Bloomberg News

Trina Solar Leads ADR Drop on Earnings Outlook: China Overnight

May 22, 2012

Trina Solar Ltd. (TSL:US) led declines among the most-traded Chinese equities in the U.S. on speculation the solar-panel maker will disappoint investors (TSL:US) for a fifth quarter.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. fell 0.9 percent to 92.43 yesterday in New York. Trina, China’s fifth-largest solar-panel maker, tumbled 8.7 percent to a three-year low. Technology companies iSoftStone Holdings Ltd. (ISS:US) and VanceInfo Technologies Inc. (VIT:US) sank at least 4 percent.

Trina will probably say that sales dropped 28 percent to $398 million, according to the median estimate of 19 analysts surveyed by Bloomberg, when it reports first-quarter earnings today. The company reported net income that fell short of analysts’ estimates (TSL:US) in the last four quarters. Chinese solar manufacturers have reported losses since the second quarter of 2011 as the industry has been plagued by overcapacity and as European countries started to cut solar energy subsidies.

“We’re expecting that the second half of the year will bring more pain than pleasure, and that Trina will underperform over the next six months,” Gordon Johnson, an analyst at Axiom Capital Management in New York, said by phone. “Their guidance may not be as good either.”

Nanjing-based solar maker China Sunergy Co. (CSUN:US) said yesterday in its first-quarter earnings statement that “weak market demand and industry oversupply will continue to adversely affect its business during the first half of 2012.”

China ETF Drops

The iShares FTSE China 25 Index Fund (FXI:US), the biggest Chinese exchange-traded fund in the U.S., slid 0.7 percent to $33.63, rising only once in the past 15 days. The Shanghai Composite Index (SHCOMP) of mainland stocks advanced 1.1 percent to a three-day high of 2,373.31.

The Standard & Poor’s 500 Index of U.S. shares was little changed at 1,316.63, reversing gains in the final hour of trading as concern that Greece was making preparations to leave the euro overshadowed economic optimism after a better-than- estimated American housing report.

Trina, based in Changzhou in China’s eastern Jiangsu province, fell to $5.33, the lowest level since March 2009.

The company’s net loss (TSL:US) for the first three months this year was $20.2 million, compared with $65.8 million in the previous quarter, the analysts forecast.

Suntech Power Holdings Co. (STP:US), the world’s largest solar-panel maker, dropped 2.5 percent to $1.98, the lowest since Oct. 3. China Sunergy lost 6 percent to $1.25 in New York after saying first-quarter revenue decreased 38 percent from the previous quarter to $68.5 million.

The U.S. imposed tariffs of 31 percent to 250 percent on Chinese solar-product imports, the Commerce Department announced on May 17. Suntech was told to pay 31.22 percent, and Trina’s levies were set at 31.14 percent.

VanceInfo, iSoftStone

American depositary receipts of Beijing-based VanceInfo slid 5.3 percent to this year’s low of $9.34 while iSoftStone, an information technology service provider, also based in Beijing, dropped 4.4 percent to $6.72, the weakest level since Oct. 7.

Semiconductor Manufacturing International Corp. (SMI:US), based in Shanghai, lost 3.2 percent to $2.14, trading 2.3 percent below its Hong Kong stock. The ADRs, each representing 50 Hong Kong shares, have been trading with a discount since March 13.

Semiconductor granted 258 million options to buy its shares at an exercise price of HK$0.346 per share, according to its filing to the Hong Kong Stock Exchange yesterday.

Guangshen Railway Co. (GSH:US), an operator of trains from China’s province of Guangdong, jumped 4.3 percent in its second day of advances to $16.70, the biggest one-day gain since Nov. 30.

China’s National Development and Reform Commission and the railway ministry increased railway cargo transport rates by an average of 9.5 percent from May 20, the China Securities Journal reported yesterday, citing an unidentified railway official. The benchmark coal transport rate was raised to 12.2 yuan ($1.93) per ton-kilometer from 10.8 yuan, according to the newspaper.

To contact the reporters on this story: Belinda Cao in New York at lcao4@bloomberg.net; Leon Lazaroff in New York at llazaroff@bloomberg.net

To contact the editor responsible for this story: Tal Barak Harif at tbarak@bloomberg.net


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Companies Mentioned

  • TSL
    (Trina Solar Ltd)
    • $8.12 USD
    • 0.38
    • 4.68%
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