Cowen’s Stone Comments on Trina Solar (NYSE:TSL) Q3 Earnings – Maintains OUTPERFORM
Source: http://feedproxy.google.com/~r/smallcappulse/feed/~3/E4bYNCAiD0s/Posted on Friday, November 20th, 2009 | In Investing Lessons, Small & Micro Cap
November 20, 2009 ndash; Analyst Comments ndash; Cowenrsquo;s Rob Stone weighed in on Trina Solarrsquo;s (NYSE:TSL) Q3 financial results, noting that he sees 80%+ upside in the stock relative to the market in 12 months, reiterating an OUTPERFORM rating.
Q3 Results
Trina Solar reported a 14.1 Y/Y decline in Q3 revenues to $249.7 million, up 66.5% over Q2, on shipments of 122.6MW, compared with 66.4MW in Q308 and 63.8MW in Q209. Gross margin was 28.5% in Q3, compared with 22.4% in Q308 and 27.4% in Q209. Net income in Q3 was $40.1 million, or $1.29 per diluted ADS compared with $32.1 million for the same period last year, and $18.9 million in Q209. Net margin was 16.1% in Q309. Manufacturing costs for module production declined to about $0.82/watt. The companyrsquo;s cash and equivalent position as of September 30, 2009 was $384.9 million. In terms of guidance, management expects to ship between 145MW to 165MW of PV modules with gross margins of 25% and 27%. For the full year, it expects total PV module shipments to be between 380MW and 400MW compared to previous guidance of 350MW to 400MW. For the FY, it expects to reduce manufacturing costs by 15% to 20%.
Stonersquo;s Key Takeaways
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Gross margins rose 110 basis points while silicon costs ($0.62 vs. $0.84) fell faster than ASP.
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Raised 2009 12E shipments to 390MW, 730MW, 960MW and 1.27GW (vs. 338MW, 510MW, 700MW and 960MW) noting that TSL should gain significant market share in 2009/10. Sees stable GM at about 26% on continued cost reduction.
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Raised 2009-12E E/ADS to $3.04, $4.50, $5.50 and $6.90 on revenue of $827M, $1.28B, $1.56B and $1.92B.
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Good visibility for the first half of2010, with large orders from Italy and Spain, and ongoing demand in Germany.
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Maintains OUTPERFORM rating
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