Atticvs Research

Further Thoughts on Trina Solar and the Solar Space

Time to sell was when it was $40, now is good time to buy ahead of strong earnings. Given jittery market overall it will be late next week before the pre-earnings run begins in earnest.

Further Thoughts on Trina Solar and the Solar Space

Bentinger, for what it's worth I agree with GS concerning the dangers of investing in many solar companies long-term. This will be a volatile game and significant dangers are now emerging. See above post re Europe and competitive landscape developing in Europe. However, I also think that most of the solar plays right now, including TSL at $28, are potentially excellent short-term trades.

Further Thoughts on Trina Solar and the Solar Space

Anyone here got a copy of, or link to, TSL's development road-map? I've them for FSLR and SPWR and make interesting reads. FSLR expects to be able to sell with ASP's of $1.00 in a few years time. Currently their total cost per watt is just over $1.00 and should break below this threshold in Q3'08. I know, not apples to apples but costs do matter...

Given the solar support cut-backs in Spain and the general economic slowdown across Europe, not to mention the huge expansion plans that most solar companies have embarked upon, I think in the next couple of years it will be very important for solar companies to have strong balance sheets and very competitive technology. Whilst I consider TSL to be potentially excellent short-term trade right now at $28, a medium or longer term investment decision for me would have to incorporate information with regard to their road-map (and of course significant efforts to strengthen their balance sheet).

Appreciate if anyone can give me a link to TSL's road map, or perhaps some on-line investors presentation where I may access the main details. thks.

The 'Problem' With Solar Companies is Not Really a Problem

Dicki, you say TSL should reach grid parity in 2010. Currently their production cost per watt is about $2.60 all inclusive and are forecast to be about $2.50 by end 2008 or early 2009. What do you forecast their total cost per watt will be in 2010? Do you have any TSL road-map reference you can post here. I understand the thin-film companies may have total costs per watt of about 80 cents by 2010 with ASP's of about $1.20 per watt. I know they are not oranges to oranges but for large installations where labor & installation costs can be spread pretty thinly costs per watt & ASP per watt do matter. I'm leaning toward the belief that if solar companies cannot get ASPs towards grid-parity - i.e. in region of say $1.50/$2.50 per watt (depending on output per panel etc) in the next few years - then they may find the going tough against more competitive offerings.

Further Thoughts on Trina Solar and the Solar Space

Jack, disageee on both counts.

You cannot logically have a dump of silicon on the market that lowers silicon input prices that doesn't lower selling prices for companies such as TSL. They are two side to the same equation give or take a short period.

Also, forgive me pointing this out but it is inconsistent to speak of giving conservative estimates on the one hand whilst on the other hand choosing to ignore the dilutive effect of an equity or equity related debt offering that has been already discussed by management.

I agree that TSL may be a buy, very probably is, but the thrust with my questions is to get to clean information not guess what may occur if and when management occasionally spin positive events as no doubt they and all other do from time to time. I'm striving to look beyond that. Surely the main purpose of good research and exchanges of data is to get beyond spin and look at best underlying information. An equity offering, or equity related offering, is more than probable for TSL. Seeing a you consider this major event to be a probablility why have you excluded it from 'conservative' EPS calculations in what was a long discourse about prospects and earnings for TSL. I feel I will probably buy TSL, but not until I get a better feel for their true prospects and EPS.

Best.

Further Thoughts on Trina Solar and the Solar Space

Jack, there’s a lot of silicon coming onto the market and I understand that this is part of the reason why silicon pricing is forecast to drop going forward. It seems to me that with such a lot of extra product hitting the market that selling prices across the board for solar companies are in danger of softening as we get into 2009 and a growing awareness of this should act as a headwind for most solar stocks in later 2008.

Second, TSL management, during the Q1 earnings conf call, spoke about their 2008 and 2009 capex plans being $250-300 million and that ‘when the time is right’ they would seek to fund this via equity or equity related financing. This too is likely, until it is concluded, to act as a headwind for the stock price – especially because that the dilution effect is likely to be fairly large given the relatively small size of TSL’s shareholders equity and balance sheet. Additionally, seeing as such funding should ideally have to occur before the end of 2008, it would seem prudent to incorporate some dilution effect into EPS projections for latter part/s of 2008.

Keep up the good work.