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Things have been fairly quiet in the CSIQ press room lately, so I thought I’d go back and highlight what the major achievements for CSIQ were in 2012, and how it has positioned them for a return to profitability in 2013 and beyond. There are many other smaller announcements and achievements which are not listed, but which all collectively contribute to CSIQ’s sunny outlook.

All the negative doom & gloom articles and rhetoric on the global solar industry dominating the printing presses in 2012 overshadowed much of CSIQ’s transition from being considered just another high-cost, undifferentiated Tier-2 module maker, to one of the top Tier players with a great combination of low-cost, high efficiency and low-BOS product offerings. Combining this with their differentiated project business model has resulted in the company having by far the most advanced project pipeline in the best markets and most visible and bankable revenue streams and GM’s of all the Chinese-based solars for at least the next 2 years, at least at this point in time.

I have some problems with formatting when I’m cutting and pasting to here, so it was just easier to pdf and attach my commentary...the following part may be of most interest;

“Combining the utility scale and non-utility scale data, and assuming modest growth in total MW shipments, for the full year 2013 I come up with;
- Full year revenue of $2.174 Billion
- Full year EPS of $3.65 (excluding forex, taxes and any surprise 1-timers)
These numbers are 2H back-end loaded.”

Heck, even if they just got to $2 EPS (incl everything), I’d be pretty happy...

It just occurred to me that you can't download the pdf unless you're a member. So for the lurkers, the part that matters the most (2013 profitability/2014 outlook) is as follows:

Business Outlook – 2013

- I have CSIQ generating about $1.2 Billion in revenue in 2013 for its NA utility scale project business, with well over 20% average GM.
- Expect news on CSSKY regarding project development and construction in SA. Africa, Mid-East. It will probably start off slow, then accelerate quickly similar to what happened in Ontario.
- CSIQ will continue to expand into the high growth global markets, in addition to benefiting from the huge China build-out.

Profitability and EPS -2013

I have generated a quarterly non-utility scale revenue and profit estimate for 2013 that is based on my belief that “stabilization” is here, and will remain throughout 2013. Primarily, that means that inventory costs catch up with real-time costs. I don’t really expect a real increase in prices (maybe a little short-term), but the ASP’s drops from here will be much more gradual. The big target in 2013 for cost reductions will be on BOS and soft costs. Stabilization will be supported by a 40GW+ demand profile for 2013 (my guestimate).

Combining the utility scale and non-utility scale data, and assuming modest growth in total MW shipments, for the full year 2013 I come up with;
- Full year revenue of $2.174 Billion
- Full year EPS of $3.65 (excluding forex, taxes and any surprise 1-timers)
These numbers are 2H back-end loaded.

Since almost 60% of the projected GP is coming from the visible project pipeline, and to meet these EPS numbers they just have to break even by Q4 on the non-utility scale business sales, I believe this is a very realistic number.

Some of the risks to this outlook would be if some Q4 revenue recognition getting pushed out to Q1-2014 (primarily the lump-sum TransCanada projects, as the rest would be recognized on % of completion), ASP’s suddenly resuming their tumble, or a harsh ruling from the EU that would seriously impact sales to the EU (a highly unlikely scenario IMO).

CSIQ FUTURE – 2014 AND BEYOND

Right now I estimate that they have about $1 Billion in the utility scale project pipeline for 2014, and $140 Mil. in 2015. These numbers will increase throughout the year. Right now, if they just break-even on modules sales, the EPS for 2014 (excl. forex, etc.) would be about $3.77.

Moving forward, the “next wave” demand profile should keep all Tier-1 solars busy. FIT-free markets should see GM for project development eventually level-out in the 12%-15% range. With many now predicting that the GW demand could be pushing 300 GW by 2020...well there’s certainly a lot of money to be made out there.

Quoted from "explo"

Do you mean 300 GW installed annually by 2020 or cumulative installs reaching 300 GW 2020?

Sorry explo, that was supposed to be 2025. It's from the 300 GW initiative. Many think it's an ambitious goal but doable. The point really is that solar will continue to grow rapidly for at least the next decade, and there is a lot of money to be made being a leader in this industry during this period.

For the lurkers, this is a quick overview of the year in review for CSIQ in 2012, plus my expectations in 2013 concerning manufacturing. The foundation for their success in 2013 and beyond was being laid in 2012...so I think it's good to see how strong the foundation is:

CSIQ PAST – 2012

Manufacturing andR&D - 2012

- Manufacturing hit “fantasy” target of 55c to 60c all-in costs....Q4 2011 was at 84c/W, Q4 2012 at 57c/W (or less)...a 32% reduction.
- Hit lab cell eff. 2013 target of 21% in 2012, increased 2013 target to 23%. Mass producing of ELPS cells at over 19.5%.
- Multiple new certifications and performance ratings as further proof of their high quality modules.

Canada Projects and EPC –2012

- Bought, built, commissioned and sold their first 11.2 MW DC utility scale project in August, completing their first project as a developer (appropriately named CS1...”Canadian Solar-1”). This milestone marks the beginning of a whole new chapter in CSIQ’s future business model.
- Two (2) TransCanada plants totaling 20 MW AC bought, built and commissioned. Revenue recognition expected Q1. Approx. $110. Mil. rev. with GM over 25%.
- Purchased 16-plants totaling 157.5 MW AC from SkyPower, and 4 more plants from SunEdison Ontario totaling 46.5 MW DC. Total Revenue approx. $1 billion dollars at over 20% GM.
- Providing EPC services on 3-plants totaling 28.7 MW AC for Penn Energy.
- Increased output of Canadian module factory 50% from 220 MW to 330 MW...operating at 100% output, and sold out for at least the next year.
- Received loans from Bank of China ($120 Mil.), China Development Bank ($93 Mil.) and Deutsche Bank ($139 Mil.), totaling $352 Mil. for the Ontario projects.

