Monday, November 29, 2010

Trina Solar (NYSE: TSL): Q3 Earnings Preview

Trina Solar Ltd. (NYSE: TSL) is scheduled to release third-quarter earnings before the market open on Tuesday, November 30, 2010. Analysts, on average, expect the company to report earnings of 87 cents per share on revenue of $420.46 million. In the year-ago period, the company reported earnings of 65 cents per share on revenue of $249.75 million.

Trina Solar Limited, through its subsidiaries, designs, develops, manufactures, and sells photovoltaic (PV) modules worldwide. It produces standard monocrystalline photovoltaic (PV) modules ranging from 165 watts (W), to 240 W in power output and multicrystalline PV modules ranging from 215 W to 240 W in power output.

In the preceding second quarter, the Jiangsu, China-based company reported that $38.71 million, or 52 cents per American Depository Share (ADS), from $18.6 million, or 35 cents per ADS, in the comparable quarter last year. Revenue surged to $370.76 million from $150.0 million. Analysts, on average, expected the company to report earnings of 49 cents per share on revenue of $336.80 million. 

At its last earnings call in August, the company lifted its guidance for total PV module shipments to be between 900 MW and 930 MW, compared to its earlier guidance of between 750 MW to 800 MW, representing an increase of 126% to 133% from last year. As a result of strong demand for its module products in both European and non-European markets, Trina Solar said that it expects to increase its shipment volume and its percentage of global shipments to the United States during the second half of 2010.

The company expects third quarter shipments between 250 MW to 260 MW of PV modules. Overall gross margin for the third quarter is anticipated to be around 30%. The company expects a decrease in a euro contribution to its third quarter revenue, primarily due to increasing sales portion in the U.S. and the rest of the world market.

The company expects to expand its in-house production capacity of ingot and wafers as well as the sale and manufacturing modules to approximately 1 gigawatt and 1.5 gigawatt respectively by the end of 2011. Trina Solar is targeting global market share of approximately 10% to 11% by 2011 year-end, an increase from its 2010 estimation of 8% to 9%.

Solar industry as a whole has benefited from continues strong demand due to growing awareness about global warming, skyrocketing oil prices, cheap financing and technological advances. 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. 

In terms of stock performance, Trina Solar shares ahave lost nearly 13% since the beginning of the year. 

Full Disclosure: None.
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