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China's Trina Solar eyes return to profit in H2


Post Date: 08 Apr 2013    Viewed: 371

Chinese solar panel marker Trina Solar Ltd (TSL.N) hopes it can snap out of losses from June, its chairman said on Saturday, as it banks on China's rising demand for green energy and an easing in excess global supply.


Trina, which suffered its sixth quarterly loss in February, is one of many solar panel makers bleeding cash as a worldwide glut hammers prices. A trade dispute with Europe may inflict more pain by slapping duties on Chinese panel makers.


While the industry may face another turbulent year, Trina Chairman Gao Ji was optimistic as he looked to expanding Chinese demand.


"The overall trend in the photovoltaic industry this year may be better than last year's," he said in an interview on the sidelines of a forum in south China, adding that business could turn around in the second half of the year.


If New York-listed Trina attains profitability from June, it would surpass expectations of analysts who only see a return to profit in the fourth quarter of 2014.


"After going through industry-wide losses in the past few years, a proportion of companies have been shut and eliminated," he said. "The situation of excess capacity is improving."


At the same time, the Chinese market is expanding, Gao said. Domestic demand could make up for as much as 25 percent of total sales this year, up from 10 percent in 2012.


"Judging by the first quarter, sales were not bad," he said. "We didn't rest over the Lunar New Year. We worked overtime." Trina is not alone in turning to its home market for growth.


Squeezed by shrinking demand abroad where financially-stretched governments have slashed green energy subsidies, Chinese solar panel makers are hoping Beijing can step in to fill the void by stimulating domestic solar consumption.


Some analysts say this is wishful thinking, due to the size of China's solar making capacity, a lack of funding for solar subsidies, and a dearth of infrastructure to harness intermittent renewable energy.


China's solar panel manufacturing sector is the largest in the world by capacity, having ballooned on billions of dollars of easy state loans as the government sought to develop clean energy.


But as foreign demand dried up, so has funding. China's state-owned banks have grown wary of lending to solar panel makers after product prices skidded 66 percent in the last two years.


Now many solar panel manufacturers, including Trina, are heavily indebted. Trina Solar owes $83.5 million on its 4 percent senior note due July 15, according to Thomson Reuters data.


Investors believe Trina should be able to repay its debt though general market confidence is still fragile after China's former green tech poster child Suntech Power Holdings Co Ltd (STP.N) defaulted on $541 million of its bonds last month. Gao said Trina sits atop cash of about $920 million and has a debt ratio of about 67 percent, beneath the 80 percent sector average.


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