Trina Solar Reports Strong Q1 Gross Margin and Promising Growth in Energy Storage Business

Trina Solar (688599) has reported impressive gross margin performance in the first quarter, with its energy storage business expected to see significant growth.

Core Insights: In the first quarter, the company achieved a gross margin of 6.61%, reflecting a notable increase of over 7 percentage points compared to the previous quarter, significantly outperforming its peers. For 2024, Trina Solar anticipates shipping over 70 GW of modules; however, the gross margin is expected to decline due to downward pricing pressure across the industry. Looking ahead to 2025, the company projects module shipments to be between 70-75 GW and is proactively investing in perovskite technology. Furthermore, the energy storage segment is expected to experience substantial growth in 2024, with annual shipments of 4.3 GWh projected to rise to 8-10 GWh in 2025. The company has also established a growing presence in overseas energy storage markets, which will enhance the gross margin of this segment.

Recent Developments: Trina Solar has released its 2024 annual report and the first quarter report for 2025. In 2024, the company achieved revenue of 80.282 billion yuan, a year-on-year decrease of 29.21%; the net profit attributable to shareholders was -3.443 billion yuan, a decline of 162.25%; and the adjusted net profit was -3.547 billion yuan, down 159.72%. In Q1 2025, the company recorded revenue of 14.335 billion yuan, a year-on-year decrease of 21.48% and a quarter-on-quarter decline of 16.34%. The net profit attributable to shareholders was -1.32 billion yuan, with an adjusted net profit of -1.323 billion yuan, representing a reduction in losses compared to previous periods.

Module Business: The decline in gross margin is attributed to falling prices across the supply chain. In 2024, the photovoltaic module business generated revenues of 55.709 billion yuan (down 27.13% year-on-year), with total module shipments exceeding 70 GW and exports of 64.48 GW (up 18.31% year-on-year). The company maintained its position as the global leader with cumulative shipments of over 170 GW for its large 210-size modules. The gross margin for the module segment dropped by 10.24 percentage points to 4.3% due to pricing pressures. On the technology front, Trina Solar achieved a world record efficiency of 26.58% for its N-type i-TOPCon cells and successfully produced the world’s first 800W+ tandem module of the 210 standard size, marking a new era in the commercialization of perovskite and crystalline silicon tandem cells. For 2025, the company expects module shipments to reach 70-75 GW.

Distributed Business: Revenues continued to grow, with an emphasis on market demand post-liberalization. In 2024, system product revenues reached 18.8 billion yuan, representing a year-on-year increase of 19.1%, with annual shipments of 5 GW and a gross margin of 18.4%, an increase of 4.62 percentage points. Trina Solar holds a strong brand and channel advantage in the domestic distributed system market, maintaining robust revenue growth in 2024. Recently, the introduction of market-oriented policies for renewable energy has led to a surge in installations, expected to boost the company’s distributed shipments in the second quarter. Future performance in the distributed system business will depend on the marginal trends in demand following the market entry of new energy sources.

Energy Storage and Structural Business: These segments are becoming significant contributors to the company’s performance. In 2024, energy storage revenues reached 2.335 billion yuan (up 19.1% year-on-year), with system shipments of 4.3 GWh (up 115%) and a gross margin of 12.95% (down 3.07 percentage points). By 2025, energy storage is expected to be a major source of profit growth for the company. As the cost of photovoltaic and storage solutions declines, there is a surge in overseas energy storage demand. Trina Solar is securing major international contracts and achieving breakthroughs in markets such as Europe and Australia. We estimate that energy storage system shipments in 2025 may reach 8-10 GWh, a significant increase over 2024, with an improved gross margin due to a higher proportion of overseas sales. Additionally, the structural business is projected to maintain high growth, with shipments projected to reach 7.3 GW in 2024, where tracking structures constitute over 50% of the total.

Earnings Forecast and Investment Recommendations: We project that the company will achieve revenues of 76.107 billion, 91.405 billion, and 105.929 billion yuan for 2025-2027, with net profits attributable to shareholders of -2.412 billion, 1.184 billion, and 3.137 billion yuan, respectively. We are adjusting our rating to “Buy”.

Risk Analysis:
1. Risk of greater-than-expected decline in distributed demand: Following the full market entry of renewable energy, the on-grid electricity price for photovoltaics is expected to enter a downward trend, which may lead to a decline in domestic distributed demand. If this decline exceeds expectations, it could negatively impact the company’s distributed system shipments and gross margins.
2. Risk of unforeseen changes in the global trade environment affecting shipments to the U.S.: In 2024, the module business is expected to maintain high gross margins only in the U.S. market, while uncertainties exist due to anti-dumping measures and tariffs in Southeast Asia and the U.S.
3. Risk of intensified industry competition: The photovoltaic sector is currently experiencing a mismatch in supply and demand, leading to fierce competition along the supply chain and ongoing price pressures, which may result in continued low gross margins for the company’s module business.