Trina Solar's very understanding banks...
Trina Solar is fast becoming a test-piece about just how understanding a Chinese bank can become.
They have just produced some pretty ordinary numbers (as pre-announced) but it the massive changes in their balance sheet that are really interesting.
Trina Solar Limited Unaudited Consolidated Balance Sheet (US dollars in thousands)
June 30
March 31
June 30
2011
2011
2010
ASSETS
Current assets:
Cash and cash equivalents
$ 630,978
$ 489,820
$ 639,517 Restricted cash
53,260
64,813
45,758 Marketable Securities
315
426
443 Inventories
226,303
179,780
96,395 Project assets
43,472
42,110
23,877 Accounts receivable, net
584,046
542,967
313,042 Current portion of advances to suppliers
64,049
82,370
42,895 Prepaid expenses and other current assets, net
101,948
90,297
53,256 Total current assets
1,704,371
1,492,583
1,215,183 Property, plant and equipment
751,480
663,851
533,795 Project assets- long term
2,614
-
- Prepaid land use right
36,661
36,854
27,139 Advances to suppliers - long-term
129,138
94,807
87,205 Investment in affiliates
320
319
- Deferred tax assets
14,667
15,405
10,481 Other noncurrent assets
28
196
1,352 TOTAL ASSETS
$ 2,639,279
$ 2,304,015
$ 1,875,155
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings, including current portion of long-term debt
$ 342,953
$ 153,286
$ 161,557 Accounts payable
315,004
253,223
197,789 Convertible note payable
137,870
137,065
Income tax payable
20,139
46,656
9,436 Accrued expenses and other current liabilities
130,305
132,487
60,220 Total current liabilities
946,271
722,717
429,002 Long-term bank borrowings
382,631
295,652
331,152 Convertible note payable
-
-
134,644 Accrued warranty costs
50,205
44,194
27,508 Other noncurrent liabilities
17,223
18,454
14,740 Total liabilities
1,396,330
1,081,017
937,046
Ordinary shares
40
40
40 Additional paid-in capital
646,925
644,628
638,457 Retained earnings
579,183
567,423
291,572 Other comprehensive income
16,601
10,707
8,040 Total shareholders' equity
1,242,749
1,222,798
938,109 Non-controlling interest
200
200
- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$ 2,639,279
$ 2,304,015
$ 1,875,155
Cash went up from $490 million to $631 million - an increase of $141 million.
But that was the end of the balance sheet good news.
Short term debt went up from $153 to $343 million. They borrowed $190 million short term.
And long term debt went up from $296 to $383 million. They borrowed another $87 million.
So another way to look at it is that the company chewed through a net (190+87-141=) 136 million despite their (much lower) stated profit.
What gives? Its a widget company with stated profit but cash burn.
Actually we know what gives - the company still can't sell their product to customers that actually pay.
Inventory went up from $180 to $226 million. This company is still shipping to warehouses...
Receivables went up from $543 to $584 million. So they are selling to people who are slow to pay (but who have probably already received irrevocable delivery of solar panels and installed them into levered solar parks. (The project financier almost certainly has the collateral now!)
The rest of the cash burn wasn't really burn - it was (another) large increase in capacity. These increases are happening despite the obvious problems this company has in selling its inventories.
As I said - the banks are very understanding.
And they will need to be because the company has contracted to buy lots more silicon and it needs to increase its output substantially. They tell us that the silicon price will be lowered in accordance with the contract. That is great: they are going to need it.
Today at my office in Sydney I was cold-called by a solar panel installer. Business is quiet so they were drumming up business. They want to sell me panels at an installed price (with inverters etc). The panel price was $1.35 per watt. Not kidding - way below where Trina is currently booking sales.
The brand was Alex Panel - another company which the salesman assured me was "planning to list on the New York Stock exchange".
Trina say next quarter will be better. At $1.35 per watt sold by retail-cold-call in Sydney I don't quite see it.
John