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  • Further Thoughts on Trina Solar and the Solar Space
    To Jack:

    So Jack, according to this !!conservative!! projection from hobo, TSL can make EPS 5$ + 2008. 2009 is booked 60% with fixed ASP's in USD. PSi is contracted to fix prices, and remaining PSi will just drop in price. That said, and a ramp from 2008 to 2009 also hobo inidcated EPS 10$ for 2009. All essential figours are out and +/- 20% sure. Going for EPS 5$ 2009 is just a mistake IMHO - better not to mention EPS 2009 at all once you find it unclear.

    The rest of your comments are great, keep it up!
    Jun 12 00:20 am |Rating: 0 0 |Link to Comment |View article
  • Further Thoughts on Trina Solar and the Solar Space
    A lot of other highlights can be read from their earnings release so I won't note them here. Just from all those who have reported so far, I think what differentiates tsl from others is their longer term approach. This is evident from their intentional strategy of diversifying their customer base, and by using long term contracts at the expense of higher short term asps for longer term visibility. One of the main concerns recently, Spain, was a huge portion for tsl's shipments in Q1, and will be so in Q2, at around 65%. Obviously tsl is milking the feed-in tariffs for all they can get now, but before they are set for renewal, tsl is projecting their Spanish exposure to drop to 17% in Q3, to just 12% for 2009. The second is integration, which will allow tsl to continue to enjoy higher gross margins compared to peers, and they still have room for improvement in terms of operating efficiencies, from 1.17/watt in Q1 to hopefully down to .80/watt at yge's levels sometime in the future. Lastly one of the main reasons why I like tsl that probably has been overlooked is their earnings power. The reason why this has been overlooked is because tsl was capacity constrained for most of 2007, and has only started to ramp in much higher percentages starting this year. This shipment ramp, from such low levels, combined with higher than industry average gross margins, will allow tsl to have the most explosive eps growth, when compared to peers. Of course, their low share count also helps, as it did for csiq who had the second lowest share count of US listed solar companies.

    I know because of what happened in Q1, many of you might think my estimates for tsl are crazy. I believe them to be entirely achievable and in line with what tsl has said. If you actually spent the time to read my logic, and do the numbers yourself, you would know that even some figures I use, are possibly conservative, such as my 200/kg silicon cost for Q4 of this year, when their 50% long term contracted virgin silicon prices could take it much lower. In fact, prior to seeing csiq's Q1 results, leading me to write my summary on what would happen if tsl's asps also trended like csiq (and subsequently yge and solf), I actually was only predicting .55 eps for tsl in Q1. And this is excluding knowledge of the huge non-operational line item expenses. In fact, some of you were saying my estimates were too low because they reported .61 eps in the prior quarter *chuckle*. Even the day prior to their Q1 earnings, I noted that if asps did not trend with peers, I saw their gross margins would drop to 24-25% with eps around .55-.60. Anyways here are my estimates for the rest of the year:

    Q2:
    asp: 3.93/watt; shipment: 44mw; revenue: 173m
    silicon cost: 1.81/watt; silicon price: 259/kg; processing cost: 1.14/watt;
    product cost: 2.95/watt; gross margin: 25%
    operating expenses: 15.5m; non-operating expenses: 6.5m; tax: 1.25m
    net income: 20m; eps: .80 (excluding poly plant charge)

    Q3:
    asp: 3.90/watt; shipment: 60mw; revenue: 234m
    silicon cost: 1.60/watt; silicon price 229/kg; processing cost: 1.10/watt
    product cost: 2.70/watt; gross margin: 30.75%
    operating expenses: 18.75m; non-operating expenses: 7.5m; tax: 2.5m
    net income: 43.25m; eps: 1.72

    Q4:
    asp: 3.90/watt; shipment: 70mw; revenue: 273m
    silicon cost: 1.40/watt; silicon price: 200/kg; processing cost: 1.05/watt
    product cost: 2.45/watt; gross margin: 37.2%
    operating expenses: 20.5m; non-operating expenses: 8.5m; tax: 3.8m
    net income: 68.2m; eps: 2.72
    Jun 12 00:15 am |Rating: 0 0 |Link to Comment |View article
  • Further Thoughts on Trina Solar and the Solar Space
    6) Along with their improved efficiencies, it also seems their capacity expansion is ahead of schedule. They noted that they should have 2 lines installed every quarter of this year. In Q1, 2 lines were installed and operational, bringing their lines up to 8, or 200mw. From their conference call, they said lines 9-14 are either "in installation or pretest production." This should make one more confident on the schedule of this year's quarterly ramp, and possibility for second half additional shipments beyond their guidance. Evidence is their stronger than expected shipment guidance for Q2. My total 2008 shipment estimate is 204mw, between their 200-210mw guidance.

