Chinese photovoltaic cell maker Solarfun Power Holdings Co Ltd forecast sequentially higher third-quarter revenue, and said it was seeing an improvement in end market demand, sending its shares up 13 percent.

For the current quarter, the company expects revenue of 918 million yuan to 984 million yuan. The lower end of the range is 7.5 percent higher than its second-quarter revenue of 854.6 million yuan ($125.1 million), Solarfun said.

Solarfun reiterated its total module shipment outlook for the quarter, which it expects to exceed 100 megawatts (MW) and forecast gross margin of about 17 percent.

Efforts to realign supply costs and increase in production capacity at its ingot and wafer manufacturing facilities should enable it to achieve healthy margins in the third quarter, the company said in a statement.

Solarfun, which reported a gross margin of 21.5 percent for the second quarter, said it was still facing a highly competitive pricing environment.

Shares of the company were up 11 percent at $6.88 in morning trade on Nasdaq. They touched a high of $7 earlier in the session.

($1=6.825 Yuan)

(Reporting by Arup Roychoudhury in Bangalore; Editing by Gopakumar Warrier)