INTERVIEW-UPDATE 1-Trina Solar sees profit margin growth

* Trina CFO says profit margins will widen in second half

* Trina considering debt or equity offerings to fund growth (Adds details on silicon, expansion plans)

NEW YORK, June 13 (Reuters) - Solar products maker Trina Solar Ltd (TSL.N: Quote, Profile, Research) expects its profit margins to widen in the second half of 2008 as its costs for silicon begin to decline, Chief Financial Officer Terry Wang told Reuters on Friday.

That decline in the cost of silicon, which is used to turn sunlight into electricity inside photovoltaic solar cells, will be sharper than any potential declines in prices for Trina's products, he said.

"We believe the silicon cost on a weighted average will decrease greater than the average selling prices," Wang said.

Last week, Trina shares slumped after it said its second-quarter margins could be squeezed by an expected 5 percent to 10 percent increase in silicon costs.

Rapid growth in the solar production capacity has gobbled up global supplies of silicon, squeezing margins and crimping the sector's growth.

New silicon plants are expected to begin coming on line in the second half of the year, pressuring prices that had jumped as much as tenfold on the spot market over the past three years.

Wang also said the company is considering tapping the debt or equity markets to raise capital to help fund the company's rapid production expansion.

Wang did not disclose how much money the company could raise, but said it would likely seek a "reasonable amount" of capital in an effort to avoid affecting the value of its shares.

Trina is ramping up its solar module output capacity and expects its end-2008 capacity to reach 350 megawatts, more than double its end-2007 level of 150 MW. By the end of 2009, Trina has targeted capacity of 600 MW. (Reporting by Matt Daily, editing by Brian Moss and Gerald E. McCormick). REUTERS 13.06.2008

GreenergyCapital contract with TSL

The Group GreenergyCapital, investment company specializes in making investments in the fields of renewable energy and energy conservation, has concluded with Trina Solar, international group active in the production of photovoltaic modules listed on the New York Stock Exchange, an important contract for the sale of panels to produce electricity.
The agreement signed by Ergyca Power, a company wholly owned by GreenergyCapital, lasts three years (2008-2010) and provides that Trina Solar provides the Group GreenergyCapital photovoltaic modules with technology mono and poly-crystalline for a value of 158 million dollars. The agreement is part of the development programme of Group companies GreenergyCapital in the field of photovoltaics, the purchase of the panels in fact follows the establishment of four special purpose vehicle, created with the objective to identify and develop initiatives in the field of energy generation photovoltaics.
In addition to investment operations, the Group has initiated activities realization of photovoltaic installations with the recent agreement with KME Group, which provides for the establishment of a plant on the establishment of Serravalle Scrivia, with an installed capacity of around 4.5 MWp plant, which will be installed photovoltaic modules produced by Trina Solar.
"After the contract signed in April with Pramac, we continue successfully in the development project of GreenergyCapital in photovoltaics," says Luca d'Agnes, CEO of GreenergyCapital SpA "The agreement with Trina Solar, in fact, represents a second important element in the realization of our project, because it contributes substantially to the availability for the Group of a strategic component for the realization of photovoltaic systems."

Which Solar Stocks Will Continue To Shine?

In early February 2008, I wrote this article giving my thoughts on 11 solar stocks. As you will recall, the stock market was hurting in January, and so were the solar stocks. In that article, I opined that the high-PE stocks in the group - First Solar (FSLR), SunPower (SPWR), and Suntech (STP) - were overpriced, while two were underpriced and screaming “BUY ME.” I further opined that if the market is truly rational, the investment returns on the low-priced stocks would exceed the returns from the high-PE stocks.

In that first article, I submitted a table I had put together, which calculated forward PE’s for 10 stocks in this space. The table is set out again below, with updated data as of yesterday’s close. As you can see, the market has been largely—but not completely—rational.

Canadian Solar (CSIQ), my favorite stock in January, is up a whopping 119% in a little over 4 months, its PE having increased from a ridiculously-low 11 in January to a more reasonable-but-still-attractive PE of 16 now. My second favorite stock in January—Trina Solar (TSL)—has turned in a respectable performance—up 36% as of yesterday, although it is down today. TSL released “interesting” earnings today and will be discussed in greater detail below.

ReneSola (SOL) actually IPO’ed (at $13.00) after I wrote my article and has also done very well—up 87% since January.

On the other hand, if you average the return on the three high-PE stocks I panned in January, you get an average return of 12%, with one of the three (STP) actually having dropped further since the pretty bad baseline in January.

FSLR did go up pretty substantially (49%), but far, far less than my favorite, CSIQ. Indeed, I believe FSLR is living on its previous laurels and momentum generated by all of its boosters in the investment community. I expect these high-PE stocks to continue to underperform their low-PE brethren going forward.