    7) I don't expect analyst estimates will be anywhere near as high as I have mine. The reason is I am deducing their silicon cost reduction for the second half, based on what tsl has said. I think analyst will most likely use midpoint figures for tsl's guidance, they should get eps estimates very close to $3.75-4.00 for 2008. Top end solar analyst like Stone who already had his estimate above $4.00 before the Q1 report might possibly raise his numbers, if he makes the same deductions based on comments tsl made on their recent conference calls. The reasons why is based on his estimates, which implied lower operational metrics than tsl showed in Q1. Although the huge non-operational expenses totally threw off numbers, their level of operations should give confidence that they can be carried for the remainder of the year, when non-operational expenses, although perhaps larger, won't much as great of an impact on overall eps numbers. Also if anyone really applies simply logic, they could easily estimate that tsl's 2008 gross margin guidance of 23-25% for the entire year is impossibly low, even on the high end, when Q1 gross margins already stood at 25.8%, Q2 won't be too much lower, and Q3-Q4 would see relatively stable asps but much less silicon costs as well as higher operational efficiencies. It's harder to see unless you look at their business in terms of individual cost components, such as I've broken out below. For example, an additional .10/watt processing cost reduction from the 1.17/watt they saw in Q1 would add at least 2.5% of gross margins alone.
    Jun 12 00:15 am |Rating: 0 0 |Link to Comment |View article
  • Further Thoughts on Trina Solar and the Solar Space
    3) A second note on silicon costs, which applies more to the second half, when half of their silicon cost comes from fixed long term silicon contracts. Obviously, these would be much lower than spot. I will bring up again, that in the prior conference call, tsl indicated they would use a 50% virgin silicon/50% reclaimable mix for the second half of the year, from 20% virgin/80% reclaimable. Analysts were a bit puzzled by this, since virgin silicon costs more, but tsl responded by saying they saw their virgin silicon costs for H2 08 below their reclaimable silicon costs for Q4 07. For anyone paying close attention, this is an absolutely huge statement. In Q4 07, their silicon costs were 195/kg. Since they were using a 20% virgin/80% reclaimable blend, this implies that their reclaimable silicon costs were at the very least below 195/kg. Thus if you put the two statements together, this implies that they see their virgin silicon costs below 195/kg for the second half of this year, at the very least. Obviously, reclaimable costs could be higher, as they did trend up so far in 2008, but for tsl to use such a huge shift in blend, would imply that their silicon costs for the second half is at the very most 195/kg. At 7g/watt silicon usage, this means their silicon costs would be 1.37/watt, down from 1.76/watt in Q1. This might not sound big to the novice, but once you see them in my estimates, you will know how huge it is. And to think, they could achieve these margins at 200/kg+ silicon costs! In addition, tsl has guided they are 95% silicon secured for 2008. Just by using a higher reclaimable blend in the second half, they are more than 100% secure this year, putting them in one of the best silicon supply picture among all Chinese si-pv solars. Evidence is their industry leading gross margins. On top of this, in the prior quarter, they said they were 95% secured, assuming a silicon usage of 7.8g/watt. With silicon usage now at 7g/watt since Q2, you can see using simple math, they are 100% secured. Again, they have always stated they felt 100% confident about their silicon supply for 2008, so it's no big surprise, but nice confirmation.

    4) They did a great job on getting operating costs in line, as they have stressed for two straight quarters. Operating expenses as a percentage of revenues dropped from 12%, to 11.2%, to 9% during the last 3 quarters, below the 9.5% guidance the prior quarter. Once again, they have been conservative on this operating metric. For tsl to keep 2008 total operating expenses to 8% of revenues, that would have to imply that Q3 and Q4 operating expense levels would have to be 8% or lower. I used 9% for Q2, 8% for Q3, and 7.5% for Q4, which as a whole still added up to over their 8% target, but should work for the sake of being conservative. Note that peers have these figures at 6-7%, so it's not like tsl is cutting corners, and thus probably have more upside to cut expenses on in the future.
    Jun 12 00:12 am |Rating: 0 0 |Link to Comment |View article
  • Further Thoughts on Trina Solar and the Solar Space
    This is 2008 estimate EPS 5+ (from Hobo and Yahoo Messege Board-TSL - refine with 5 stars and you are there):

    Ok after taking notes on several conference call listenings, I made some slight deductions and estimates on 2008. This is not for everyone, so if you are not a long term investor in tsl, you can just skip this post since I will make no stock price prediction especially for the short term. First I want to make a few comments on what was said on the earnings release and the conference call.

    1) One of the main differences between tsl and its direct peers is that tsl decided to sign long term contracts with customers, and apparently not as weighted in euro dollar payments. Because of this, they did not benefit from any asp rise in Q1, nor will they for any further rises this year. The advantage is, their asp visibility, in their reported usd, is the most clear, thus allowing them to give very narrow ranges for this year. In addition, they also have good visibility into 2009, with asp ranges not significantly lower than 2008 - something that I'm sure is very shocking for many analysts predicting massive 25% asp drops next year. Obviously, their visiblity makes calculating their business for this year much easier. The ability for us to predict tsl's asp range for the rest of 2008 is extremely important, because it is one of two very unpredictable variables. The other is being silicon.

