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[In-Depth Report] 5 Reasons Why Trina Solar’s IPO Is Postponed

published: 2020-01-15 10:00

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:

  • The 4.5-billion trust loan
    • Trina Solar has secured a trust loan of RMB 4.5 billion in 2017, bearing a fixed annual interest of 6%. The loan is issued in installments with 60-month terms.
    • And according to the company’s recent announcement, the stock ownership of the controlling shareholders and the actual holders of the stock could be at risk, should they have difficulties repaying the loan on time.
    • The listing committee questions Trina Solar’s majority holding to remain unaffected by the trust loan.
  • The Stock Assignment Agreement
    • Trina Solar has signed a Stock Assignment Agreement with an investment fund, which transferred 100% of the shares of Changzhou Tianru to the latter. The sale made Trina Solar RMB 2.8 billion.
    • The listing committee would like Trina Solar to confirm if the share ownership has actually been transferred. Are there clauses for share buy-back program in place? What is the relationship between Trina Solar and the buyer? In other words, is this sale of an attempt at debt financing?


  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:

  • Other than the commitments made by the actual controlling person regarding economic compensation, are the complete procedures for transferring operating rights of collective lands properly followed?
  • What are the measures that are implemented to ensure that there is no significant adverse impact on the company’s operation and assets?


  1. Contentious accounting practice

There are two main tricky areas here:

  • The accumulated accounts receivables and renewable energy subsidy receivables

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

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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