Chinese Export Data Report (CEDR) recorded 654.5MW of modules exported by Canadian Solar Inc. (NASDAQ: CSIQ) during the fourth quarter 2014. During the third quarter 2014, CEDR recorded 531.9MW of exports by the company. Based on the company’s disclosure for the third quarter, shipments reached 770MW. Among those, Canadian identified 181MW shipped to Japan. CEDR records showed 180.4MW delivered to Japan for the same period.
CEDR indicated 327.29MW shipped to Asia, 180.61MW to North America, and 96.08MW to Europe during the recent quarter. The top destination was Japan at 238.19MW, followed by the US at 109.26MW, Honduras at 70MW, and India at 63MW. Fourth-quarter volume was a record for the company, and it was the largest quarterly volume recorded by the individual company to date. In a year-over-year comparison, Canadian increased its deliveries by 88%. The company took first place among the Chinese top ten exporters, beating Trina Solar’s 587.32MW and JA Solar’s 514.97MW, also a record for JA Solar.
Canadian’s global average declared price (GADP) was two cents higher than that of the third quarter. However, the company’s declarations are lower than most of its peers, since the largest volume contributions, in our view, were made to its own subsidiaries; therefore, they represent cost of the inventory, not selling price. We consider the two largest destinations, Japan, and the US, to fit this profile, acknowledging that both locations have the company’s plant developments. Under those conditions, ASP estimates, even though GADP can serve as a good linear benchmark, are quite difficult to make.
The following commentary was published in February, reflecting on December 2014 data the last month of the quarter:
“Q4 Guidance: 810MW-860MW,
Objective: 860MW top end
Q4 CEDR Final: 654.54MW
Overseas Estimate: 80MW Ontario
Plant sales: 70MW CAD own, 43.1MW EPC, 28.4MW US, total solution=141.5MW
China Estimate: ~100MW
Expectations: Canadian reached its best delivery figure ever, and, in fact, has delivered the most ever out of all companies for one quarter at 654.54MW. Based on the recent update from Canada, the company declared to have 275MW of projects left for Q1. We readjust our volume for a total solution to be at 70MW of plants and 43.1MW in EPC. In the US, sold volume should equate to 28.4MW. Thus, the total solution figure seems to gravitate around 141.5MW for Q4. The overall number looks like 796.04MW, including CEDR and total solution. We are no longer certain of volume from Ontario. In theory, 95% utilization would produce 40MW per month. If we assume that the volume for EPC is recognized as part of the Ontario production, then we are still left with 80MW this quarter. This is no longer a discussion on meeting the guidance, but whether the company will exceed it. If the assumption for Ontario is true, Canadian will not ship a lot to China (for sale, as we exclude delivery to own projects, which should be 100MW). If so, there is a potential for volume surprise. CEDR Q4 deliveries are a record for the company.”
Canadian Solar reported fourth-quarter results on March 5th, 2014. Total module shipments were 1,125MW, with 897MW recognized in revenue. Total solution shipments were 163MW, compared to 173MW in the third quarter. There were 228MW of modules shipped to projects without generating revenue.
If we add 125MW from Ontario, and the additional 100MW from the company’s updates to China, the CEDR estimate would arrive at 104MW – short of the actual volume, or 91% accurate to results reported by the company.
Canadian Solar is expected to ship 1,000 to 1,030MW of modules during the first quarter of 2015. This guidance includes 55MW to be delivered to its own projects. One utility project, Glenarm, has been sold and will be recognized in revenue in the first quarter. Two other Ontario projects have COD during Q1 2015 and could be recognized. In the US, one 20MW project has been sold, along other smaller projects that we estimate could add 10MW more. There is also a portion of EPC projects to be recognized out of the pool of 150MW the company is delivering to Samsung this year. It is worth nothing that while Canadian is not participating directly in the 140MW solar plant tender offered by the province of Ontario for this year, both Samsung and Canadian’s subsidiary, Recurrent Energy, are participating in the auction.
The top companies have concentrated on deliveries to the EU and Japan in the first month of Q1, based on data from CEDR. One of the largest destinations for the first quarter is the UK. Our quarterly expectations are that the Euro will force most of the companies to reduce their exposure to the EU if the softness in the currency remains beyond the quarter, but this condition is nowhere near to compromising global demand. Fortunately, emerging markets are capable of replacing the demand from the EU, while the UK should remain stable for the market under at 5MW. In the case of Canadian, its large exposure to the US and Japan, plus plant acquisitions in the UK, all in preparation for yield, are the pivotal point of the company’s transition to independence from market instabilities. In addition, January has the qualities of another record in the making for a number of participants, among them Canadian, and we expect this trend to continue.
