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Trina Solar: To Build Large Project In China, Earnings In 2015
Trina Solar (TSL) agreed to buy a 90% stake in a power plant developer in China’s southwest Yunnan province, thereby building and owning one of the largest projects in China. Its shares jumped 5.6% on Monday.
Chinese solar companies tend to carry a lot of debt on their balance sheets, and this is when low leverage paid off, noted Roth Capital Partners analyst Philip Shen:
We estimate that the 300MW project will require TSL to post ~$122mn of equity (300MW x $1.50/W x 30% equity x 90% ownership by TSL). This compares to TSL’s cash balance of $450mn as of Q2. Recall, TSL has one of the best B/S in its peer group with a net debt/cap ratio of ~26% as of Q2 vs. peer average of >50%.
Our model assumes 410MW of on B/S projects over the next 12 months. We believe this is conservative, especially considering the Yunnan project alone represents 300MW.
Trina Solar expects construction to start in the third quarter this year and the project could come on line as soon as next June. This project could add at least 10% to Roth’s 2015 earnings estimates:
Our back-of-the-envelope analysis suggests the 300MW project could generate ~4c of quarterly EPS or ~16c of annual EPS vs. our 2015 forecast of $1.38.
But the analyst re-iterated caution towards solar projects in China. The biggest hurdle there is financing, which Barron’s has identified multiple times in the past:
One of the challenges facing Chinese solar projects is that FiT payments are not yet predictable and reliable. They are currently paid approximately once every six months. We expect this to improve over time, but the market is not there yet.
Among the solar names on Monday, Canadian Solar (CSIQ) was another big mover, advancing 8.2% after announcing a large module sales in the second quarter. ReneSola (SOL) rose 2.2% after saying it would develop a 13MW solar project in the UK. |
发表于 2014-9-4 10:58
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发表于 2014-9-4 11:11
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