Trina Solar Slashes Guidance, Shares Hold Up

Nov. 4.11 | About: Trina Solar (TSL)

You have to wonder whether the good news out of solar will ever return with the constant flow of negative headlines. The key to pinpointing when a bottom may be in place for share prices is when the bad news is ignored and the price of the stock stays flat or even goes up. We may be near that time especially for the China solar stocks. Shares of Trina (NYSE:TSL) held up quite well Thursday despite slashing guidance and closed down just a few percent off the lows of the day.

Due to a deflationary environment and the difficulty of getting financing for some of its European customers, the company has slashed Q3 shipment guidance from 480 – 520MW to 372 – 375MW. The full year guidance gets cut too from 1.75 – 1.8GW to 1.4GW.

"A deflationary pricing environment impacted by challenging financing conditions for some of our customer’s European projects resulted in the shortfall of our targeted shipment volumes," said Mr. Jifan Gao, Chairman and CEO of Trina Solar. "At the same time, we strived to maintain reasonable gross profits amidst such market conditions."

"Despite continued challenges in our traditional markets, we believe our efforts to capture or expand business in new and existing customer channels will result in significant orders for the year 2012. Specifically, we are encouraged by the prospects of demand growth in emerging PV markets within the Americas, Asia and Africa. Additionally, we have improved, and will continue to improve, our leading manufacturing efficiencies and cost structure through, among other things, renegotiations of some of our polysilicon and other key materials agreements to position us favorably going forward."

Trina Solar will report official earnings results on Nov 21st after the market close. Technically, shares remain weak, trading below the 50 day moving average. Also the volume levels don’t indicate to me that a definite bottom is in place yet. I like the action in Suntech Power (NYSE:STP) much better and for the purposes of full disclosure, have initiated a position personally in shares of STP. I may soon also initiate a position in shares of YGE which remains my top China solar play.

Disclosure: None