Trina Gains as Solar Shipments Beat Forecast, Margins Expand

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Trina Solar Ltd., the biggest supplier of solar panels, rose the most in a year after shipments in the first quarter beat its own forecast by as much as 22 percent and margins increased.

The company delivered 1,026 megawatts of panels in the quarter, compared with a March forecast of 840 megawatts to 870 megawatts, and almost double the 558 megawatts shipped in the same period last year, Changzhou, China-based Trina said Thursday in a statement.

Global demand for solar panels is surging as prices fall and nations worldwide promote wider use of clean energy. That’s driving up sales at panel makers, and prompting many of them to expand production.

“They are basically shipping everything they can produce,” Mahesh Sanganeria, analyst at RBC Capital Markets in San Francisco, said in an interview. “If they had more capacity they would have guided for a bigger number next year.”

Trina’s American depositary receipts, each worth 50 ordinary shares, climbed 13 percent to $12.47 at the close in New York, the most since May 21, 2014.

“We kicked off 2015 on a strong note with our best first quarter in terms of module shipments,” and exceeded estimates “for almost all major financial metrics,” Jifan Gao, Trina’s chairman and chief executive officer, said on a call with analysts.

Lower Costs

The company is seeking to lower production costs, and gross margin widened to 18 percent from 15.7 percent in the fourth quarter. Sales increased 25 percent from a year earlier to $558.1 million.

Net income slipped to $13.9 million, or 16 cents an ADR, from $26.5 million, or 37 cents, a year earlier, beating the 13-cent average estimate of five analysts surveyed by Bloomberg.

The company is building a $160 million factory in Thailand. It’s expected to begin production in the first quarter of 2016 and will be able to make 500 megawatts of panels and 700 megawatts of cells annually.

The company is “still very much constrained” by the limits of its existing factories, Teresa Tan, the company’s chief financial officer said on the call. Trina is operating at “full capacity” and expects margins to stay in the “high teens” as plans to expand capacity “remain on track.”

The results outshine Yingli Green Energy Holding Co., which Trina overtook as the biggest solar supplier last year. Yingli has pursued a strategy of selling at low costs to gain share, which may make it difficult to service its almost $2 billion in debt. It’s lost a third of its value since Friday when the company warned investors that there was “doubt” about its financial condition.

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