Saturday, May 22, 2010

Trina Solar (NYSE: TSL): Q1 Earnings Preview

Trina Solar (NYSE: TSL) is scheduled to release its first-quarter financial results before the market open on Tuesday, May 25, 2010. Analysts, on average, expect the company to report earnings of 61 cents per share on revenue of $328.51 million. In the year ago quarter, the company reported a loss of 21 cents per share on revenue of $132.11 million.

Trina Solar Limited, through its subsidiaries, designs, develops, manufactures, and sells solar modules. It offers monocrystalline PV modules ranging from 165 watts to 230 watts in power output; and multicrystalline PV modules ranging from 210 watts to 230 watts in power output for use in residential, commercial, industrial, and other solar power generation systems. In past three quarters, the company has beaten Wall Street forecasts by 125%, 71% and 23% respectively.

In the preceding fourth quarter,the Changzhou, China based company reported that it swung to a profit of US$49.16 million, compared to a net loss of US$673 thousand in the year ago quarter. Earnings were $0.74 per ADS, compared to a loss of US$0.01 per ADS in the prior year quarter. Net revenues for the quarter were US$313.27 million, compared to US$216.34 million in the prior year quarter.  Analysts, on average, expected the company to report earnings of US$0.60 per share for the quarter.Total shipments were 399 megawatt, an increase of 98.5% from 201 megawatts in 2008. Gross margins rose to 32.6% despite a drop in average sales prices per watt.

For the first quarter of 2010, it expects to ship between a 180 to a 190 megawatts of PV modules. It anticipates gross margin for the first quarter to range between 26% and 28%. For the full year 2010, the company expects total PV margin shift of between 750 to 800 megawatt representing an increase of 88 to a 100% growth from 2009.

Globally, solar industry depends upon government subsidies and incentives and support to remain competitive. However, recent developments suggest that subsidies will inevitably be reduced or phased out. Evergreen Solar sells bulk of its panels in key European markets like Germany and Spain, where generous federal subsidies ensured high electricity rates for solar energy system. In Germany, Solar subsidies for rooftop-installed solar power will see a one-off cut of 16 percent from July, while most open-field installations will be cut by 15 percent.Support for farmland solar systems is to be scrapped completely, according to media reports. Meanwhile, euro's recent sharp slide too has darkened the outlook for solar companies. In 2010, the company expects Germany and Italy to make up less than half of total sales which is an improvement from past years.

However, the industry as a whole is likely to benefit from growing attention to global warming, skyrocketing oil prices, cheap financing and technological advances. At the Copenhagen Summit held in December 2009, the five major polluters of the world agreed to take action to reduce CO2 aggressively, with $100B per year pledged to help developing nations adopt green energy technology to cut greenhouse gas. Meanwhile, the US, China, Brazil and India continue to invest heavily in wind and solar energy with China's $454B in the next 5 year period as the most aggressive one. As part of the stimulus bill signed last year, the federal government approved around $60 billion in loan guarantee authority and $30 billion in energy grants for renewable energy and transmission companies. Congress has also granted a 30% renewable-investment tax credit to help expand the development of alternative sources of energy. As of February this year, the industry had gotten Treasury grants worth $81 million. That grant program is scheduled to end Dec. 31. The industry is still hoping that Congress will approve further policies to aid solar.

Thanks to better cost advantages, Chinese solar module maker have grabbed more market share from their international competitors. Local solar companies have also benefited from China's well-developed supply chain, cheap electricity, supportive policies and even low environmental standards. Trina Solar is steadily improving its cost structur. In the fourth quarter, it managed to reduce its blended non-silicon cost to $0.78 per watt in Q4 from $0.82 per watt in Q3.

In terms of stock performance, Trina Solar shares have gained  more than 70% over the past year.
Related Posts with Thumbnails

Wikinvest Wire