NEW YORK (TheStreet) -- Shares of Trina Solar (TSL - Get Report) are up 4.07% to $13.04 after it was reported that China's largest profitable panel manufacturer, agreed to buy a 90% stake in the power-plant developer Yunnan Metallurgical New Energy Co., Bloomberg reports.
The remaining 10% will be retained by the parent company Yunnan Metallurgical Group Co. and two of its units, Changzhou-based Trina said today. Terms of the deal weren't disclosed.
Trina is expanding its efforts to build solar farms, including a 1-gigawatt project in the western Xinjiang region announced in December. Yunnan Metallurgical is developing a 300-megawatt solar plant in Yunnan province, with construction expected to begin this quarter, according to a statement.
"Developing strategic partnerships with select partners demonstrates our flexibility in exploring downstream opportunities in China," Jifan Gao, Trina's CEO said in the statement.
TheStreet Ratings team rates TRINA SOLAR LTD as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate TRINA SOLAR LTD (TSL) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TSL's very impressive revenue growth greatly exceeded the industry average of 10.4%. Since the same quarter one year prior, revenues leaped by 70.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- TRINA SOLAR LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, TRINA SOLAR LTD continued to lose money by earning -$1.02 versus -$3.76 in the prior year. This year, the market expects an improvement in earnings ($0.95 versus -$1.02).
- The gross profit margin for TRINA SOLAR LTD is rather low; currently it is at 20.57%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, TSL's net profit margin of 5.95% is significantly lower than the industry average.
- The debt-to-equity ratio of 1.16 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, TSL has a quick ratio of 0.60, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: TSL Ratings Report