What has happened is precisely as it should be, in my opinion. FSLR is predicted to double its earnings between 2007 and 2008, and STP and SPWR aren’t even expected to do that, yet they trade at forward PE’s of 26 to 88. On the other hand, CSIQ and TSL are expected to more-than-double THEIR earnings in 2008, and yet their forward PE’s are 16-17. Of course, after today’s earnings report from TSL, I think the consensus for TSL earnings in 2008 will go up at least 10-15% from $3.16 to, putting TSL’s PE at about 12-13.

Solarfun (SOLF), Yingli (YGE) and JA Solar (JASO) trade at PE’s of 20-25, and I do not believe they offer more compelling values compared to TSL and CSIQ that would justify those higher PE’s. If a reader knows of a significant advantage one of these three has over TSL or CSIQ, please comment about it.

In my view, although SPWR is clearly the technology leader in the group today (they are cranking out 22% efficiencies in the lab, and are selling 19.3% efficient panels commercially), its growth rate has definitely decelerated. Indeed, on the conference call some weeks ago, SPWR indicated that revenues in Q2 of this year will be flat with Q1 (whereas TSL, for example, is guiding to about a 40% sequential increase in revenues). In my view, even given its technological prowess, and although it deserves some premium, SPWR is overpriced at a forward PE of 37. This is especially true given the fact that SPWR won’t even double earnings this year, while both TSL and CSIQ are expected to more than double their earnings. In addition, I believe other companies will substantially narrow the efficiency gap in the next year or two, decreasing SPWR’s relative advantage.

Suntech Power (STP) is also slowing in growth, with earnings only expected to go up 50% this year. I panned STP in January because I thought it was overpriced at its PE of 31, and I still think it is overpriced at a PE of 26, compared to CSIQ and TSL at about 14.

As to FSLR, I didn’t like its prospects in January, and I don’t like them any more now. For any company to justify a forward PE of 88, it has to be able to more than double its earnings on an annual basis for several years into the future, usually because it has a proprietary product or service for which there is no meaningful competition (think Microsoft OS’s in the distant past, although even in those days, I don’t think MSFT garnered forward PE’s of almost 100).

Although FSLR will probably double earnings this year, I doubt it will do so next year and the year after that. The expectations are so high that one tiny stumble and all of a sudden, FSLR no longer merits a forward PE of 88, and contraction of the multiple will hurt the stock price, or, at the very least, prevent any increase in stock price. One need not look far to find examples of this—look at STP and SPWR, both of which are trading at about half of their 52-week highs (AAPL and GOOG are two more examples of fabulous companies who got knocked down because they failed to meet continuing outrageous expectations—and they “only” trade at forward PE’s of 30 or so).

Frankly, I would not even pay a forward PE of 40 for FSLR, and here’s the reason why not:

The KEY reason FSLR is worth more than the other solars TODAY is because it is the price leader in terms of cost per watt. But there is only one reason for that price leadership—which is that polysilicon is priced in the hundreds of dollars per kilo, whereas within 2 to 3 years, it will be priced in the dozens of dollars (and not that many dozens at that). Since poly is the #1 manufacturing cost for FSLR’s competitors, an 80% decrease in the cost of poly (from, say, $250 to $50)—as is likely to occur over the next several years—will go very far towards eliminating FSLR’s cost advantage. Keep in mind also that FSLR also has one cost DISADVANTAGE that its poly brethren do NOT have—FSLR has to build TWO panels in order to generate the same amount of electricity that a SINGLE poly-based panel will make. That will double FSLR’s cost for aluminum, glass, manufacturing and other costs to build that extra panel.

When you take this into account, I would not be surprised if in three years, a single poly-based 300-watt panel costs no more to make than (2) 150-watt FSLR thin-film panels. And all things (including price) being equal, who wouldn’t prefer ONE 300-watt panel versus TWO FSLR 150’s? In other words, FSLR’s panels will actually have to be at least 15-20% cheaper just to induce purchasers to buy them because the amount of room they require and the extra installation costs will have to be compensated for.

Finally, how much upside is there for a company—any company—with a market cap of $20 billion? I simply don’t see 2-bagger potential for FSLR in the next year, whereas CSIQ and TSL with market caps of around a billion could double or triple in a year or two and still have a market cap FAR less than HALF that of FSLR TODAY. Another way to see this is to look at the price targets for FSLR, which range up to maybe $350 (I don’t follow this closely, so maybe I am wrong here). That gives FSLR an upside of maybe 40%. In contrast, if later in 2008, it looks like TSL will make $5.00/sh in 2009 (consensus before earnings release today was $4.19—see further discussion below), and by the end of 2008, TSL’s PE expands modestly to 18 against 2009 earnings, the resulting price of $90 represents a 2-bagger from the current trading price around $46.

