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[In-Depth Report] 5 Reasons Why Trina Solar’s IPO Is Postponed
2020-01-15   |  Editor:et_editor  |  1138 Numbers

Trina Solar, one of the largest solar powerhouses in the world, tried to apply for IPO in China, which was expected to be clear sailing for the company. However, the Sci-Tech Innovation Board, China’s equivalent to NASDAQ, has not approved Trina’s application. The status is now “postponed.”

Image by Gerd Altmann from Pixabay

A Solar Tech Giant With a Solid Track Record

Trina Solar was founded in 1997 and has been making rapid expansion ever since. Its core businesses include PV products, systems as well as smart energy. According to IHS, Trina Solar has been the second largest solar module manufacturer in the world from 2016~2018.

Therefore it seems surprising that the PV giant was unable to apply for its IPO successfully.

Source: IHS Markit
The ranking positions are based on 2017 production data

 

Why Is Trina Solar’s Application Postponed?

Judging from all the articles reporting the IPO application of Trina Solar in China, the main reasons are as follows:

  1. One-way street communication
  2. Questionable financing practices
  3. Land disputes
  4. Contentious accounting practice
  5. The pending lawsuits

 

  1. One-way street communication

As one of the Chinese companies that used to be listed on NASDAQ, Trina Solar is bound to attract lots of public scrutiny and attention from the media. The attention from the public grew even more intense when the company was applying for an IPO.

It would be wise for companies in this kind of situation to keep the information transparent and the communication open. However, that was not the route Trina Solar has taken.

According to Century New Energy Network, a Chinese media for the energy industry, the communication between the energy corporation and media was a one-way street.

Trina Solar supplied the media outlets with its own branded content without leaving viable contact details for the media. It was not easy for the media to have a meaningful dialog with the company.

Therefore Trina Solar’s IPO attempt was heavily reported but with lots of negative coverage.

 

  1. Questionable financial practices

The listing committee of the Sci-Tech Innovation Board has called Trina Solar’s financial practices into the question:

 

  1. Land disputes

How Trina procured their business premises and the land for their PV projects was not beyond reproach. The listing committee would like to obtain more information regarding the following areas:

 

  1. Contentious accounting practice

There are two main tricky areas here:

The accumulated accounts receivables and renewable energy subsidy receivables totaled RMB 290 million. Subsidy receivables from 9 power plants have not been included in the 7th edition of the national renewable energy tariff surcharge subsidy catalog.

How does Trina Solar plan to collect these payments?

Does the accounting classification of these payments comply with Accounting Standards for Enterprises issued by China’s Ministry of Finance?

The acquisition of NClave, one of the top sun tracking system suppliers in the world, has reportedly brought Trina Solar RMB 140 million.

Trina Solar predicted that NClave could increase the sales by 2.4~39% over the period of 2019~2023.

How the company arrived at this particular growth rate is also under the scrutiny of the listing committee.

 

  1. The pending lawsuits

Trina Solar has several lawsuits that are yet to be settled. Until June 30, 2019, the company stands to lose RMB 218 million from four of these lawsuits, should they lose the cases.

These potential losses are not mentioned in its application for IPO, for which the listing committee demands more information.

 

 
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