I have done a crude analysis of the 2015 revenue content for Canadian Solar (CSIQ), and these are the figures.
Canadian is expected to get $3.397B in overall revenue with some $1.094B in revenue from the total solution. Canadian portfolio plant sales were around $360M. Some $441M is my assumption to be equity sold in the plants in the US. Rest, around $294M, was revenue from the EPC mainly and other sales classified as a total solution.
Module sales were around 4.38GW at $2.3B an average of $0.53 per watt.
So based on peeling the onion I was able to look into the future of 2016. Assuming that CSIQ would probably do 5.5GW in module sales in 2016 at $0.50 per watt, revenue from module sales would contribute around $2.7B. This is healthy growth of 25%
The problem starts with the plant sale revenue and essentially with the source of it. Canadian has a pipeline of projects in Japan and Brazil, both seeing most development during 2017. Some strong outlining of the strategy will be required here as the market certainly will not welcome drop in the revenues what is seems to be a gap of some $700M.
Japan’s plans are about 72MW to be developed in 2016 for the total ownership of 100MW or so. If the company decided to sell those projects, the revenue generation would be around $250M. I would expect acceleration here, after the second quarter of 2016, most of the projects in current US roster are finished. All of late US pipeline projects have been sold or have investment tax equity in it.
There are Chinese plants, which probably are not considered for sale due to FiT concerns are not seeing much activity in the region or having any consideration to be a sellers’ market.
It is hard to evaluate the situation in Brazil since plants in Brazil are being affected by the exchange rates. I still consider them as valuable to Canadian Solar. I am not sure however if they would have attractive gross margins currently if open to the market sales.
Finally, there is a yieldco situation. Yieldco would probably require financial strength to transition 500MW of the US pipeline, 80MW of Canadian plants and about 50MW of UK plants, with the last set probably also better to be sold rather than kept. However, at 600MW, the IPO would have to bring somewhere around $200M in 2016 to pay for the equity portion of Canadian's Investment. At $15 per share, 20M share offering out of 40M shares outstanding could offer potentially $60 to $80M in CAFD to investors. The company valued $600M would have potential of $1.5 per share in dividend with yield of 10%, which would show more of distress situation on the market currently experienced by YieldCos
Selling below $15 could affect the transfer value or the level of ownership. It may certainly not eliminate the control of the new yieldco, but it would seem immediate to sell equity for so low and so much of it of the hop.
It will be critical to listen to clues and fully appreciate the March 10th call.
At this point as I mentioned elsewhere, I am not holding a position in CSIQ to get clarity on above points
Edited by odyd