We recommend avoiding a position in Trina Solar Ltd. (TSL). Our recommendation is based upon the anti-dumping policy of the U.S against Chinese solar manufacturers, the rising price of polysilicon, a decline in profit margins, rising inventory, and slow demand in Europe. Trina missed its second quarter earnings by $0.51 and declared Q2 EPS of $1.3. Its revenue fell by 40% YoY and it missed revenue estimates by $52 million. The company has cut its future guidance based upon demand constraints and a high level of inventory.
The company got a hit because of the 30%-250% U.S. tariffs that were imposed on Chinese solar imports in a bid to protect domestic producers. The impact was seen in the results for the last quarter, as the company's revenue from U.S. markets declined from 36.8% to 26.3%. The revenue mix from Germany increased up to 42.1% from 36.7% in the first quarter. But Trina Solar has faced poor demand from European markets due to snowy weather conditions and, most importantly, European markets are in their maturity stage.
Read more..
No comments:
Post a Comment