Trina Solar Ltd. (NYSE: TSL): Q4 Earnings Preview 2010

Trina Solar Ltd. (NYSE: TSL) is scheduled to release fourth-quarter earnings before the market open on Tuesday, February 22, 2011. Analysts, on average, expect the company to report earnings of $1.09 per share on revenue of $524.74 million. In the year-ago period, the company reported earnings of 74 cents per share on revenue of $313.27 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 third quarter, the Changzhou, China-based company's net income was $82.87 million, or $1.08 per American Depository share (ADS), compared witha profit of $39.76 million, or $0.64 per ADS, in the year-earlier quarter. Revenue surged 103.5% to $508.30 million from $249.75 million. Analysts, on average, expected the company to report earnings of 87 cents per share on revenue of $420.46 million. 

At its last earnings call in November, the company expects to ship approximately 300 MW of PV modules. The company expects its gross margin relating to its in-house wafer production to module production to be in the mid 30s in percentage terms during the fourth quarter of 2010. The company believes its overall gross margin, taking into account wafer and cell requirements outsourced to third party suppliers to meet demand in excess of its internal capacity, for the fourth quarter will be approximately 30%. For the full year of 2010, the company raised its guidance for total PV module shipments to be approximately 1 GW, compared to its earlier guidance of between 900 MW to 930 MW, representing an increase of approximately 151% from the annual PV module shipments in 2009. The company said that it is increasing capacity to 1.7GW for next year, up from 1.1GW ending in 2010. The company executives suggested that they are increasing capacity by 50% and one could expect similar increases in shipment volume. 

The company plans to have more than 10% market share in the global photovoltaic market in 2011, an increase from its 2010 estimation of 8% to 9%. The solar product maker, currently has a global market share of 8%, plans to allocate up to US$400 million in capital expenditure for 2011. According to the company, Europe will still be the largest market but will have a slow sales growth next year. Sales in the region are expected to account for 60% of the firm's global sales from the current 75%. Rapid sales increase with strong demand is likely to be recorded in the U.S., Australia, China and Japan. Trina Solar said that it is well prepared to withstand a weak market environment with plans to reduce its exposure to Europe and shift some of the business in the U.S. Trina Solar intends to double shipments to the U.S. in 2011 from 130 megawatts in 2010. Back home, Trina's shipments could nearly double from roughly 30 MW in 2010. "We expect gross profit to grow tremendously and net profit growing even faster in 2011,"  Chief Financial Officer Terry Wang said in December.

In December, the company said that it plans to invest about $800 million over the next three years in research and development facilities. The Chinese solar maker said the investment in the Changzhou Trina PV Park will help expand the company's manufacturing capacity.

2010 continued the significant growth of the solar market throughout the country with new markets in China and the USA advancing their demand for solar panels. Solar industry as a whole has benefited from continued strong demand thanks to growing awareness about global warming, skyrocketing oil prices, cheap financing and technological advances. Companies involved in the production of semiconductors used in solar panels have enjoyed a positive quarter. Many have experienced rising shipments over the last few quarters, resulting in a sequence of record quarters. The world is becoming increasingly environmentally conscious. Both commercial and private demand for solar power is rising. Solar options are becoming more attractive as more governments provide better options for buildings producing solar power to feed into and out of the grid as required.

Last month, US President Barack Obama in his State of the Union address called for 80 percent of the nation's electricity to come from clean sources by 2035. Meanwhile, Senator Bernie Sanders submitted a bill to congress titled the "10 Million Solar Roofs and 10 Million Gallons of Solar Hot Water Act". This bill is expected to spur alternative energy growth and create green jobs.

Meanwhile, the largest market for solar, Germany, is slated for a significant decline in 2011. German government officials and industry groups are reaching an agreement over solar-power subsidy cuts for 2011. Hinging on the volume of new solar power capacity additions, the government may cut incentives by almost 12%, effective July 2011. However, if installations exceed 7.5 gigawatts, subsidy cuts may reach almost 15%.