United States Projects and EPC - 2012

- Closed deals to be the developer and/or EPC contractor on 246MW DC worth of projects, mostly in the 10 MW size, which is CSIQ’s “sweet spot”.
- Partnered with the largest privately held roofing company in the United States—PetersenDean—on a new roofing program the company is introducing.
- Entered partnership with De Lage Landen Financial Services, Inc., a global provider of financing solutions new program designed to make it even easier for commercial installers and solar developers to bring more solar projects to completion in the U.S. market.

Global Systems and Solutions business - 2012

- 50:50 Joint venture with SkyPower, called CSSKY, to develop projects in South America, Africa and the Middle East. They presently have 12 offices in these areas. SkyPower’s majority shareholder is US CIM Group, with over $9 Billion in assets under management. SkyPower boasts 8.4 GW of projects in applications and various stages of development.
- Good penetration in high margin Japanese market, supported by shipment data, primarily system kits.
- Penetration into Abu Dhabi (with Al Fahad Group), Turkey, Puerto Rco and other high growth potential areas.

Negative Business Developments - 2012

- Reduced 4Q/YE guidance 20% during Q3 (appears this was due mostly to factors other than just demand).
- TransCanada project revenue recognition slower than anticipated. In the future this should be mitigated by recognizing project revenue on % of completion basis, for both own/sell and EPC.
- CSIQ loses arbitration to LDK. This was about $30 Mil. plus the loss of a $10 Mil. deposit. I would guess this will show up on the Q4 numbers, so it could be a big one-time hit to close out last year.

CSIQ PRESENT - 2013

Manufacturing - 2013

- Presently at about 55c/W all-in costs...expect that to hit new fantasy target of 45c-50c/W YE, achieved with a combination of improved manufacturing efficiencies and higher module efficiencies. Lab cell eff. target of 23% by mid-year.
- Ramp up of ResidentialAC and later Commercial AC module product lines. Expect options that reduce BOS (New Edge/Zep Solar), and systems kits, to become increasing more popular (very popular in Japan right now). The utility scale market gets all the headlines, but it’s this point-of-use rooftop or small ground-mount that have the greatest upside potential IMO, with “grid parity” for residential spreading rapidly (and even more-so as storage becomes a more integrated part of these systems).

Quoted from "Klothilde"

Why do you expect 45 -50 cents? Imho this is not realistic.

Maybe the 45c/W is reaching a little...I would put that more in the “wouldn’t be surprised” category, based on Qu’s notoriously ambitious goals. But 50c or less would be my “expectation”.

I saw all the same comments and calculations last March on how 55c-60c was impossible by the end of 2012...turns out they not only hit the target range, but actually almost hit the bottom of that range. I don’t expect further reductions to come from upstream, but rather it would more likely come as a result of more automation, better manufacturing techniques, lower use of materials, and from better panel efficiencies...all areas you can expect small, but steady improvements. And this should be helped by higher utilizations due to higher global demand. And who knows what else they may have up their R&D sleeves...

This is just my opinion...we’ll see in March what they actually have in mind...if it’s 50c or less, you’d have to ask Qu if you want specifics. But I also think 50c/W all-in cost by YE is much less of a fantasy than thinking that any part of the value chain will be doubling their selling costs in the next 11 months...

This thread was not intended to be a discussion on what CSIQ’s YE cost targets may or may not be, or an in depth discussion on any of the other micro-parts of the equation, but rather to highlight CSIQ’s potential profitability and EPS in 2013 and beyond due to the accomplishments they made on both sides of the business. Bottom line, this is what most investors ultimately care about anyway. If you want to dig down and discuss any of these other more focused topics, please start a new thread to do so...and if it all revolves around SOL, then on the SOL board. I also don’t see how repeatedly attaching links to SOL’s website on the CSIQ board offers anything of substance to the topic being discussed...which on this board is CSIQ.

Thanks for your understanding

nano

explo...I think you’re missing the point. This thread was not started to debate the difference between performance ratings between SOL and CSIQ. I didn’t even mention SOL once, either directly or indirectly, in my overview. Not to mention that info posted on another company’s site will obviously be filtered and presented in a biased format, not only by what’s shown, but also by what’s not shown (your own comment; “Note that the results presentation seems to have been filtered by SOL”). I’m sure there’s more to the story than meets the eye.

Btw, according to this test, both the CS5 mono and CS6 poly CSIQ panels did extremely well.

An even better example...can you please explain to me how the thread started by spiritcraft last week on CSIQ’s ResidentialAC launch, quickly turned into a discussion on SOL’s microinverters (which btw aren't even integral and must be externally mounted), with links again to SOL’s website, and then talking about SOL’s storage solutions, etc.?

It’s just a pretty obvious pattern of attacking CSIQ and pumping SOL at every opportunity. Maybe it's because CSIQ has become one of the top leading solar companies, and therefore it naturally becomes a target because it's the example everything else is compared to (bash the leader to make one feel better about their own investment). I didn’t come here for endless SOL vs. CSIQ debates. Quite frankly I don’t care one bit about SOL. And I hold nothing against you for that being your #1 choice. But please keep all the stuff about SOL on the SOL board.

I hope you can see this from my point of view...

nano

no problem...it's easy to get drawn totally off topic, and some response was warranted. It would be an interesting discussion, involving all the solars, to discuss and compare their product offerings, R&D breakthroughs, and future expectations (on a separate thread of course... ).