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Some things you didn’t know about Trina Solar

February 25th, 2011 · No Comments

Good metrics, what’s not to like? Q4 EPS of Trina actually exceeded those of First Solar, whose stock price is more than five times as high..

  • For 2010, net revenues were $1.86 billion, an increase of 119.8% from $845.1 million in 2009, primarily due to increased shipments that offset decreased ASP
  • Total shipments were 1.06 GW, an increase of 164.8% from 399.0 MW in 2009
  • 2010 EPS fully diluted of $4.18, an increase of 148.1%
  • Q42010 EPS (fully diluted) $1.87 (of which $0.32 as a currency gain), 71% above consensus estimate of $1.09
  • Overall gross margin was 31.5% in 2010, compared to 28.1% in 2009
  • Operating margin was 22.5% in 2010, compared to 16.0% in 2009
  • $790M in cash and $458M in bank borrowing (of which $300M long-term)
  • Full 2011 guidance PV shipments 1.75-1.8GW (an increase of 65-70% from 2010)
  • 39.455M shares fully diluted
  • non-silicon cost of $0.74, falling to $0.70 at the end of 2011 through technology and manufacturing improvements
  • 2010 monocrystalline and multicrystalline cell efficiencies 19.5% and 18.0%
  • Demand is so solid that the company actually has to invoke third party producers to meet orders, it’s production capacity isn’t big enough. (As a witness to TSL efficiencies, this practice lowers margins quite a bit)
  • For a bit of fun, the $1.87 in Q4 exceeded the Q4 EPS of First Solar (FSLR), which came in at $1.80. FSLR has a share price of $155. We’re not sure such a large difference is warranted.

Shipments, revenue, profits all increase by triple digit growth. Next year won’t quite be a repeat of that, but there are growth solid expectations.

So, shipments will increase 65-70%. Revenue will increase less as the ASP (average selling price) per module is on a declining path, but unless the ASP dramatically implodes, profits will still increase. And the decline in the ASP will be (partly) offset by process improvements.

Yes, the main risk is that solar energy still depends on subsidies. However, consider the following:

  • Production cost steadily decline (25 years ago cells cost $25 per KW, now less than $1)
  • Energy efficiency steadily improves
  • Theses two developments together produces a steadily increasing price competitiveness with fossil fuels, the price of which is on an uptrend
  • In some parts of the world (depending on sunshine and local energy cost), solar can already compete with the grid
  • The present difficulties in the Middle East and North Africa will serve as a powerful reminder that alternative energy not only becomes increasingly competitive, but it also serves as a (long-term) route to lessen our dependency on oil.

Tags: TSL