, and certain of its
officers and directors, of the U.S. Securities Act of 1933
in connection with the Company's initial public offering in
May 2007. The Company is reviewing the complaint with
experienced US defense counsel, and expects to contest the
complaint vigorously

    Quarterly Earnings Conference Call Details

    China Sunergy's management team will host a conference
call to discuss results from 3Q 2007 on Monday 19th
November at 5:00 am (US Pacific Time)/8:00 am (US Eastern
Time)/9:00 pm (Beijing/Hong Kong Time). A live audio
webcast of the conference call will be available on China
Sunergy's website at http://www.chinasunergy.com . To
listen to the conference call, please use the dial in
numbers below:

    Dial-in numbers and pass code:
     U.S. callers please dial: [phone]
     International callers please dial: [phone]
     Pass code: 7988 8918

     A replay of the call will be available for one week
following the call and can be accessed on the Company
website or by dialing the numbers below:

     U.S callers please dial: [phone]
     International callers please dial: [phone]
     Pass code: 5764 0685


    About China Sunergy Co., Ltd.:

    China Sunergy Co., Ltd. (Nasdaq: CSUN) ("China
Sunergy") is a leading manufacturer of solar cell
products in China as measured by production capacity. China
Sunergy manufactures solar cells from silicon wafers
utilizing crystalline silicon solar cell technology to
convert sunlight directly into electricity through a
process known as the photovoltaic effect. China Sunergy
sells solar cell products to Chinese and overseas module
manufacturers and system integrators, who assemble solar
cells into solar modules and solar power systems for use in
various markets. For more information please visit
http://www.chinasunergy.com .

    Safe Harbor Statement

    This announcement contains forward-looking statements
within the meaning of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. All
statements other than statements of historical fact in this
announcement are forward-looking statements, including but
not limited to, the company's ability to raise additional
capital to finance the company's activities; the
effectiveness, profitability, and the marketability of its
products; the future trading of the common stock of the
company; the ability of the company to operate as a public
company; the period of time for which its current liquidity
will enable the company to fund its operations; the
company's ability to protect its proprietary information;
general economic and business conditions; the volatility of
the company's operating results and financial condition; the
company's ability to attract or retain qualified senior
management personnel and research and development staff;
and other risks detailed in the company's filings with the
Securities and Exchange Commission. These forward-looking
statements involve known and unknown risks and
uncertainties and are based on current expectations,
assumptions, estimates and projections about the companies
and the industry. The company undertakes no obligation to
update forward-looking statements to reflect subsequent
occurring events or circumstances, or to changes in its
expectations, except as may be required by law. Although
the company believes that the expectations expressed in
these forward looking statements are reasonable, they
cannot assure you that their expectations will turn out to
be correct, and investors are cautioned that actual results
may differ materially from the anticipated results.

    The following financial information is extracted from
the Company's unaudited condensed consolidated interim
financial statements for the respective periods.


                           China Sunergy Co., Ltd.
        Unaudited Condensed Consolidated Income Statement
Information
                (In US$ '000, except share and per share
data)


                                                 For the 3
Months Ended
                                            Sep 30,    
June 30,      Sep 30,
                                             2007        
2007         2006
    Net sales                               48,956      
56,220       36,776
    Cost of goods sold                     (47,944)    
(53,452)     (30,489)
    Gross profit                             1,012       
2,768        6,287
    Operating expenses:
        Selling expenses                      (432)       
(418)        (357)
        General and administrative
         expenses                           (3,731)     
(2,583)       (1781)
        Research and development
         expenses                             (446)     
(1,365)        (140)
    Total operating expenses                (4,609)     
(4,366)      (2,278)
    (Loss)/Income from operations           (3,597)     
(1,598)       4,009
        Interest expense                    (2,047)     
(1,897)        (935)
        Interest income                        560         
503          165
        Other income/(expenses), net           524        
(640)        (606)
    (Loss)/Income before income tax         (4,560)     
(3,632)       2,633
    Income tax benefit                         133         
 89           14
    Net (loss)/income                       (4,427)     
(3,543)       2,647
    Dividend on Series A
     redeemable convertible
     preferred shares                                      
(57)        (101)
    Dividend on Series B
     redeemable convertible
     preferred shares                                     
(121)        (216)
    Dividend on Series C
     redeemable convertible
     preferred shares                                      
(86)          (7)
    Net (loss)/income attributable
     to ordinary shareholders               (4,427)     
(3,807)       2,323

    Net (loss)/income per ADS
      Basic                                 $(0.11)     
$(0.14)       $0.14
      Diluted                               $(0.11)     
$(0.14)       $0.11

    Weighted average ADS outstanding
      Basic                             39,555,463  
26,908,246   16,895,073
      Diluted                           39,555,463  
26,908,246   23,070,480



                            China Sunergy Co., Ltd
          Unaudited Condensed Consolidated Balance Sheet
Information
                (In US$ '000, except share and per share
data)


                                                         
Sep 30,   June 30,
    Assets                                                 
2007      2007
    Current Assets
      Cash and cash equivalents                           
76,369   101,949
      Restricted cash                                     
26,837    27,025
      Accounts Receivable (net)                           
25,961    38,470
      Other receivable (net)                              
11,453     3,504
      Inventories                                         
58,435    47,496
      Advance to suppliers                                
79,711
      Amount due from related companies                    
2,275     8,738

    Total current assets                                 
281,041   296,088
    Property, plant and equipment, net                    
45,517    39,833
    Land use rights                                        
2,191     1,017
    Deferred tax assets                                    
  390       256

    Total assets                                         
329,139   337,194


    Liabilities and shareholders' equity
    Current liabilities
      Short-term bank borrowings                         
122,291   119,424
      Current portion of long-term borrowings              
8,674     8,674
      Accounts payable                                    
10,591     9,639
      Advance from customers                               
1,965     4,351
      Amount due to related companies                      
1,088     6,947
      Accrued expenses and other payables                  
2,072     3,500

    Total liabilities                                    
146,681   152,535

    Shareholders' equity
    Ordinary shares: US$0.0001 par value;
     237,332,777 and 237,332,777 shares issued
     outstanding as of September 30, 2007 and
     June 30, 2007, respectively                           
   24        24
    Additional paid-in capital                           
178,218   178,105
    Retained earnings                                     
(2,601)    1,826
    Accumulated other comprehensive income                 
6,817     4,704

    Total shareholders' equity                           
182,458   184,659
    Total liabilities and shareholders' equity           
329,139   337,194



    For further information, please contact:

    China Sunergy
     Fischer Chen
     Email: [e-mail]

    Financial Dynamics
     Julian Wilson
     Tel:   [phone]
     Email: [e-mail]

     Michael Polyviou
     Tel:   [phone]
     Email: [e-mail]