Solar Week In Review: Trina’s Capacity Constraints, Yingli’s Distributed Project, SunPower’s Production Milestone

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The solar sector had a reasonably eventful week, with Yingli Green Energy (NYSE:YGE) completing a distributed solar project in China and Trina Solar (NYSE:TSL) indicating that it is unable to meet solar panel demand, despite running its facilities at full capacity. In other news, SunPower (NASDAQ:SPWR) announced that it had reached a production milestone for its solar cells. Here is a recap of the news that mattered for solar stocks that we cover.

See Our Complete Analysis For Solar Stocks Trina SolarYingli Green EnergySunPower

Trina Solar’s Capacity Constraints

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Trina Solar’s CEO recently indicated that the company was unable to meet demand for solar panels despite the fact that its factories were running at full capacity. [1] According to Bloomberg, global solar installations are expected to soar this year, rising to around 52 gigawatts (30% y-o-y growth) owing to falling costs, stable government incentives and lower financing costs. Trina, which is China’s largest profitable solar company, has guided for shipments of between 3.6 GW to 3.8 GW this year, up from around 2.6 GW a year ago, translating to a growth rate of over 40% year-over-year.  ((Q2 2014 Supplemental Earnings Call Presentation, Trina Solar, August 2014))

  • We have a $14.50 price estimate for Trina Solar, which translates to a market cap of around $1.2 billion. Our price estimate is about in line with the current market price. We are modeling revenues of about $2.56 billion for FY 2014 with an EPS estimate of around $0.83. This compares to a consensus EPS of around $0.92 according to Reuters.
  • Trina Solar’s stock was down by around 1% last week.

Yingli’s Chinese Distributed Project

Yingli Green Energy and DuPont Photovoltaic Solutions completed the installation of  a 210 KW (kilowatt) solar power project on the rooftop of the DuPont China R&D Center in Shanghai. [2] The project was designed and installed by Yingli and utilizes the company’s PANDA monocrystalline modules. China is aiming to install 13 GW of solar capacity in 2014, with over half the capacity expected to come from distributed generation. The Chinese government has been looking to increase distributed generation in the country by providing feed-in-tariffs and tax incentives to attract businesses and individuals to invest in rooftop solar power systems.

  • We have a $3.50 price estimate for Yingli Green Energy, which translates to a market cap of around $635 million. Our price estimate is almost in line with the current market price. We are modelling revenues of about $2.68 billion for FY 2014 with a loss per share of around $0.42. This compares to a consensus loss per share of around $0.74 according to Reuters.
  • Yingli’s stock was down by around 8% last week.

SunPower’s Production Milestone

High-end solar panel manufacturer SunPower indicated that it recently produced its billionth high-efficiency solar cell. Although SunPower is running its factories at near full utilization, its manufacturing capacity has been expanding at a slower rate compared to the market and this is likely to be restricting its market share growth. The company has improved manufacturing capacity from around 1.1 GW in 2013 to close to 1.3 GW currently and this number should increase to around 1.8 GW by 2017 as the new Fab 4 plant, which is under construction in the Philippines, ramps up.

  • We have a $35 price estimate for SunPower, which translates to a market cap of around $4.60 billion. Our price estimate is about 5% below the current market price. We are modelling revenues of about $2.75 billion for FY 2014 with an EPS of around $1.35.  This compares to a consensus EPS of around $1.31 according to Reuters.
  • SunPower’s stock declined by around 1% last week.

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Notes:
  1. Trina Solar Plants at Full Capacity as Demand Outstrips Supply, Bloomberg, September 2014 []
  2. DuPont Photovoltaic Solutions and Yingli Solar collaborate on solar power project in China, PV Magazine, September 2014 []