Full Disclosure: None.

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.

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.

Trina Solar Ltd. (NYSE: TSL): Q4 Earnings Preview 2009

Trina Solar Ltd. (NYSE: TSL) is scheduled to release its fiscal fourth-quarter 2009 financial results before the opening bell on Wednesday, February 24, 2010. Analysts, on average, expect the company to report earnings of 60 cents a share on revenue of $282.35 million. In the year ago period, the company posted a loss of 2 cents per share on revenue of $216.34 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 the preceding fiscal-third quarter, the Changzhou, China-based company reported that its net income rose to $40.11 million or $1.29 per American Depository Shares, or ADS, from $32.05 million or $1.17 per ADS in the previous year. Net revenue for the quarter dropped 14.1% to $249.75 million from $290.72 million, reflecting lower module average selling prices.Analysts, on average, expected the company to report earnings of $0.75 per ADS on revenue of $216.30 million. Gross margin climbed to 28.5% from 22.4% and gross profit advanced year-over-year to $71.07 million from $65.19 million, mainly attributable to lower average silicon purchase prices. For the three-month period, solar module shipments were around 123 MW, up 84.7% from the previous year.

The company said in November that it is seeing even stronger demand in the fourth quarter, reflecting increasing brand recognition for our products and a further improvement in financing conditions.

For the fourth quarter, the company foresees shipments to range between 145 MW and 165 MW of PV modules and expects gross margin of 25% - 27%. For the full year, Trina Solar expects total PV module shipments to range from 380 MW to 400 MW, compared to its earlier guidance of 350 MW - 400 MW. Trina expects to have between 850 and 950MW of cell manufacturing capacity online by the end of 2010.

Last month, Trina Solar announced that the Chinese government has picked the company to establish a key state solar laboratory. The approval is a big boost for the company as it means new business and strong support from China's central government.

Recently, Trina Solar announced that it has developed a square monocrystalline-silicon cell with enhanced power output utilizing a proprietary improved photovoltaic cell manufacturing process. The company said that the advanced cell structure should significantly boost cell conversion efficiency, achieving up to 18.8% in test laboratory production.

Among other developments during the quarter, the company announced the change of ratio of its ordinary shares to American Depositary Shares or "ADSs" from one hundred ordinary shares to one ADS to fifty ordinary shares to one ADS, effective on January 19, 2010.

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's global market share is estimated to have reached 6 to 7 percent in 2009, up from 3.5 percent in 2008, according to Sean Tzou, the chief operating officer of Trina Solar Limited.

The demand for solar power products has picked up after a difficult 2009, when the turmoil in the credit market forced financial players to abandon U.S. solar energy projects. The 2008 collapse of top solar financier Lehman Brothers and the freeze-up in the global credit markets drove nearly all banks to halt funding for major new solar projects, forcing the makers of systems that turn sunlight into electricity to cut prices for their products and sending their stocks crashing. The problems of solar companies had been further compounded by an oversupply of polysilicon, a material used in solar panels.

The solar industry is poised 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.

In the near term, the solar industry is facing an important challenge in the form of reduced government subsidies. 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. According to media reports, the German government is planning to cut solar subsidies for new roof and open-field sites from April by 16 percent to 17 percent. Additional cuts to the subsidies will be made from 2011 if solar projects amount to more than 3,000 megawatts, and even more if they total more than 3,500 megawatts. Already, France in January slashed the tariffs for electricity produced from rooftop solar panels by 24 percent. Spain too has taken similar steps. Most solar panel maker generate the bulk of their revenue from Europe.

The company's stock currently trades at a forward P/E (fye 31-Dec-10) of 13.67 and PEG Ratio (5 yr expected) of 0.88. In terms of stock performance, Trina shares have gained 513 percent over the past year.

Full Disclosure: None.

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