Roth Capital affirms its Buy rating and $25 target price on Trina Solar (NYSE: TSL) following preliminary Q1 shipment numbers released last week. For the first quarter, the Company said it currently estimates its solar module shipments to be in the range of 540 MW to 570 MW, including 20 MW to 30 MW for its downstream projects, as compared to the previous guidance of 670 MW to 700 MW, including 20 MW to 30 MW for its downstream projects. This is primarily due to a temporary decrease in shipments to the EU pending agreement on a new minimum import price pursuant to the adjustment mechanism in the price undertaking. The Company expects shipments to European markets to increase with the finalization of the terms.
Analyst Philip Shen noted that Trina's announcement was similar to peer Yingli Green Energy's (NYSE: YGE) recent preliminary results; lower shipments were offset by higher gross margins. In March, the EU lowered its floor price to EUR53c/W from EUR56c/W, which likely caused buyers to delay purchases. In 2013, SOL had the highest EU shipment mix (45% vs. TSL of 37% and YGE of 32%). Of the group, CSIQ may have the least EU exposure (12% in 2013), the analyst noted.
Shen commented, We now forecast Q1 shipments of 555MW vs. prior ROTHe of 685MW, revenues of $468mn vs. prior ROTHe of $460mn (boosted by the 50MW project sale), and EPADS of 14c vs. prior ROTHe of -1c. We are only adjusting Q1 estimates and will reevaluate 2014 and 2015 estimates after TSL’s Q1 earnings release.
// In 2013, SOL had the highest EU shipment mix (45% vs. TSL of 37% and YGE of 32%). Of the group, CSIQ may have the least EU exposure (12% in 2013), the analyst noted.//
Well, that has changed last Q and will keep changing; 4Q13 the TOP-3 YGE has 30%, SOL 27%, TSL 23% exposure to EU, compared to JKS's 12% and SOL's 9%.
As far as the March lowered floor price to #$%$53c/W from #$%$56c/W, they ALSO reduced the quota from 7GW to 5.8GW, everybody knew that the Chinese shipped less than 7GW to EU last year that prompted the EU to reduce the minimum price per Watt.
Uncle's Tofu brain is not working quite right ahead of the trip to Asia, will think over these when Uncle has time.
Maybe you guys can help think about why they shipped less than 7GW (aka the Cap), it could be the maximum price of #$%$56c/W was set too high as we knew the Taiwanese sold for less. Now they lower it to #$%$53c/W, shouldn't they keep the Cap at 7GW? Uncle was dead wrong about increasing the maximum price Early due to Brain Malfuctioning... Hey, it ain't the 1st time.