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dydo

Canadian Solar (CSIQ)

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3 hours ago, SCSolar said:

Except that Chinese solars haven't traded at valuations equivalent to their US peers in what?  Over a decade?  Why should that change now?

Don't get me wrong--I still have shares from the mid-30s, so I'd love to see these stock prices.  But it will have to be from earnings, not an increase in P/E.  And that's still 2+ years away.

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"Thanks for the upgrade Brian, that was very nice of you.  Keep up the good work."

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Nice to see CSIQ hitting 52-week highs, getting business globally, becoming independent off commodity material swings. I read commentary how they going to fall on their face with their multi products. Not likely if they build solar parks with them as a major user. CSIQ adaptability to business cycles seems superior to any other listed company. And surprisingly the market is recognizing it. Days of $40 per share may not be gone but if anything CSIQ has a chance to reach that in a couple years.

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22 minutes ago, dydo said:

Nice to see CSIQ hitting 52-week highs, getting business globally, becoming independent off commodity material swings. I read commentary how they going to fall on their face with their multi products. Not likely if they build solar parks with them as a major user. CSIQ adaptability to business cycles seems superior to any other listed company. And surprisingly the market is recognizing it. Days of $40 per share may not be gone but if anything CSIQ has a chance to reach that in a couple years.

I don't think CSIQ will fall on its face. I do however believe the market for now for Poly is not going to grow as fast as Mono. The market should maintain at 40-50GW for the next few years. This would clearly create a market for their current Multi Perc technology.  The problem is that even GCL is moving away from Multi. They are ramping mono wafer and trying to squeeze a few more years out of their legacy multi furnace capacity by going to mono casting. What is driving CSIQ is the belief their project business. Most of that was built in the past and after this year, the highly profitable Japan projects will be mostly all built and much of it disposed of. When that happens, the margins and profits will be likely be tighter that the several dollars they will make this year. I do not see them sustaining a price much over $20 for any period of time.

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12 hours ago, SCSolar said:

I don't think CSIQ will fall on its face. I do however believe the market for now for Poly is not going to grow as fast as Mono. The market should maintain at 40-50GW for the next few years. This would clearly create a market for their current Multi Perc technology.  The problem is that even GCL is moving away from Multi. They are ramping mono wafer and trying to squeeze a few more years out of their legacy multi furnace capacity by going to mono casting. What is driving CSIQ is the belief their project business. Most of that was built in the past and after this year, the highly profitable Japan projects will be mostly all built and much of it disposed of. When that happens, the margins and profits will be likely be tighter that the several dollars they will make this year. I do not see them sustaining a price much over $20 for any period of time.

The story of Canadian pipeline shrinking was heard loud and clear on this forum since Canadian plants were completed. The company is not only one pure developer still standing, but it is producing more and more business encompassing other arms of managing solar plants. It maintains healthy "sell and/or keep" strategy. There are many markets to go with solar plants. And those markets will expand.  We have not seen any victims of the slowdowns with exception of few subs going bankrupt in China.  There is plenty of space available.

The manufacturing and the decisions made had worked thus far for the company. I am not sure why transformation, when required, would not be as well executed as it has been to date. Not sure why a successful organization would suddenly lose its footing. They are the most capable of a shift. FSLR has zero ability to shift, SPWR is dead, JKS is almost dead and will never be buried if it died, like Yingli, but CSIQ is somehow paralyzed and cannot make a move? I read those scenarios too many times. I argued against them as many, and I am surprised to see them again. Even Snake seems to be seeing Chinese taking FSLR to cleaners now. I do not have a skin in this game, but I think Canadian could surprise few folks here with its share price going forward. Cheers, I am back under the rock. 

 

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My favorite subject, yummy! 😋

Does anyone of you guys have a 2019 EPS estimate?  Consensus right now is $2.38 but I don't know you guys.  Module prices are just soo low and their OPEX is soo high...  