    2) At 7.5g/watt, tsl's blended silicon cost for Q1 was 235/kg, up from 195/kg the prior quarter. By being able to drop silicon usage from 8g/watt to 7.5g/watt sequentially, they were able to reduce the silicon cost rise from 15% down to 12%. In addition, I noted in earlier posts that I believed tsl was very conservative on many parts of their guidance during their Q4 2007 quarter. tsl guided for an average of 7.8g/watt silicon usage for all of 2008. They are already at 7.5g/watt during Q1, and guided Q2 to be at 7g/watt, a remarkable improvement in their operating efficiencies. Well it's remarkable to what they guided to, as you can see, was as conservative as you can get. However, if you listened to ldk and sol, you'd know that eventually tsl would be able to achieve these results. Luckily, they did so in under two quarters. Thus as a result, even if silicon costs rise by 10% sequentially, silicon cost would only rise to 1.81/watt in Q2, from 1.76/watt in Q1. This along with what they guided for Q2 asps, should allow them to achieve 25% gross margins.



    Jun 12 00:12 am |Rating: 0 0 |Link to Comment |View article
  • Profiting from Panic-Selling in Trina
    To Jack,

    Check out investinghobo on the yahoo board, I don't need to add anything further to his estimation of 5$+ for 2008 and 10$+ for 2009.
    Jun 10 13:24 pm |Rating: 0 0 |Link to Comment |View article
  • Further Thoughts on Trina Solar and the Solar Space
    Your EPS for 2009 of 5 $ is just unexplainable low, as you predict circa 4 2008 and an expansion of margins in 2009? This makes just no sence.Also TSL is sold out 2009 60% (complete year).

    Please explain in detail this:

    disruptive technologies offering PV panels with ASPs (not costs to produce, but actual sales prices) of $1.00 to $1.50/watt

    The rest is fantastic and you did a very good job, keep it up!
    Jun 10 06:57 am |Rating: 0 0 |Link to Comment |View article
  • Profiting from Panic-Selling in Trina
    Jack, how do you arraive at EPS 5 $ 2009 ? TSL can do this 2008 and can make 8-11 $ 2009. I can't understand you 50% to low estimate for 2009!
    Jun 10 01:18 am |Rating: 0 0 |Link to Comment |View article
  • Why I'm Not Cutting Back Trina Solar before Earnings
    As Si will reach historical prices soon again, there is no need for UMG or thin Film. Si is unlimited available in the world and no shortages will occur in future.
    Jun 06 05:41 am |Rating: 0 0 |Link to Comment |View article
  • Why I'm Not Cutting Back Trina Solar before Earnings
    Ade, TSL is "the King" because due to its highest margines compared to all others (incl. STP & LDK) it is the safest solar play. STP has not any kind of vertical integration, so again TSL is the advanced company.
    Jun 06 04:41 am |Rating: 0 0 |Link to Comment |View article
  • Why I'm Not Cutting Back Trina Solar before Earnings
    Great article Mark! Don't forget Trina can do more than 5 EPS in 2008 and double it in 2009. So we are at fP/E 10 2008 and fP/E 5 for 2009. Peers are 250-300% higher valued. Nothing more to add.
    Jun 06 04:38 am |Rating: 0 0 |Link to Comment |View article
  • Which Are the Bargains In Solar Stocks?
    O.K. Jack understand, in Q4 2007 TSL guided the year 2008, margins & Sales and you can estimate 2008 EPS. Looking to the currency (EURO) Impact, the 4 US$ should move to EPS 5US$ and higher, ASP rises with the high EURO. Consider this too. Considerin this + own TSL guidance, we are now trading on P/E 9-10. The latest estimations for TSL are av. 4.1 EPS 2008 and still way too low as not considering currency.Anyhow Jack, you have predicted CISQ and now you predict TSL, you are the No. 1 here in Solar, respect!
    May 26 03:03 am |Rating: 0 0 |Link to Comment |View article
  • Which Are the Bargains In Solar Stocks?
    Jack, one problem with your articles is, you don't look into TSL's guidence. TSL has guided for more than 4 EPS 2008 and I bet it will be more than 5, and the 2009 EPS is sure 8-10 US$. So, leave these actual to low estimates aside, and you will see that TSL is half the price of CSIQ.
    May 25 19:48 pm |Rating: 0 0 |Link to Comment |View article
  • Which Are the Bargains In Solar Stocks?
    Are you sure your currency is correct for SOLF (lmao)! Don't publish P/E's without knowing the currency !

    Everyone knows TSL has the lowest P/E's and your SOLF FPE is misleading - with intention ?
    May 24 12:50 pm |Rating: 0 0 |Link to Comment |View article
  • Solarfun Earnings Could be the Perfect Trigger for a Short Squeeze
    P.S. I think Davi & Jack (Predicted CSL & TSL !!!!) are the best analysts in the solar space! Great Job!
    May 16 13:30 pm |Rating: 0 0 |Link to Comment |View article

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