On December 9, 2024, Trina Solar Co., Ltd. (688599. SH, "Trina Solar") announced that it has terminated the spin-off and listing plan of its holding subsidiary, Trina Rich Energy Co., Ltd. ("Trina Solar").

In April 2023, Trina Solar threw out the above plan. Twenty months later, the PV industry is facing overcapacity and the USTR announcing that it will increase import tariffs on solar wafers, polysilicon and some tungsten products imported from China from January 1, 2025.

Trina Wide terminated the plan, and the hope that shareholders mainly venture capital funds introduced in multiple rounds of financing of Trina Rich could not be realized.

On the morning of December 13, the Economic Observer called Trina Solar's investor hotline to ask how to solve the issue of the exit of the 18 new shareholders of Trina Solar, and the staff responded that the company was discussing with investors.

Multiple rounds of financing

Trina Fujia (previously known as Jiangsu Trina Smart Distributed Energy Co., Ltd. ("Trina Smart") was established in October 2016 with only two shareholders: Trina Solar (85.17%) and Changzhou Fujinhao Investment Partnership (Limited Partnership) (14.83%). At present, the registered capital of the company is 2 billion yuan. Gao Haichun, the chairman of Trina Solar, is the daughter of Gao Jifan, the founder, chairman and general manager of Trina Solar.

Trina's financial data shows that from 2020 to 2022, the company's net profit will be 38 million yuan, 142 million yuan and 434 million yuan respectively, and its net assets will be 99 million yuan, 268 million yuan and 1.524 billion yuan respectively. The rapid growth of Trina's performance has attracted a large amount of capital.

On April 22, 2023, Trina Solar disclosed that the company is planning a spin-off and listing of Trina Solar. Trina Smart is the main body of the company focusing on the distributed photovoltaic power generation market, providing distributed photovoltaic system solutions and digital energy management business for the distributed photovoltaic market. Benefiting from the support of distributed photovoltaic policies and the promotion of affordable grid access by technology, Trina Smart has developed rapidly in recent years and expanded its business scale.

At this time, Trina Solar's shareholders have increased to 10: Trina Solar's shareholding has been diluted to 73.57%, Changzhou Fujinhao has changed its name to Shanghai Fuhexin Enterprise Management Partnership (Limited Partnership), and its shareholding has been diluted to 12.81%; In addition, there are 8 new shareholders such as Shanghai Lihe Times Enterprise Consulting Management Co., Ltd.

On April 24, 2023, Tianhe Smart changed its name to Tianhe Fujia.

It is worth mentioning that Trina Rich is a distributed power station brand that Trina Solar started very early. In the prospectus released in 2020, Trina Solar introduced that for the home rooftop distributed power station, the company took the lead in the industry to launch a photovoltaic brand - Trina Fujia. Trina Solar is a demonstrator of photovoltaic Internet applications, and through Trina Solar's intelligent cloud service center, it can monitor the power generation of the power station in real time, effectively shorten the fault response time of the power station and improve the economic efficiency of the power station.

According to Tianyancha's industrial and commercial information, as of December 12, 2024, after the spin-off and listing plan, Tianhe Fujia has launched multiple rounds of financing and introduced 18 new shareholders, including Wuxi Chunhua Xixiang Investment Center (Limited Partnership), Xingyin Investment Co., Ltd., CPIC Changhang Equity Investment Fund (Wuhan) Partnership (Limited Partnership) (hereinafter referred to as "CPIC Changhang"), Xiamen CDH Wentao Equity Investment Fund Partnership (Limited Partnership) (hereinafter referred to as "Xiamen CDH"), etc.

The Economic Observer noted that these new shareholders not only include well-known institutions such as Xiamen CDH and CPIC Changhang, but also some small private equity and state-owned venture capital funds. The company's largest funding round occurred shortly after the disclosure of the spin-off plan.

On April 26, 2023, Tianhe Fujia increased its capital and shares, introducing 11 new shareholders, with a total capital increase of 1.9 billion yuan. Trina Solar's stake in Trina Rich was also diluted to 72.41% in the capital increase.

On December 12, 2024, the Economic Observer interviewed a shareholder of Tianhe Wealthy regarding the termination of Tianhe Fujia's separate listing plan. One of the shareholder's investment managers responded: "There is no way, the company invests in Tianhe Fujia to support the development of enterprises in the area."

Performance changes

In the 20 months since Trina Solar proposed to spin off Trina Fujia and go public, the PV industry has changed dramatically. The first is that the whole industry is facing the problem of overcapacity.

Against this backdrop, Trina Solar's PV products are still under pressure from reduced demand, despite the industry-leading TOPCon cell technology (a new type of photovoltaic cell technology known as tunneling oxide passivated contact cells).

According to the third quarter report of 2024, Trina Solar lost money for the first time, and its operating income from January to September was 63.147 billion yuan, a year-on-year decrease of 22.16%; net profit was -847 million yuan, down 116.67% year-on-year.

As of September 30, 2024, Trina Solar's gearing ratio was 74.57%, the highest since the company's listing in June 2020. Trina Solar's total liabilities were RMB101.066 billion, an increase of 10.23% over the same period last year. Accounts receivable was 16.991 billion yuan, and inventory was 26.413 billion yuan.

Tianhe Fujia's net profit in the first half of 2023 was 349 million yuan, and the net profit in the first half of 2024 shrank to 29.9341 million yuan, less than one-tenth of the same period last year.

Gao Jifan, chairman of Trina Solar, explained the reasons for the company's losses and coping strategies at the third-quarter results briefing on November 12. Gao Jifan said that in the third quarter, the company's performance declined and suffered losses, mainly due to the continuous decline in the price of photovoltaic module products. In addition, the company's advantageous market (the United States) and advantageous sectors (residential distribution) are facing strong external uncertainties, so they choose to slow down into the corner and not take too many risks. Therefore, the company's dominant market in the third quarter showed a state of phased deceleration. As for how these risk factors will evolve in the future, and whether the deceleration strategy is correct, it will take time to observe. But the strategy is by no means static, but should match the pace of change in the industry. Now that the industry is in a stage where the external environment may change rapidly, the company will always pay close attention to the development trend of the industry, make optimal strategic adjustments in combination with marginal changes, and create maximum value for shareholders.

Trina Solar's share price hit a record high of 87.22 yuan per share in August 2022, with a total market value of more than 200 billion yuan. Since then, the company's share price has been falling, hitting a minimum of 15.23 yuan per share in July 2024. On December 13, Trina Solar closed at 23.55 yuan per share, with a total market value of 51.324 billion yuan.

Trina Solar said that the termination of the planned spin-off of Trina Rich is a strategic decision made by the company based on the development trend of the industry and its own advantages. The company will transform and upgrade from a traditional photovoltaic product manufacturer to a provider of overall solutions for photovoltaic and energy storage smart energy, providing accurate and differentiated solutions for different customers based on various application scenarios. TRW is an important part of the company's transformation process.

Compared with its peers in the photovoltaic industry, Chint Electric (601877. SH) subsidiary, Chint Aneng, and Sungrow, a subsidiary of Sungrow (300274.SZ), have also failed to spin off and list their plans.