In conclusion, I believe that the solar space will grow vigorously over the next decade, and I believe that at the present time, TSL and CSIQ continue to offer the best risk-reward ratio in this space. I do believe it’s difficult to look very far out (ie, beyond 2009) because I think by 2010, disruptive solar technologies (CIGS or other thin-film PV, concentrating photovoltaic, etc) will be sufficiently commercialized that they may present very serious competition to the polysilicon-based panel producers, but at this point in 2008, TSL, CSIQ and SOL offer the best prospects.

Finally, I want to discuss TSL’s earnings announcement this morning. The earnings headline number was $12.9 million, or 51 cents per share, slightly exceeding consensus of 48 cents, and substantially less than last quarter’s 62 cents. Not surprisingly, investors who did not look under the hood sold TSL today, causing it to drop to about $46 as I write this.

If one looked under the hood, however, one would discover a charge of $4 million against earnings due to “remeasurement of the non-US dollar denominated obligations in the US dollar functional currency”—whatever this means. In the absence of this weird charge that is apparently related to an accounting change that occurred for the first time this quarter, earnings would have been 67 cents. To put it a different way, if this accounting change had occurred next quarter, TSL would have announced earnings of 67 cents and the stock would be at $55 now rather than $46. Amazing how such an unanticipated and seemingly trivial decision can have such major impact.

Also, TSL paid over a million dollars in income taxes this quarter versus a tax benefit of half a million last quarter. Making a further adjustment for this would yield “operational” earnings (ie, earnings based on the sales and profit margins rather than currency exchange and income taxes) of about 75 cents this quarter.

More importantly, guidance for this year was increased—with operating margins of 15-17% expected on revenues of $770 to $808 million. Taking the midpoint on sales and margins ($789 million times 16%) yields operating income for this year of $126 million. Utilizing the same interest cost and exchange losses as just reported but annualizing them equals a cost of about $24 million and taxes at 4.92% (announced on the call) adds up to $6 million, yielding earnings in 2008 of $96 million, or $3.79/sh, yielding a PE of about 12 against the current trading price of about $46.

I believe that the analysts will go through the same math I have just done and that earnings estimates for both 2008 and 2009 will be increased by at least 10-15% in the next few days. Therefore, to me, TSL where it is trading now ($46) is a buy, not a sell.

To those not familiar with the solar space, I must close with a few cautions. First, solar stocks are EXTREMELY volatile, with 20% daily moves NOT unusual. So if you do not have the stomach for seeing your position lose 20% of its value in one day, solar may not be the place for you. Second, the solars have gone up a lot in the past few weeks, and there is a good argument to be made that they need to slide back before they go back up as we anticipate the next earnings season beginning next month. Third, there is reputed to be a psychological connection between oil prices and the solar stocks. To me, this was more of a factor in the past than it is now, but it remains a factor. Thus, if oil slides back from the $120’s, it may take the solars with it. Fifth, some people believe that the stock market in general may be heading back to 12,000 or even below to retest the Jan and March lows, and obviously, such a move may well impact the solars (although the solar often don’t follow the broader market on a day-to-day basis).

On the positive side, I think that there is a fair possibility that in the next few months, Congress may pass an energy bill that will extend the old incentives and create some new ones. Although some of that is already baked in, I believe the passage of this bill may move the solars up another 5-10%. Finally, especially if oil and gas hold up or even go higher, I believe that over the next few months we’ll hear more about factors that will be pro-solar—such as carbon-capture, increased state incentives spurred on by increases in the cost of electricity (due to higher costs of coal and natural gas) and due to environmental concerns, etc.

Whether the “bullish” forces I have discussed above beat the “bearish” ones, I cannot say. But if you are comfortable with the volatility and other risks discussed above, I think that TSL is a buy at $46 or $47 and CSIQ is a decent buy under $40.

Jack Yetiv

Trina Solar Announces First Quarter 2008 Results

Friday June 6, 7:58 am ET

CHANGZHOU, China, June 6 /Xinhua-PRNewswire-FirstCall/ -- Trina Solar Limited (NYSE: TSL - News; ''Trina Solar'' or the ''Company''), a leading integrated manufacturer of solar photovoltaic products from the production of ingots, wafers and cells to the assembly of PV modules, founded in 1997, today announced its financial results for the first quarter 2008.

    First Quarter 2008 Financial and Operations Highlights
  -- Solar module shipments were 29.49 MW, up 180.3% from 10.52 MW in the
     first quarter of 2007 and 23.3% from 23.91 MW in the fourth quarter of
     2007
  -- Total net revenues increased to $120.7 million, up 183.6% year-over-
     year and 19.0% sequentially
  -- Gross profit was $31.1 million, an increase of 226.8% year-over-year
     and 12.6% sequentially
  -- Gross margin was 25.8%, compared to 22.3% in the first quarter of 2007
     and 27.2% in the fourth quarter of 2007
  -- Operating margin was 16.7%, compared to 10.5% in the first quarter of
     2007 and 16.0% in the fourth quarter of 2007
  -- Net income was $12.9 million, compared to $4.8 million in the first
     quarter of 2007 and $15.7 million in the fourth quarter of 2007
  -- Net income of $12.9 million includes a foreign currency exchange loss
     of $4.0 million, primarily associated with the remeasurement of the
     non-US dollar denominated obligations in the US dollar functional
     currency
  -- Earnings per fully-diluted ADS was $0.51

