[odyd 1,305]

Couple of confusing ratings Cowen $13, FBR $23

FBR note below

FBR & Co. trims its price target on Outperform-rated Canadian Solar (Nasdaq: CSIQ) from $32 down to $23 following recent Q2 results and outlook.

The firm noted key points from CSIQ's recently quarterly report:

2Q beat. CSIQ reported 2Q16 revenue of $805.7M, module shipments of 1.29 GW, and gross margin of 17.2%, ahead of its guidance of $710M.$760M for revenue, module shipments of 1.2 GW.1.25 GW, and 15%.17% gross margin, respectively.

Late-stage pipeline grows again; U.S. to boost portfolio. The late-stage pipeline grew to 2.4 GW from 2.1 GW QOQ, and total solar power plants in operation reached 472 MW, up from 438 MW QOQ. CSIQ expects to add more than 1.0 GW of operating plants in 2016, mainly in the U.S.

Positives include (1) it maintains annual module guidance of 5.4 GW.5.5 GW; (2) 1.185 GW of U.S.-based projects are still due to reach commercial operation in 2H16; and (3) it positioned itself for a weakening pricing environment with inventory reductions and moderation of planned capacity expansion.

Negatives include (1) weaker 3Q revenue guidance of $660M.$710M amid ASP pressure, although this does not include $32.9M in projects sold in China expected to close in 4Q; (2) project push-outs in Japan as the government tightened interconnection time frames for projects seeking feed-in tariffs; and (3) project resale values slipped a bit as CSIQ estimated closer to $1.80/MW versus $2.00/MW prior

[ravalos 23]

36 minutes ago, odyd said:

Couple of confusing ratings Cowen $13, FBR $23

FBR note below

FBR & Co. trims its price target on Outperform-rated Canadian Solar (Nasdaq: CSIQ) from $32 down to $23 following recent Q2 results and outlook.

The firm noted key points from CSIQ's recently quarterly report:

2Q beat. CSIQ reported 2Q16 revenue of $805.7M, module shipments of 1.29 GW, and gross margin of 17.2%, ahead of its guidance of $710M.$760M for revenue, module shipments of 1.2 GW.1.25 GW, and 15%.17% gross margin, respectively.

Late-stage pipeline grows again; U.S. to boost portfolio. The late-stage pipeline grew to 2.4 GW from 2.1 GW QOQ, and total solar power plants in operation reached 472 MW, up from 438 MW QOQ. CSIQ expects to add more than 1.0 GW of operating plants in 2016, mainly in the U.S.

Positives include (1) it maintains annual module guidance of 5.4 GW.5.5 GW; (2) 1.185 GW of U.S.-based projects are still due to reach commercial operation in 2H16; and (3) it positioned itself for a weakening pricing environment with inventory reductions and moderation of planned capacity expansion.

Negatives include (1) weaker 3Q revenue guidance of $660M.$710M amid ASP pressure, although this does not include $32.9M in projects sold in China expected to close in 4Q; (2) project push-outs in Japan as the government tightened interconnection time frames for projects seeking feed-in tariffs; and (3) project resale values slipped a bit as CSIQ estimated closer to $1.80/MW versus $2.00/MW prior

I think the last point is the one with the highest risk/uncertainty amidst the current environment. Expecting a $1.80/W re-sale price for their solar plants is overly optimistic, given that many solar plants from other developers that were built earlier have been sold in the $1.5-$1.7/W range. 

[odyd 1,305]

One more from the Roth

Roth Capital affirms Canadian Solar (Nasdaq: CSIQ) at Buy with a price target of $20 following Q2 results and outlook issued early Thursday.

Analyst Philip Shen offered the following overall thoughts today: With the stock down 14% in August alone, CSIQ closed up 18% on short covering as the market was looking for a miss and even weaker guide, especially at the margin level. While we are just at the beginning of this industry downturn, our view is that CSIQ will likely be one of the best positioned companies in our module universe given its disciplined approach to navigating this downturn (aggressively managing inventory, minimizing bad debt, having a diversified sales network, and employing leading technology).

