Trina Solar Trumps Them All

Trina is just killing it as a cost leader in the manufacture of
solar modules. In the third quarter, the Chinese shop achieved gross
margins of 28.5%, well ahead of guidance. Here's how some other solar
players weighed in:

All data from company filings.

Trina took its nonsilicon costs down by 3.5% sequentially,
reflecting increased manufacturing efficiencies. Silicon costs
plummeted an eye-popping 25% sequentially, as long-term contracts were
rejiggered in the face of a persistent upstream glut of the raw
material.

Prices are of course coming down at the module level as well, but
Trina is so far wringing out enough savings to more than offset these
declines.

As far as Trina's strategy for 2010, the thinking here is a bit different than what I outlined in my review of Canadian Solar's quarterly report.
Both companies are certainly looking to grab market share. Both
probably will. The difference is that Trina looks a lot less willing to
compete on price. Rather, the company is focusing on brand name,
reputation for quality, and customer support. It appears the company
has the goods to make this work.

Asked whether the company was worried about all of the capacity
expansion being planned by its publicly traded peers, Trina management
pointed to the expansion potential afforded by the failure of
uncompetitive suppliers. As we've stepped through this season's
earnings reports, it's become clearer to me that the overcapacity
situation is not as severe as many gloomy analyses had framed it. Many
higher-cost manufacturers are not just temporarily idling production
lines. They're down for the count, and that takes a lot of pressure off
of the supply side of the equation.

Trina has gained tremendously from the solar shakeout. Its
multibagger share price performance this year is reflective of that
reality.

© 2009 UCLICK L.L.C.