''We are pleased with our first quarter performance, as we benefited from our integrated manufacturing capabilities to offset higher silicon feedstock costs,'' said Trina Solar's Chairman and CEO, Jifan Gao. "We also made solid progress on our technology roadmap, including reducing wafer thickness and other process improvements, all of which contributed to lower our module manufacturing costs. These developments, combined with our new automated wafer and cell line manufacturing workshops, are central to our strategy of continuously improving our technology platform, ensuring our low cost position through a vertically integrated business model, and developing a strong brand globally.''

    First Quarter 2008 and Recent Business Highlights
  -- Expanded capacity to approximately 200 MW for each of ingot, wafer,
     cell and module production as of March 31, 2008
  -- Introduced automation and in-line processing to new cell production
     lines 7 and 8
  -- Achieved 100% in-house cell processing, an increase from approximately
     75% in the fourth quarter of 2007
  -- Reduced monocrystalline and multicrystalline wafer thicknesses from 200
     to 180 microns and from 220 to 200 microns, respectively
  -- Enhanced the Company's brand recognition and market share by further
     developing sales channels in developing solar markets, including
     Belgium, France, Korea, Australia and the Netherlands
  -- Received Underwriters Laboratory (UL) certifications to initiate sales
     in the United States, with initial contracts secured for the second
     half of 2008 and throughout 2009
  -- Contracted 100% and 90% of first and second half of 2008 targeted
     module production, respectively, or approximately 95% of 2008 targeted
     module production of 200 MW to 210 MW
  -- Announced long-term polysilicon supply contracts with GCL Silicon
     Technologies, Silfab S.p.A. and Qingdao DTK
  -- Initiated deliveries to customers on a long-term contract basis to
     increase visibility on 2009 business such as Phoenix (Germany), Proinso
     (Spain), Pirelli (Italy) and Clipsol (France)

  First Quarter 2008 Results

Net Revenue

Trina Solar's net revenues in the first quarter of 2008 were $120.7 million, an increase of 19.0% sequentially and 183.6% year-over-year. Total shipments in the first quarter of 2008 increased to 29.49 MW, up from 23.91 MW in the fourth quarter of 2007 and 10.52 MW in the first quarter of 2007. Average sales price ("ASP") was $3.95 in the first quarter of 2008, compared to $3.94 in the fourth quarter of 2007 and $3.80 in the first quarter of 2007.

Gross Profit and Margin

Gross profit in the first quarter of 2008 was $31.1 million, an increase of 12.6% sequentially and 226.8% year-over-year. Gross margin was 25.8% in the first quarter of 2008, a decrease from 27.2% in the fourth quarter of 2007 and an increase from 22.3% in the first quarter of 2007. The sequential decrease was predominantly due to higher cost of silicon raw materials. The year-over-year increase in gross margin was primarily due to higher module ASP and cost efficiencies from in-house cell production.

Operating Expense, Income and Margin

Operating expenses in the first quarter of 2008 were $10.9 million, representing 9.0% of first quarter net revenues, a decrease of 11.2% from the fourth quarter of 2007 and 11.8% from the first quarter of 2007. The sequential and year-over-year decreases were primarily due to lower general and administrative (''G&A'') expenses and sales and marketing expenses as a proportion of total net revenues. Operating expenses in the first quarter of 2008 included approximately $1.3 million of share-based compensation expenses.

Operating income in the first quarter of 2008 was $20.2 million, an increase of 24.5% sequentially and 352.2% year-over-year.

Operating margin was 16.7% in the first quarter of 2008, compared to 16.0% in the fourth quarter of 2007 and 10.5% in the first quarter of 2007. The sequential and year-over-year increases in operating margin were due to increased manufacturing benefits from vertical integration.

Change of Functional Currency

Effective January 1, 2008, the Company changed the functional currency of its operating subsidiary, Changzhou Trina Solar Energy Co., Ltd. (''Trina China''), from RMB to US dollars. This change is in accordance with FASB Statement No. 52, "Foreign Currency Translation", and was based on Trina China's significant and sustained shift in conducting a majority of its business activities in US dollars. During the first quarter of 2008, the Company recorded an exchange loss of $4.0 million, which was primarily associated with Trina China's non-US-denominated obligations that are now required to be remeasured in the US dollar functional currency. Such remeasurements are and will continue to be, to the extent we continue to have such non-US denominated obligations, recorded as transaction gains or losses in the consolidated statement of operations.

