We’ve been a little quiet about Trina the last couple of days, this is not because we don’t like it anymore. We had quite a run, after we advised to buy like 10 days ago in the low 30s, it ran to the mid forties, and we advised to take some money off the table.
We still like it a lot on a fundamental basis, and we might have another run at that 200 day moving average shortly. The cancellation of the proposed polysilicon plant (producing a key ingredient) caused quite a stir.
On the one hand, Trina’s goal of becoming a completely integrated solar play has been abandoned, on the other hand, this has most likely been wise move. The production would have come on-line just when the present scarcities in poly would have changed into the expected glut.
And financing a $1B facility created uncertainties for investors, which were reflected in the price. Then, yesterday, Goldman Sachs (no less) came out with a rather pessimistic note on Trina, which it shook off like dogs do with water.
Goldman’s reasons were not quite clear to us. They seemed to argue that Trina ran the risk of over-expansion. Basically, they were saying it was growing too fast. Goldman is pretty influential, but we went up two bucks, rather than down.
The reason for that might have become clear today, Trina is going to start what looks like the beginnings of ‘Trina City’. It invited five suppliers to build facilities nearby, in order to improve coordination and cooperation, and shorten supply lines.
It seems a good idea, and an answer against those risks stated by Goldman. We do not yet advise to buy again (we need a convincing break-out above that 200 day average for that), but this thing is definitely on the move.