April 2, 2012 (Chinavestor) Chinese solar stocks gave investors hard times in 2012. Market value and stock prices plummeted as Europe cut subsidies. Investors have to remember that Europe is the largest market for solar manufacturers and any subsidy cuts are hurting demand real bad. Trina Solar (NYSE:TSL) just reported financials last Friday and falling revenues are here to testify of that. But falling revenues are not specific to Trina Solar (NYSE:TSL) alone. Jinko Solar (NYSE:JKS) and Suntech Power (NYSE:STP) experienced that as well, as the following table testifies.
Italy, Spain and Germany all announced subsidy cuts, countries responsible for well over half of Europe's installed solar capacity. Trina Solar (NYSE:TSL) has 40% more capacity than it produces and built up a large inventory of $170 million, up from $26 million a year earlier. More about this problem, read "TSL invewtory pile up"
But there are some positive development. Bottom line, e.g. earnings, improved for Suntech Power (NYSE:STP) for the last quarter of the year. While it is too early to tell if this trend is here to stay and that it is an industry wide pattern, one thing is certain. Chinese solar stocks are cheap on valuation and any good news have serious potential to improve stock prices.
Train Solar (NYSE:TSL) slipped deeper into the red in the fourth quarter but losses are manageable, especially concerning its huge cash pile. Trina Solar (NYSE:TSL) has one of the most robust balance sheets in the industry and is looking good to make some acquisitions as the price war unfolds. Some argue that as many as two thirds of current PV manufacturers may disappear in the next two to three years as liquid crunch will hit smaller players. That is certainly good news for cash hoarders like Trina Solar (NYSE:TSL), or companies that have ability to tap debt and equity markets, if needed. Yingli Green Energy (NYSE:YGE) reported a difficult fourth quarter but the company is vertically integrated and is expected to slash costs going forward.