Interest Expense and Income

Interest expense in the first quarter of 2008 was $3.5 million, compared to $2.6 million in the fourth quarter of 2007 and $1.2 million in the first quarter of 2007. The sequential and year-over-year increases were due to additional bank borrowings and an increase in interest rates. Interest Income was $1.2 million in the first quarter of 2008, compared to $2.4 million in the fourth quarter of 2007 and $0.4 million in the first quarter of 2007.

Net Income and EPS

Net income was $12.9 million in the first quarter of 2008, compared to $15.7 million in the fourth quarter of 2007 and $4.8 million in the first quarter of 2007. Net Income of $12.9 million includes a foreign currency exchange loss of $4.0 million, primarily associated with the remeasurement of Trina China's non-US dollar denominated obligations in the US dollar functional currency.

Net margin was 10.7% in the first quarter of 2008, compared to 15.5% in the fourth quarter of 2007 and 11.2% in the first quarter of 2007. Earnings per fully diluted ADS in the quarter were $0.51.

Embedded Derivative

The Company's quarterly and yearly 2007 financial statements are subject to change based on the Company completing its computation of the fair value of a foreign exchange derivative embedded in a material long-term silicon supply contract. Such contract provides that the purchase price of the silicon to be acquired be denominated in US dollars, which is not the functional currency of either of the contracting parties at the time the contract was entered into. Given the continued strengthening of the RMB against the US dollar, the Company believes that the ultimate impact will be an increase in earnings for the year 2007. The impact, if material, will be recorded as ''change in fair value of derivative'' a non-cash and non-operating item in the consolidated statement of operations.

Due to the change of Trina China's functional currency to US dollars, effective January 1, 2008, this contract-related embedded derivative will no longer be required to be measured at fair value with changes in fair value recorded in the consolidated statement of operations. However, ''Retained earnings,'' ''Total shareholders' equity'' and ''Total liabilities and shareholders' equity'' items in the balance sheet of our financial statements as of March 31, 2008 may be subject to change upon completion of the computation of the embedded derivative due to its existence as of and for the year ended December 31, 2007.

Financial Condition

As of March 31, 2008, the Company had $38.2 million in cash and cash equivalents, which excludes the Company's restricted cash balance of $126.0 million. Restricted cash comprises deposits pledged to banks to secure bank borrowings and letter of credit facilities. The Company's working capital balance was $84.8 million. Total bank borrowings stood at $259.7 million, of which $14.2 million were long-term borrowings. Shareholders' equity as of March 31, 2008 was $380.9 million.

Business Operations Outlook

2008 Silicon Feedstock

The Company has now secured approximately 95% of its estimated silicon feedstock requirements for 2008.

Sales Markets

The Company continues to expand its geographic sales distribution outside of the primary European PV markets, including contracts with Enfinity (Belgium), Giordano and Solargie (France), Pirelli-SolarUtility (Italy), and Worldwide Energy (United States). Approximately 95% of the Company's targeted 2008 module production of 200 MW to 210 MW has now been contracted.

Discontinuance of Polysilicon Project

On April 14, 2008, the Company announced its decision to discontinue the development of its previously announced 10,000 MT polysilicon production facility. The Company made this strategic decision after careful assessment of its raw material requirements in conjunction with recent and favorable developments in the long-term polysilicon supply environment. The Company now believes it has greater access to polysilicon feedstock to support its growth objectives, particularly that the Company has signed long-term contracts covering large amounts of polysilicon feedstock, while achieving the necessary cost reductions to maintain its competitive advantage. To address its future polysilicon requirements, the Company will continue to negotiate and sign long-term contracts to meet its strategic supply needs. Additionally, the Company will consider strategic investment options in future polysilicon projects which offer attractive economics and involve smaller investment requirements, although no projects are currently under consideration. The Company's decision to discontinue the project will not affect the amount of polysilicon feedstock it expects to receive in 2008 and 2009.

Second Quarter and Fiscal Year 2008 Guidance

For the second quarter of 2008, the Company expects to ship between 43 MW and 45 MW of PV modules and has expectations of total net revenues in the range of $169 million to $177 million. The Company believes gross margin for the second quarter will likely be between 23% and 25% and estimates operating margin to range between 13.5% to 15.5% of total net revenues.

For the full year of 2008 the Company expects total net revenues to be in the range of $770 million to $808 million, with PV module shipments between 200 MW to 210 MW. The Company is expecting gross margin for the year between 23% and 25% and believes operating margin will likely be in the range of 15% to 17% of total net revenues.

Conference Call

The Company will host a conference call at 8:00 a.m. ET on June 6, 2008, to discuss the results for the quarter ended March 31, 2008. Joining Jifan Gao, Chairman and CEO of Trina Solar, will be Terry Wang, Senior Vice President of Finance, Sean Tzou, Chief Operating Officer, Andy Klump, Vice President of Business Development, Arturo Herrero, Vice President of Sales and Marketing, and Thomas Young, Director of Investor Relations. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 1(800)884-2382. International callers should dial +1(660)422-4933. The conference ID for the call is 47429382.