Heading into the quarter, investors were also concerned about the profitability of the company's 1.3GW latestage U.S. pipeline given recent peer earnings calls. It appears economics for the Recurrent pipeline may be healthier or more stable relative to others. Between the U.S. project pipeline and other projects expected to COD in 2017, we estimate the company could generate ~$6 in EPS that could support earnings over the next two years.

Near-term upside catalysts ahead include Recurrent COD announcements and partial/full sale announcements of U.S. projects that could drive earnings higher. Longerterm, the successful launch of a J-REIT in Japan targeted for Q2/Q3’17 could also be a positive. That said, negative industry data points could cap gains in shares. For 2016, we model 100MW of project sales in H2, but the company is expected to have 1.37GW in operation by year end that could be sold and drive upside to our estimates.

[BIPV Investor 9]

2 hours ago, odyd said:

One more from the Roth

Roth Capital affirms Canadian Solar (Nasdaq: CSIQ) at Buy with a price target of $20 following Q2 results and outlook issued early Thursday.

Analyst Philip Shen offered the following overall thoughts today: With the stock down 14% in August alone, CSIQ closed up 18% on short covering as the market was looking for a miss and even weaker guide, especially at the margin level. While we are just at the beginning of this industry downturn, our view is that CSIQ will likely be one of the best positioned companies in our module universe given its disciplined approach to navigating this downturn (aggressively managing inventory, minimizing bad debt, having a diversified sales network, and employing leading technology).

Heading into the quarter, investors were also concerned about the profitability of the company's 1.3GW latestage U.S. pipeline given recent peer earnings calls. It appears economics for the Recurrent pipeline may be healthier or more stable relative to others. Between the U.S. project pipeline and other projects expected to COD in 2017, we estimate the company could generate ~$6 in EPS that could support earnings over the next two years.

Near-term upside catalysts ahead include Recurrent COD announcements and partial/full sale announcements of U.S. projects that could drive earnings higher. Longerterm, the successful launch of a J-REIT in Japan targeted for Q2/Q3’17 could also be a positive. That said, negative industry data points could cap gains in shares. For 2016, we model 100MW of project sales in H2, but the company is expected to have 1.37GW in operation by year end that could be sold and drive upside to our estimates.

Yeah Roth is smoking some very strong stuff. Not sure how they claim $6EPS by end of 2017 via project sales. That would be $350M in profit on a pipeline CSIQ is saying would only be worth $2.1B at the end of 2016. As their 2017 development pipeline is small relative to the 1.37GW they will have by the end of 2016, I'm hard pressed to see how their development profitability it going to escalate to produce Roth's anticipated profits. Particularly as they have guided down the value of their currently developed assets by $100M. Had they continued with their target of 300MW of Japanese projects in 2017 I'd be much more optimistic about hitting Roth's target as previously CSIQ has suggested that the Japanese projects have +20% margins.

All this being said I do think CSIQ is one of the best names in the sector and I will continue to watch weekly ASP trends to gauge how long this oversupply condition is going to last for.

 

[odyd 1,305]

I think the biggest disappointment for me is the lack of the value creation in a long term. J-REIT is an alternative to a global which does sweeten the pot a bit, but in general terms, CSIQ is back to being a module maker.

I am not interested in selling solar plants unless they have a feeble profile. Qu said Japanese portfolio is certainly the best; I think the same. In my view, the US portfolio has least amount power of GM and holds the most debt. On the other hand, selling a tax equity is beneficial. Hard to get an idea of what to sell next with so many questions. CSIQ is rated half of FSLR even what I think will be an even year from EPS perspective. Certainly, FSLR has the better balance sheet and deserves the recognition of it; that balance sheet may be worked harder now and lose its sparkle fast. 

From my perception of the market, I see CSIQ, FSLR, and JKS as interesting. I am curious to see how JKS manages own sales with selling modules only, and not getting FiT. 

We are just a beginning of the cycle, and I see CSIQ go under $10 as the fears continue. The industry will consolidate, and I see all three to dominate the solar market and financial markets by 2018. I hope to pick CSIQ around that point.