Trina Solar seeks China flotation after New York delisting

‘Why? Because we are a leading enterprise with a global strategy and [funding] needs for development,’ says chairman Gao Jifan

PUBLISHED : Tuesday, 28 March, 2017, 3:43pm
UPDATED : Tuesday, 28 March, 2017, 10:46pm

Trina Solar, the world’s largest maker of solar panels, will seek to go public in its home country after its privatisation and delisting from the New York stock exchange is completed, according to its chairman.

The Changzhou, Jiangsu province-based firm will also pursue further overseas expansion in both panels manufacturing and solar farms development.

“We will certainly go public again and our preference is to list in a China market,” chairman Gao Jifan said in an interview on the sidelines of the Boao Forum for Asia on Thursday, in Hainan province.

“Why? Because we are a leading enterprise with a global strategy and [funding] needs for development.”

He said the board has not made a decision whether to list in Shanghai, Shenzhen or Hong Kong, but a mainland China listing is “better in principal.” He would not give a possible listing time frame.

Neither would he say if Trina would pursue a reverse takeover to realise its listing plan. A long queue of applicants currently waiting means it may take years to launch an initial public offering in the mainland.

A group of investors led by Gao and Shanghai Xingsheng Equity Investment & Management in August last year launched an all-cash buyout offer that gave Trina an equity value of US$1.1 billion.

The offer was at a premium of 34 per cent to the market price prior to the announcement. The deal was completed just over a week ago.

Gao said the firm has over the past few years built 2.5 giga-watts (GW) of annual panel production capacity in Malaysia, Thailand, Vietnam and Holland, allowing it to get around punitive import tariffs imposed by the European Union and the United States on Chinese panels for alleged “dumping” of solar cells that drove many western rivals out of business.

Trina had 6 GW of global capacity at the end of September. It has more than 2,500 overseas employees, accounting for about 20 per cent of its total.

Gao said besides the ‘big four’ markets – China, the EU, the US and Japan – Trina are seeking to expand in Southeast, South and Central Asia, Latin America, the Middle East, and Africa.

Besides opening a US$200 million plant in Thailand a year ago, he said Trina has signed a five-year agreement to plough US$1.6 billion into panel manufacturing and solar farms development in India.

It has also invested in a 132 MW solar farm in Mexico that was recently approved by the government.

In China, Gao expects completion of solar panels to be less volatile this year, thanks to greater volumes from state-supported rural installation programs that are not subject to a subsidy cut that comes into effect on June 30. The total volume produced is “unlikely to see a significant drop”, he said.

Strong progress by Chinese solar power generators will see subsidies eliminated by 2025

Last year China saw record solar installation of 34.5 GW, around 40 per cent of the global total.

That was up almost 130 per cent from 2015, with 22GW erected in the first half as developers raced to finish projects before subsidised power prices were cut on July 1.

The rush meant many projects suffered low utilisation since power grid connection could not cope with the fast expansion, especially in remote sun-rich northern regions where local power demand is limited.

With mounting subsidy arrears owed to renewable energy project developers, and persistent grid bottlenecks, some analysts have a more cautious view than Gao on China’s solar sector growth.

Citi analysts said in a report they expected this year’s installation volume may drop to 22 GW.

Given chronic grid bottlenecks and Beijing’s policies that favour rooftop projects that don’t need connection to the grid, Gao expects that segment to see huge growth this year, possibly reaching 30 per cent of total installation, up from 12 per cent last year.

Last year’s rooftop volume expanded by more than 200 per cent from 2015, driven largely by the agricultural sector.

Trina plans to capitalise on this by building a solar power generation systems dealership network to cover 2,000 counties and towns in China.

To get around the grid bottleneck, Trina has also built a power storage equipment manufacturing business that Gao expects to see 500 million yuan of sales this year, 80 per cent of which coming from exports.