Thursday, September 11, 2008

Trina Solar Close To Signing Its First US Integrator Deals (TSL)

Yesterday in "Attention Trina Solar Investors: China Inflation Eases As Trade Gap Grows (TSL)":
Because Trina changed their functional currency to the U.S. dollar it is susceptible to a strengthening Chinese renminbi.
(I'll leave the why of TSL's decision to break from the currency herd for another day)...
Well, today is another day.
From easyBourse:
By Yuliya Chernova Of DOW JONES NEWSLETTERS NEW YORK -(Dow Jones)- China-based solar-panel maker Trina Solar Ltd. (TSL) plans to boost its sales in the U.S. next year to 8% of total revenue as it works to sign its first customer deals with local solar integrators, rather than distributors, the company's Chief Financial Officer Terry Wang told Clean Technology Insight.
This year, Trina expects close to 5% of its total revenue, projected at between $850 million and $900 million, to come from U.S. customers. So far, the company has been selling its modules, whose average price is $4, through wholesale distributors. But the company is interested in getting closer to the customer and in skipping the distributor part of the equation to sell directly to integrators.
(This story also appeared in Clean Technology Insight, a daily newsletter and information service published by Dow Jones & Co.)
"Assuming the current level of incentives stays the same, we'll have about 8%" of revenue from the U.S., said Wang. But it's possible that the federal investment tax credit, which is due to expire at the end of the year, will be revived with increased incentives for solar installations. "That would be an upside for us," said Wang. Of course, there is a chance that the tax credits will lapse, but Trina is counting on the tax credit extension, said Wang....MORE
The decision to use the dollar as their functional currency hurt the company to the tune of $10.1 Million in the first two quarters but is absolutely necessary if you are going to be a serious player in the U.S.

Trina has a very odd management style. On the one hand they have made blunder after blunder in shareholder relations. On the other, they have shown some very forward strategic thinking. One example is the move into the Italian market. They started that process a year ago when the rest of the industry was dreamin' Castilian. Trina is in Spain, but their work in developing an Italian business resulted in our July 29 post "Trina, Suntech in supply deals with Italy's Enel (STP; TSL; ENEI.MI)".
Enel is Italy's largest and Europe's second largest listed utility.

And why did we know they would be coming to the U.S.?
You need Underwriters Laboratory certification to sell here. From our June 13 post "Trina Solar Q1 Conference Call Transcript on the Currency Change (TSL) ":
Two points upfront, the currency change was not a one time, first quarter, event.
The change from the Renminbi is looking smart for a couple reasons:

1) TSL's geographic diversification (26% market share in Italy, 25% of projected second half sales see: Solar: Arrivederci Germania, Viva Italia!) includes a push into the U.S. where they are currently one of three Chinese manufacturers with U.L. certification, U.S. business will be 6% of shipments in the second half, up from zero....
This stuff isn't rocket surgery.