We never doubted that things were going well at Trina Solar, but there once again was a sell-off in the general market, which spills over to the solars, as these are perceived as risky. And risk appetite is not too big these days, although Trina is unjustly categorized as risky.

First, the news, it’s twofold:

• A convertible bond issue of $120M, due in 2013. Details you can read here
• TSL’s net revenue for the quarter would be between $200 million and $205 million, topping its forecast from last month of $169 million to $177 million, beating analysts’ expectation of $173.98 million, according to Reuters Estimates.
• However, not all is well;  gross margin for the quarter would be between 22.5 percent and 23.5 percent, down from the 23 percent to 25 percent it had expected last month. This is because rising cost of polysilicon

What is probably going on is that they are expanding faster, which needs more capital (hence the convertible), but also more polysilicon. The additional purchases of polysilicon will probably be at open market prices, hence the margin decline. As long as this is temporary, and as long as the extra revenue adds to overall profits, this is not a problem.

Now, technicals. We actually did forsee a bottom at roughly $27, but hesitated to give a buy signal as the markets are in such bad shape (especially last week) that anything could have happened (and that still holds, actually). Here is the graph:

We think it’s short-term fate is entirely in the hands of the markets, so there is probably a little more upside on the way. Indeed, as we write, it has now crossed $33, more than 11% up for the day..

Let it cool a little before stepping in. We must also note that they are starting to learn the Wallstreet game, sugarcoating the convertible with increased forecasts, that’s also good, in the past they had some problems in this department..