If you are unable to participate in the call at this time, a replay will be available on June 6, at 11:00 a.m. ET, through June 13 at 11:59 p.m. ET. To access the replay, dial 1(800)642-1687, international callers should dial +1(706)645-9291 and enter the conference ID 47429382.

This conference call will be broadcast live over the Internet and can be accessed by all interested parties on Trina Solar's website at http://www.trinasolar.com . To listen to the live webcast, please go to Trina Solar's website at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to participate during the live broadcast, a replay will be available shortly after the call on Trina Solar's website for 90 days.

About Trina Solar Limited

Trina Solar Limited (NYSE:TSL - News), through its wholly-owned subsidiary Changzhou Trina Solar Energy Co. Ltd, is a well recognized manufacturer of high quality modules and has a long history as a solar PV pioneer since it was founded in 1997 as a system installation company. Trina Solar is currently one of the few PV manufacturers that has developed a vertically integrated business model from the production of monocrystalline and multicrystalline ingots, wafers and cells to the assembly of high quality modules. This integrated value chain helps to ensure that high quality products can be delivered to its end customers around the globe, including a number of European countries, such as Germany, Spain and Italy. Trina Solar's solar modules provide reliable and environmentally- friendly electric power for residential, commercial, industrial and other applications worldwide. For further information, please visit Trina Solar's website at http://www.trinasolar.com .

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, the Company's ability to raise additional capital to finance the Company's activities; the effectiveness, profitability, and marketability of its products; the future trading of the securities of the Company; the ability of the Company to operate as a public company; the period of time for which its current liquidity will enable the Company to fund its operations; the Company's ability to protect its proprietary information; general economic and business conditions; the volatility of the Company's operating results and financial condition; the Company's ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the Company's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the Company and the industry. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.

                           Trina Solar Limited
                   Consolidated Statement of Operations
           (US dollars in thousands, except ADS and share data)

                                         For the Three Months Ended
                                March 31,        December 31,       March 31,
                                  2008               2007*            2007*
                              (unaudited)        (unaudited)      (unaudited)

  Net revenues                  $120,671           $101,394         $42,548
  Cost of revenues                89,595             73,796          33,040
  Gross profit                    31,076             27,598           9,508
  Operating expenses
  Selling expenses                 2,958              3,860           1,593
  General and
   administrative
   expenses                        7,165              6,533           2,671
  Research and
   development
   expenses                          749                978             776
  Total operating
   expenses                       10,872             11,371           5,040
  Operating income                20,204             16,227           4,468
  Exchange loss                   (4,001)            (1,440)             --
  Interest expenses               (3,473)            (2,636)         (1,202)
  Interest income                  1,240              2,362             392
  Other income
   (expenses)                        (25)               502            (110)
  Income before income
   taxes                          13,945             15,015           3,548
  Income tax (expenses)
   benefit                        (1,072)               509           1,158
  Net income from
   continuing
   operations                     12,873             15,524           4,706
  Net income from
   discontinued
   operations                         --                162              49
  Net income                     $12,873            $15,686          $4,755

  Earnings per ordinary
   share from continuing
   operations
     Basic                         0.005              0.006           0.002
     Diluted                       0.005              0.006           0.002
  Earnings per ADS
   from continuing
   operations
     Basic                         0.515              0.622           0.222
     Diluted                       0.512              0.612           0.221
  Earnings per
   ordinary share
     Basic                         0.005              0.006           0.002
     Diluted                       0.005              0.006           0.002
  Earnings per ADS
     Basic                         0.515              0.628           0.225
     Diluted                       0.512              0.619           0.223
  Weighted average
   ordinary shares
   outstanding
     Basic                 2,497,258,784      2,495,985,720   2,116,518,294
     Diluted               2,512,896,880      2,535,166,603   2,131,218,837
  Weighted average ADS
   outstanding
     Basic                    24,972,588         24,959,857      21,165,183
     Diluted                  25,128,969         25,351,666      21,312,188


   * Please see the explanation in the section ''Embedded Derivative''.





                           Trina Solar Limited
                        Consolidated Balance Sheet
                        (US dollars in thousands)


                                                March 31,       December 31,
                                                  2008              2007
                                              (unaudited)       (unaudited)

  ASSETS
  Current assets:
  Cash and cash equivalents                      $38,210           $59,696
  Restricted cash                                126,027           103,375
  Inventories                                     73,173            58,548
  Accounts receivable, net                        80,484            72,323
  Other receivables                                3,978             3,063
  Advances to suppliers                           63,848            43,567
  Amount due from related parties                     43                --
  Value-added tax recoverable                      4,585             1,417
  Deferred tax assets                                327               380
  Current assets of discontinued
   operations                                         --                33
  Total current assets                           390,675           342,402
  Property, plant and equipment                  245,431           197,124
  Intangible assets, net                           5,593             5,462
  Advances to suppliers - long-term               64,449            53,737
  Deferred tax assets                              1,439             1,095
  TOTAL ASSETS                                  $707,587          $599,820

