Trina Solar Ltd. :TSL-US: Earnings Analysis: Q3, 2016 By the Numbers : November 28, 2016

Trina Solar Ltd. reports financial results for the quarter ended September 30, 2016.

We analyze the earnings along side the following peers of Trina Solar Ltd. – Canadian Solar Inc., JA Solar Holdings Co., Ltd. Sponsored ADR, Hanwha Q CELLS Co., Ltd. Sponsored ADR and JinkoSolar Holding Co., Ltd. Sponsored ADR (CSIQ-US, JASO-US, HQCL-US and JKS-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 725.98 million, Net Earnings of USD 26.56 million.
  • Gross margins narrowed from 17.43% to 16.94% compared to the same period last year, operating (EBITDA) margins now 7.41% from 6.41%.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-09-30 2016-06-30 2016-03-31 2015-12-31 2015-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 725.98 942.48 795.41 944.12 781.18
Revenue Growth (%YOY) -7.07 30.65 43.57 34.07 26.94
Earnings (mil) 26.56 39.47 25.92 40.91 -19.7
Earnings Growth (%YOY) 234.81 -3.31 87.65 285.87 -271.93
Net Margin (%) 3.66 4.19 3.26 4.33 -2.52
EPS 0.49 0.49 0.49 0.49 -0.24
Return on Equity (%) 9.07 13.84 9.36 15.26 -7.44
Return on Assets (%) 2.11 3.19 2.18 3.72 -2.05

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Market Share Versus Profits

Revenues History
Earnings History

TSL-US‘s change in revenue this period compared to the same period last year of -7.07% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that TSL-US is holding onto its market share. Also, for comparison purposes, revenues changed by -22.97% and earnings by -32.71% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s gross margins showed no year-on-year improvement. In spite of this, the company’s earnings rose, influenced primarily by the improvement in operating margins (EBITDA margins) from 6.41% to 7.41%. For comparison, gross margins were 18.34% and EBITDA margins were 8.71% in the last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from 6.41% to 7.41% and (2) one-time items. The company’s pretax margins are now 4.27% compared to -2.23% for the same period last year.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

Trina Solar Ltd. engages in the manufacture and sale of integrated solar-powered products. Its operation comprises production of mono- and multi-crystalline silicon ingots, wafers, cells and related products and the subsequent assembly and marketing of solar modules, which are panels packed with interconnected solar cells that convert sunlight into electricity. The company was founded by Jifan Gao in December 1997 and is headquartered in Changzhou, China.

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