 

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34 minutes ago, Klothilde said:

My favorite subject, yummy! 😋

Does anyone of you guys have a 2019 EPS estimate?  Consensus right now is $2.38 but I don't know you guys.  Module prices are just soo low and their OPEX is soo high...  

 

Low end I see is $1.25 high end range is $2.25.  Shipments for revenues in the 8GW range.

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32 minutes ago, Klothilde said:

Could you help me with basic metrics like ASP CPW GP?  Greatly appreciated.  You seem to be implying a GP o f $550 - $700M.  Right?

GP $620-$700M.

Opex $430M+/-

Interest $100M+/-

ASP $0.27 CPW $0.235(13%GM) on 8GW shipments for revenues

The wild card are project sales revenue , power revenues and EPC revenues.

Project 130MW Japan @ 3.30 @ 30%GM

700MW @ 1.2/W @ 12.5%GM 

Power Revenues/Dividend Incomes $40M @ 50%GM

EPC $150M @ 15%GM

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18 minutes ago, SCSolar said:

GP $620-$700M.

Opex $430M+/-

Interest $100M+/-

ASP $0.27 CPW $0.235(13%GM) on 8GW shipments for revenues =$280M

The wild card are project sales revenue , power revenues and EPC revenues.

Project 130MW Japan @ 3.30 @ 30%GM =$129M

700MW @ 1.2/W @ 12.5%GM  =$105M

 Power Revenues/Dividend Incomes $40M @ 50%GM =$20M

EPC $150M @ 15%GM =$23M

I'm getting only $557M with the above. 🤔

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I see additional downside to the numbers you posted.  Their shipments are forecasted to decline from 6.8 GW in 2017 to 6.4 GW in 2018, so I would expect moderate growth for this year at best and not a boost to 8GW.  Also I think their ASP could be a few cents lower given that their quarterly ASPs have trended at or slightly below the spot averages for mono-PERC, which are at 26 cts right now.  Also they've had a total of $7M in power revenue in the first nine months of 2018, so $40M seems high to me.  Lastly the GM on the EPC revenue seems high to me.  All in all my humble opinion is that it is not clear at all whether they'll be able to post a profit for 2019, they could very well end up in the red.

As to the sustainability of their business model I think it is useful to get an idea of project ASP and GM of the non-Japanese project business.  They say that as of Oct 31. they have 1148MW of operating plants worth $1.23B.  That's an ASP of $1.07.   If you extract 93MW of Japanese plants at an estimated ASP of $3.3/W ($307M) you are left with 1055MW  worth $923M at an ASP of $0.88/W.

Regarding GM they've pointed out where to find the asset values of operating plants on their balance sheet. As of Sep.30 the total comes up to $1360M.  The corresponding resale value for these plants would be the $1.23B (Oct 31 portfolio) plus $307M for the sale of Garland and Tranquility in October, i.e. $1537M.  That leaves around $177M in gross profit (12%GM).  Subtracting an estimated $92M of gross profit for the Japanese plants (93MW*3.3*30%) leaves $84M for the non-Japanese portion.  That would yield a GM of around 7% for the non-Japanese part.

Thus you have the non-Japanese project business at $0.88/W and 7%GM.

On the other hand they have OPEX running north of $400M a year, including interest north of $500M.  Try covering even half of it with projects and you will quickly see that they would need at least 3 times more project volume than they have right now just to cover OPEX (if they didn't have the Japanese business to cross-subsidize the other regions).

I would translate the above into following story: CSIQ was very successful in generating profits from the Canadian and Japanese FIT regimes but as the world has moved to competitive bidding they are now experiencing a radical decline both in project ASP and GM.  For the time being the legacy Japanese project business allows them to mask the inherent lack of profitability in other regions.  However as the Japanese business tapers off it will become ever more apparent that their business model is not sustainable.

Who likes?

And please don't get me started on multi versus mono please.

And has anybody else realized that nearly half of their operating plants are in China (462MW) and that those assets are hard to sell right now?  Some people would call those pearls toxic assets but not me.

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