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Trina Solar Ltd.

Trina Solar Ltd.
18 March 2008

Tel. +44 (0)20 7232 3090
www.iirgroup.com
Fax +44 (0)20 7232 3099
LSE: IIR
Traded on
AIM, London
Stock Exchange
Regulated and
authorised by

Refer to page 17 for footnotes
Page 1
Initiation Report

ADR
Fundamental Stock

BUY
Ticker: TSL
Target price:
US$42.73
Current price:
US$29.29
Fundamental research indicates a 46% upside in the ADR for the coming 6-24 months. We have
calculated the target price based on fundamental factors using the weighted average of target prices
obtained using DCF and comparative valuation methodologies.


We rate the ADR a BUY based on fundamental factors, with a 6-24 month target price of US$42.73.

Trina-Solar-Ltd/' class='doin' >
European
ADR
BUY
Ticker: TSLy.F
Target Price:
34.18
Current Price:
18.57
The European ADR is expected to appreciate 84% over the next 6-24 months. In addition to the 46%
fundamental upside, approximately 38 percentage points further upside are attributable purely to the
anticipated appreciation of the US dollar against the euro over the same period.


We rate the European ADR a BUY, with a 6-24 month target price of 34.18.


Report summary
Trina Solar Ltd. (Trina Solar), an integrated Chinese solar module manufacturer, is expected to
experience strong growth in revenues and margins over the medium and long term, driven by rising
demand for photovoltaic (PV) modules around the world. We expect the global PV market to grow at a
CAGR of over 30% over the next 5 years (driven by government incentives and the rising cost of
hydrocarbons), and Trina Solars vertically-integrated business model positions it to take full
advantage this of market opportunity. The company is currently pursuing capacity expansion
initiatives, which are expected to support volume and revenue growth over the coming years. However,
at present the growth potential of the sector is being partially constrained by a shortage of
manufacturing capacity for virgin polysilicon, a principal material required to produce the silicon wafers
used in PV modules. This shortage has been caused by rapid growth in demand for polysilicon from the
PV and semiconductor industries, set against only a limited increase in polysilicon manufacturing
capacity. However, we expect the polysilicon supply-demand situation to ease by 2009, reflecting
growth in polysilicon manufacturing capacity. We expect this to lower PV companies operating costs,
supporting profitability. Furthermore, solar companies have recently been securing long term
polysilicon supply contracts in order to guarantee their polysilicon supplies and facilitate greater
economies of scale. Furthermore, Trina Solar recently announced plans to build its own polysilicon
production facility by 2012, which will limit the companys dependence on third-party suppliers and
enhance its value chain. While reserves of conventional energy such as oil, gas and coal are depleted,
and in view of the rising pressure on developed countries to adhere to Kyoto Protocol norms, we
believe that solar energy harnessed through PV modules will become an increasingly mainstream
source of energy going forward. Based on the growth potential of the industry and Trina Solars
vertically-integrated business model, we view the ADR as a good investment opportunity at current
levels.
Vertical integration to drive long term growth
Investment horizon - short term actionable trading strategies
This report addresses the needs of strategic investors with a long term investment horizon of 6-24 months. If this
report is provided to you by your broker under the Global Settlement, you may now also access (free of charge) the
short term trading outlook that we publish from time to time for this issuer, looking at the coming 5-30 days for
readers with a shorter trading horizon. These are available online only at www.researchoracle.com.
Supervisor: Nirav Shah
Analyst: Simi Panicker
Editor: James Smithies
Global Research Director:
Satish Betadpur, CFA

Next news due:
1Q 08 results, May 2008

Trina Solar Ltd.
18 March 2008

Tel. +44 (0)20 7232 3090
www.iirgroup.com
Fax +44 (0)20 7232 3099
LSE: IIR
Traded on
AIM, London
Stock Exchange
Regulated and
authorised by

Refer to page 17 for footnotes
Page 2
Currency impact for US investors
The company reports in US dollars, which we assume is its major trading currency. Earnings forecasts
are therefore also expressed in US dollars. As a result, the impact of currency movements on the price
of the ADR is assumed to be neutral. Where specific currency risks are identified these will be
highlighted in the report.
Currency impact on the European ADR
The impact by itself of the anticipated currency movements on the European ADR (now 18.57),
without considering changes in the share price, is positive and is expected to be:
Over 6 months: 19.27
Over 12 months: 21.54
Over 24 months: 23.43
Investment Thesis
Company overview
Trina Solar is one of the few vertically-integrated companies in the solar industry which manufactures
monocrystalline ingots, wafers and PV modules. Trina Solars predecessor company, Changzhou Trina
Solar Energy Co., Ltd. (Trina China), was incorporated in December 1997. Its initial business was the
installation of PV systems, however the company became a primary PV module manufacturer in 2004.
In order to facilitate an Initial Public Offering, Trina Solar was incorporated on 14 March 2006 in the
Cayman Islands to act as a holding company. Trina Solar acquired 100% stake in Trina China, a wholly-
owned subsidiary through which Trina Solar conducts most of its operations. Trina Solar was listed on
the New York Stock Exchange (NYSE) on 19 December 2006.
Business overview
Trina Solar is engaged in the production and sale of PV cells and modules. In order to secure its
feedstock requirements and to ensure economies of scale, Trina Solar began manufacturing
monocrystalline ingots and wafers in 2005 and 2006, respectively. It also began in-house production
of PV cells in April 2007; prior to this, the company relied entirely on toll manufacturers (third-parties
which would convert the companys wafers into PV cells) for production of its PV cells. Currently,
however, toll manufacturers account for only 25% of Trina Solars PV cell requirements. Furthermore,
the companys PV modules contain their own ingots and wafers. As a result, the companys business
model is almost fully integrated at this stage. The company aims to produce 100% of its PV cell
requirement in-house, thus achieving full integration, by the end of FY 2008. We believe that Trina
Solars vertically-integrated business model will enable the company to both standardize its quality
control procedures and achieve greater economies of scale and improved margins, going forward.
The company manufactures its PV cells and modules using crystalline technology. According to
Solarbuzz LLC (Solarbuzz), an independent solar energy research and consulting company, crystalline
technology accounted for 92% of all PV installations in 2006 (compared to thin film technology, which
accounted for the balance). While thin film technology leads to lower costs of production for PV cells
and modules (as it uses less silicon), it also has lower typical efficiency rates (the amount of energy
delivered to the grid relative to the solar energy absorbed by the PV cell or module) of between 6% and
11%, compared to between 17% and 18% for crystalline technology.
At the end of FY 2007, the company had an annual PV module manufacturing capacity of 150
megawatts (MW), and aims to reach a capacity of 350 MW by the end of FY 2008. Trina Solar primarily
manufactures monocrystalline and multicrystalline PV modules with a capacity of 160-185 watts (W)
and 180 W-220 W, respectively. At present, Trina Solars PV cells have typical efficiency rates of 17%
and 15.6% for monocrystalline and multicrystalline cells, respectively; the company expects to improve
these rates to 19% and 18% respectively by 2010, in effect raising its PV modules power output to
approximately 240 W-250 W.
Trina aims to become
fully vertically-
integrated by the end
of FY 2008
Trina aims to increase
its PV module
production capacity to
350 MW by the end of
FY 2008

Trina Solar Ltd.
18 March 2008

Tel. +44 (0)20 7232 3090
www.iirgroup.com
Fax +44 (0)20 7232 3099
LSE: IIR
Traded on
AIM, London
Stock Exchange
Regulated and