Trina Solar sees 2009 sales doubling

CHANGZHOU, China Thu Sep 18, 2008 3:39pm BST

CHANGZHOU, China (Reuters) - Chinese solar product maker Trina Solar Ltd expects its revenue to double in 2009, reaching $1.7 billion to $1.8 billion as it ramps up capacity to meet strong demand for clean energy, its chief executive said on Thursday.

Solar module shipments next year will surge to 450 megawatts (MW) from this year's 210 MW to 220 MW, as the firm plans to double its capacity to 700 MW by the end of 2009 and boost it further to 1,000 MW in 2010, Gao Jifan said in an interview from the firm's headquarters in Changzhou, near Shanghai.

To fuel the expansion, Trina Solar's capital expenditure is expected to rise to $250 million in 2009 from $200 million this year and reach $350 million in 2010, with funding coming mostly from internal resources, he said.

"Our cash flow is enough to fund our expansion until 2009. I believe our operating cash flow will increase further in 2010, enough to supply our expansion needs," said Gao, who is also the firm's chairman.

He therefore did not expect the development plans of the New York-listed firm to be significantly constrained over the next two to three years by the U.S. credit crunch.

Trina Solar's cash reserve at the end of this year is estimated at $100 million, with operating cash flow generated in 2009 seen between $150 million and $200 million, he added.

POLYSILICON SUPPLIES

The firm has secured 70 percent of its sales target for 2009 and Gao expected to secure more orders, most likely in Europe, which now generates more than 90 percent of its total revenue.

Trina Solar makes solar modules in China and ships them overseas. Gao said he may consider building plants outside China in the future.

Trina Solar said in April that it had signed an eight-year polysilicon supply agreement with a unit of GCL Silicon Technology Holdings, sufficient to produce about 2,600 MW of solar modules.

Supply constraints in polysilicon, which turns sunlight into electricity inside solar cells, have driven prices higher, hurting profit margins for photovoltaic producers.

But the situation has started to improve in the second half of the year as polysilicon producers expand their output to meet demand from the solar industry.

Gao expected the company's profit margin, estimated at 23 to 25 percent this year, to improve in 2009, as it signed more long-term polysilicon supply contracts, with pricing levels significantly lower than in the spot market. He did not provide detailed figures.

Solar power stocks posted massive gains in 2007 as concerns about climate change and soaring prices of fossil fuels boosted investor interest in renewable energy sources.

But many shares fell sharply this year, reflecting a view that solar power valuations had got ahead of themselves.

Trina Solar's shares, traded on the New York Stock Exchange, closed at $25.02 on Wednesday, down sharply from $53.80 at the end of last year.

Gao said he believed his firm's share price was undervalued given the bright prospects of the solar industry, as more governments in developing countries such as China offer policy incentives to promote the development of solar power, following the lead of many European countries.

"There is no doubt that our share price is undervalued," he said. "It should be more than double the current level."

(Editing by Edmund Klamann)

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