  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities:
  Short-term borrowings, including
   current portion of long-term debt            $245,422          $163,563
  Accounts payable                                46,485            42,691
  Accrued expenses                                 9,308            10,255
  Advances from customers                          2,036             2,371
  Income tax payable                               2,647             1,406
  Current liabilities to be disposed                  --               199
  Total current liabilities                      305,898           220,485
  Long-term bank borrowings                       14,247             8,214
  Accrued warranty costs                           5,858             4,486
  Long-term payables                                 712                --
  Total liabilities                              326,715           233,185

  Ordinary shares                                     26                26
  Additional paid-in capital                     306,162           304,878
  Retained earnings*                              63,371            50,466
  Other comprehensive income                      11,313            11,265
  Total shareholders' equity*                    380,872           366,635
  TOTAL LIABILITIES AND SHAREHOLDERS'
   EQUITY*                                      $707,587          $599,820


   * These line items are subject to change upon the completion of the
     Company's computation of the embedded derivatives in one of the
     Company's supply contracts.  Please see ''Embedded Derivative'' for
     more information.



  For more information, please contact:

  Trina Solar Limited
   Sean Shao, CFO
   Tel:   +86-519-8548-2008 (Changzhou)

   Thomas Young, Director of Investor Relations
   Tel:   +86-519-8548-2008 (Changzhou)
   Email: ir@trinasolar.com

  CCG Elite Investor Relations
   Crocker Coulson, President
   Tel:   +1-646-213-1915
   Email: crocker.coulson@ccgir.com

   Ed Job, CFA
   Tel:   +1-646-213-1914
   Email: ed.job@ccgir.com 

---

Source: Trina Solar Limited

TraderMark - Steller Trina Solar (TSL) Earnings Masked by Currency Adjustment

In this era where the masses only look at what Briefing.com tells them and/or never actually open up an earnings report to look inside but only react to the "headline" number, Trina Solar (TSL) is giving back yesterday's gains on what I consider to be a stellar report. The stock is back down to the $46 level, so I'll be adding to my position when the market opens as I consider this a gift based on what I saw today. I'll explain the reality behind the numbers below.

As anyone in the market for more than a few months know, earnings are all about "expectations" - Trina Solar reported $0.51 EPS which beat the analysts expectations of $0.48. Considering the small P/E ratio this normally would be good enough but considering its "solar" and people want to game earnings, people were hoping for a larger beat - my estimate was they would actually do something in the $0.60 to $0.65 range. Which they did achieve. Huh? You just said they did $0.51.... how did they reach the $0.60-$0.65 range?

Well essentially the management of Trina Solar, as they are apt to do, pulled a surprise on us (in the past they decided to surprise us with adventures such as starting a new polysilicon plant out of the blue, without any heads up), but this time around they decided to change their currency from Chinese Renminbi to US Dollars. Strange. I have no idea why and there was no heads up for this. Here is their explanation:

• Effective January 1, 2008, the Company changed the functional currency of its operating subsidiary, Changzhou Trina Solar Energy Co., Ltd. (''Trina China''), from RMB to US dollars. This change is in accordance with FASB Statement No. 52, "Foreign Currency Translation", and was based on Trina China's significant and sustained shift in conducting a majority of its business activities in US dollars. During the first quarter of 2008, the Company recorded an exchange loss of $4.0 million, which was primarily associated with Trina China's non-US-denominated obligations that are now required to be remeasured in the US dollar functional currency. Such remeasurements are and will continue to be, to the extent we continue to have such non-US denominated obligations, recorded as transaction gains or losses in the consolidated statement of operations.

So the net effect of said "decision" was a $4.0M loss this quarter due to this currency change. This is obviously not part of their operational business but more of an accounting function that won't be repeating in future quarters. So if we took away this "decision" their net income would of been $16.9M. With this adjustment their net income was $12.9M - essentially they lost 24% of their profit this quarter due to this exchange. But again, this has nothing to do with their core business.

So what would their EPS of been if they had $0 gain/loss from foreign currency? $16.9M / 25.1M shares = $0.67 EPS

And we would of woken up today to a stock probably trading in the upper $50s as Trina Solar beat earnings expectations of $0.48 by 19 cents. But so it goes, and again - the "masses" will just react to the headline number, which incredibly even with losing $4M in profit due to the currency change STILL beat expectations. That's how strong business is.

Just for reference the 3 main competitors who are most like Trina are Suntech Power (STP), Yingli Green Energy (YGE), and Solarfun Power (SOLF). In the last quarter how did they benefit/gain from foreign currency exchange?

