[odyd 1,339]

I have a silly question.

They quoted 0.67 per watt for Q3, stating that 0.52 became 0.54 due to lower utilization. Is the 0.67 include the amortization costs? If this is the case taking the reversal and inventory provision out costs per watt was 0.81, I am still struggling with this figure. this is quoted from AR 2011:

•

Silicon

raw materials. Our silicon

raw materials, which

consist of primarily polysilicon,

comprise

the

majority of our cost of revenues.

We

purchase polysilicon from various suppliers,

including silicon distributors, silicon manufacturers, semiconductor manufacturers and

silicon

processing companies.

•

Other direct materials. Such

materials include direct materials for the production

of PV modules

such as plastic, metallic pastes, tempered glass, laminate material,

connecting systems and aluminum

frames.

•

Sourcing

costs. We fulfill some of our wafer requirements by sourcing from strategic partners. We

will continue to source wafers through

long-term supply agreements in order to fill the gap between

our PV cell and module manufacturing capacity and our wafer manufacturing capacity.

•

Toll manufacturing. Prior to 2008, we entered

into

toll manufacturing arrangements by providing wafers to toll manufacturers for processing

and receiving solar cells from them in return. The toll

manufacturing cost is capitalized as inventory, and

recorded as a part of our cost of revenues when

our finished PV modules are sold. Starting from 2010,

we were able to meet nearly all of our solar

cell needs with our in-house production

capabilities and

we

discontinued our reliance on

toll

manufacturers for processing solar cells. In

2009, 2010 and 2011, we fulfilled

some of our ingot and wafer requirements by obtaining toll services from our strategic partners.

•

Overhead. Overhead

costs include equipment maintenance and

utilities such as electricity and water

used in manufacturing.

•

Direct labor. Direct labor costs include salaries and benefits for our manufacturing personnel.

•

Depreciation

of facilities and equipment. Depreciation of manufacturing facilities and related improvements is provided on a

straight-line basis over the estimated useful life of 10 to

20 years and

commences from the date the facility is ready for its intended

use. Depreciation of manufacturing

equipment is provided on a

straight-line basis over the estimated

useful life of five to ten years, commencing from the date that the equipment is placed

into

productive use.

Our cost of revenues is affected

by our ability to control raw material costs,

to achieve economi es of scale in our operations,

and to

efficiently manage our supply chain, including our successful execution

of our vertical

integration strategy and

our judicious use of toll manufacturers or third-party

wafer suppliers to fill potential shortfalls

in production

capability along the supply chain.

How does this differ from processing costs of 0.67?

I am getting confused seeing Jinko at 0.59 including amo/depreciation and the company having the same COGS per watt. Not the same for CSIQ.

[explo 648]

There is something strange with the cost TSL reported, but i have not looked into it yet. I'll get back on this later.

[odyd 1,339]

Hi explo, I am actually getting those numbers discussed with Trina. I am researching it as part of my article prep. The article should appear at one point on PVM, so I do not want to spoil it. I am rechecking numbers at this point.

[explo 648]

Sounds good. I'll give you my quick suspicions. In a market of falling component prices. The actual cost of goods sold (COGS) is always worse then cost of goods produced (COGS) due to the inventory carrying cost. Not only do you have to write down the high cost inventory left at end of quarter to market level and add as a cost to COGS (although this inventory was not sold it ends up on this line and reduces gross profit), in the inventory you sold you also had high cost, much higher than your COGP for the quarter. CSIQ has been one that has been confusing market here by stating their cost for a quarter as their COGP at the END of the quarter (i.e. something that will impact gross margin much later depending on at what level in the value-chain the cost was stated for, i.e. poly reach sold modules later than cell inventory). Now Trina has up until now been very good to actually state COGS as their cost for the quarter. My feeling is that now that their carrying cost has exploded they are caving to communicate their cost like CSIQ and then the stated production costs and gross margin for a quarter don't add up. But I have not looked at their Q3 numbers more than at headline level to verify this suspicion. YGE's Q3 accounting will also be interesting to see. They suggested they would move under utilization cost to from COGS to designated OPEX line. That will polish their gross margin. That's the first time I see this. As I've said before YGE is one of those companies that have paid a lot for their production assets and thus less confortable idling it due to the high under utilization cost.

[odyd 1,339]

Yes, it would be inventory and the carrying cost from one end of the Q to another. The problem here is that they do not have clarity, they explained this as the analysts a fairly easily able to understand this component. I am not sure where did they get this idea? I did analysis of the figures upon initial conversation. It was disliked. So I am trying to present facts and willing to comply with their views as long as they are factual instead of interpretation, to benefit TSL. I suppose the key point is that their inventory is presented as lower of cost or market, so what was it last quarter? How many modules they sold off the inventory and how this affects their "accurate" under utilization number, because 50% does not sound right? . I think this is where the bone of discontent was located , but I will wait. The benefit to get this right is outweigh the speed to push this to public.

[explo 648]

>> They suggested they would move under utilization cost to from COGS to designated OPEX line. Sloppy of me. It's in their GM pre non-cash charges that they give, that they've not just excluded provision for write downs, but also some of the standard fixed asset depreciation for asstets that were not utilized.

[Guest spiritcraft]

http://www.solarpowerportal.co.uk/news/trina_to_supply_55mw_of_modules_for_eight_uk_projects Manufacturer Trina Solar is to supply 55MW of PV modules to renewable energy provider Anseco for solar eight projects in southern England. The modules will be delivered to site over the next four months.Anesco has chosen Trina’s PC14 module, which has been designed specifically for large-scale installations. Richard Rushin, Trina Solar’s UK Sales Manager, said the UK was witnessing an upsurge in large-scale projects. “Where previously residential installations were the bedrock of the solar PV industry in the UK, adjustments to the feed-in tariff system have seen commercial and large-scale installations take precedence. “We anticipate 2013 being the year of the solar farm, and the substantial pipeline of projects on which we will be working closely with Anesco is testament to the growth of this market.”

[odyd 1,339]

this is pretty hard slam on Trina http://seekingalpha.com/article/1097791-trina-solar-as-debts-come-due-14-billion-in-off-balance-sheet-liabilities

[Guest spiritcraft]

That is about the most blatant slam by a short I have yet seen. Anyone care to discuss the merit?

[Guest spiritcraft]

Further note... That seems almost criminal or at least immoral being so blatant. Note: it just went positive.