Sun Shines on Trina

Trina Solar Ltd. (TSL - Snapshot Report) flew past both the Zacks Consensus EPADS of 31 cents and year-ago EPADS of 68 cents to reach 71 cents in the second quarter of fiscal 2009. The growth in EPADS was driven by lower polysilicon prices, which is its key raw material.

The company was able to reduce its polysilicon costs by more than 30% over the first quarter. This came through lower purchase price, effective management of long-term contracts and prudent inventory management. The company was also able to reduce its non-silicon manufacturing cost for its multi-crystalline modules by about 6 cents over the first quarter to 73 cents per watt.

Trina Solar is currently one of the few private manufacturers who have developed a vertically integrated business model ranging from the production of mono-crystalline and multi-crystalline ingots, wafers and cells to the assembly of high-quality modules.

Trina Solar's revenue rose 13.5% over the first quarter to $150 million. However, year-over-year revenue fell 26.5% solely due to lower module average selling price. The company’s total shipments during the quarter rose to 63.9MW as compared to 48.8MW in the first quarter and 47.6MW in the year-ago quarter. Shipments grew due to higher demand in prime European markets, improved customer access to PV system purchase financings and rising government incentive programs for alternative energy projects.

Higher revenue and lower cost structure percolated down the line and pulled up the company’s gross margin to 27.4% from 17.2% in the first quarter of fiscal 2009 and 23.2% in the year-ago quarter.

Trina Solar reiterated its 2009 guidance for total photovoltaic module shipments to a range of 350MW – 400MW. It expects to ship between 90MW –110MW of photovoltaic panels in the third quarter. On the flip side, Trina sees its ASP falling between 10% –15% in the third quarter and slide further between 10% – 12% in the fourth quarter. However, this would be offset by improvements in manufacturing costs. The company expects to improve upon its manufacturing costs by 15% – 20% in fiscal 2009.

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