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Chinese Solar Firms Flare Higher

Along with Solarfun Power (SOLF), which reported strong earnings yesterday, the three Chinese solar companies were the biggest gainers in the industry in early afternoon trading. Solarfun was up 5.25% on massive volume -- 6.83 million shares versus an average of 1.06 million shares.

Third-quarter earnings in the sector have highlighted the extent to which Chinese solar players have used their pricing advantage to quickly gain market share on Western competitors. Company executives emphasized that these earnings have shown the extent to which they are establishing their brands as global competitors.

Analysts expected today's results to reinforce the strong outlook for the fourth quarter and full year. Trina upped its expected shipment target for the full year shipments to be between 380 MW and 400 MW, compared to its earlier guidance of between 350 MW to 400 MW, representing an increase of 89.1% to 99.0% from 2008.

There was some disappointing news in the earnings for both firms, such as the Suntech earnings dip of 30%. Trina experienced a net revenue drop of 14.1% to $249.7 million, but also reiterated an expected 15%-20% manufacturing costs drop.

Regardless, the market's response was anything but focused on these lower figures, as the defiance of Street expectations and optimistic outlook for near-term shipments continue to fuel investor interest. The solar industry may be under heat in this earnings period, but the Chinese companies continue to generate it.

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