1. Suntech Power gained $2.9M due to foreign currency exchange (they earned 33 cents per share, which means 2 of the 33 cents had nothing to do with their business, only foreign currency exchange)
   
2. Yingli Green Energy gained $9.8M due to foreign currency exchange (they earned 25 cents per share, which means 7 of the 25 cents had nothing to do with their business, only foreign currency exchange)
3. Solarfun Power gained $2.8M due to foreign currency exchange (they earned 31.5 cents per share, which means 5.5 of the 31.5 cents had nothing to do with their business, only foreign currency exchange)

So here is the irony in it all - all 3 of their most similar competitors created "earnings" (anywhere from 2 to 7 cents) from the foreign currency exchange... not only did Trina Solar not get that "cheat" to help goose their earnings, they gave away 16 cents worth of earnings due to this decision. It is almost bemusing in a way.

But again, NONE of these companies should benefit (or lose) from the currency exchange in reality - but just like most US multinationals are "beating estimates" by having a weak dollar and hence they get these currency benefits (which would reverse if the dollar ever rallied for more than a few days), these companies have been able to goose their earnings the same way. Most investors again, do not look past the headline number or dig in and see this - they just go off what Reuters or Briefing.com tells them.

So in summary what I am saying is if Trina Solar had not seen any benefits like their 3 main peers and simply gained NOTHING from currency exchange they would of reported 67 cents and beat the estimate by 19 cents. If they had gained 2-7 cents more from foreign currency exchange (like their closest peers) they would of reported anywhere from 69 cents to 74 cents. My goal was 60 to 65 cents (analysts 48). So while the masses believe this was a small beat, the reality is this was a tremendous beat. So we'll buy more on the panic selling this AM.

Back to Trina Solar earnings - gross margins continue to be best in class, repeating the trick from last quarter [Mar 4: Long Suffering Trina Solar Finally Gets Some Relief] coming in at 25.8%, above my expectations and above Trina's own guidance.

And here is guidance which is also upped from last quarter

• For the second quarter of 2008, the Company expects to ship between 43 MW and 45 MW of PV modules and has expectations of total net revenues in the range of $169 million to $177 million. The Company believes gross margin for the second quarter will likely be between 23% and 25% and estimates operating margin to range between 13.5% to 15.5% of total net revenues.

• For the full year of 2008 the Company expects total net revenues to be in the range of $770 million to $808 million, with PV module shipments between 200 MW to 210 MW. The Company is expecting gross margin for the year between 23% and 25% and believes operating margin will likely be in the range of 15% to 17% of total net revenues.

For future margin guidance keep in mind they said 23-25% for this quarter and came in at 25.8%. So they are playing the Wall Street game - under promise, over deliver (Apple is a master of this). All in all, a great report - which the lemmings on the street in their short sightedness will miss. Due to this currency exchange situation I am unclear if my $4.00 target for EPS for 2008 will still be hit since I was incorporating 60 cents this quarter as part of my model but it should be (minimum) $3.80s-$3.90s for the year. But they did up revenue guidance for the year so $4+ should still be do-able.

That said, I am getting tired of management constantly pulling these surprised out of their back pocket, which is leading to an industry leading LOW P/E ratio since you never know what they are going to pull next. Thankfully their operations are so strong it is counteracting the management "surprises".

I'll be adding on the weak open this AM.

EDIT 9:45 AM - I've moved Trina Solar from a 7% weight to 11% weight. This is a $70 stock masquerading as a $46 dollar stock.

Source: http://www.fundmymutualfund.com/2008/06/steller-trina-solar-tsl-earnings-masked.html

TraderMark - This Week's Performance will be tied to Trina Solar (TSL)

Our current #1 position reports tomorrow AM; usually my methodology is to cut back on all positions ahead of earnings but due to the severe undervaluation in this name, I am keeping my entire stake going into the cattle call tomorrow. I'm not sure if this quarter will be "the one" or it will happen next quarter, but the current $3.14 EPS 2008 analyst estimate I find to be completely beatable, in fact by a large margin. I am hoping guidance tomorrow better reflects that. But even at the "$3.14" we have a forward P/E ratio of under 15 for a company growing well over 100% this year, and should be able to grow >50% for the next few years. At the $4.00 or so I believe it can achieve this year in EPS its trading under 12.

Most peers trade at forward P/e ratio in the mid to upper 20s. So if you throw my $4.00 2008 estimate and give it a peer valuation you see where I am going with this one... and why I am not cutting back although we just never know how the lemmings will react tomorrow. Frankly I could make a very valid arguement that Trina should be valued higher than some of its peer group due to its integrated business model and potentially superior gross margins. The only fly in the ointment would be any sort of equity offering as almost every company in the sector has done in their short public life - Trina Solar has yet to do one, so they are overdue. But their cash flow is such they might not need to do one at all.

Either way with such an overweight on one position our performance for the week will definitely be determined by tomorrow's action in Trina.

Long Trina Solar in fund and personal account



Source: http://www.fundmymutualfund.com/2008/06/this-weeks-performance-will-be-tied-to.html