odyd

Canadian Solar (CSIQ)

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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.

 

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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.

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On ‎8‎/‎20‎/‎2016 at 7:46 AM, odyd said:

I think the biggest disappointment for me is the lack of the value creation in a long term.

That's it, in a nutshell.  And the problem is, once you lose investor confidence, it takes a long time to get it back.

I expect more from people who call themselves business managers.  Very disappointed in all levels of CSIQ management here.

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59 minutes ago, solarpete said:

That's it, in a nutshell.  And the problem is, once you lose investor confidence, it takes a long time to get it back.

I expect more from people who call themselves business managers.  Very disappointed in all levels of CSIQ management here.

Fundamentally the problem is that they have been lying to investors for the past year and a half.  In regards to project development they are no longer to be trusted in my opinion. They have shown they can no longer execute as advertised and that they have little understanding of the actually project profitability. I see them under 10 with a chance to redeem themselves around q2 next year. Until then stay away.  

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17 minutes ago, BIPV Investor said:

Fundamentally the problem is that they have been lying to investors for the past year and a half.  In regards to project development they are no longer to be trusted in my opinion. They have shown they can no longer execute as advertised and that they have little understanding of the actually project profitability. I see them under 10 with a chance to redeem themselves around q2 next year. Until then stay away.  

Agreed.

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1 hour ago, BIPV Investor said:

Fundamentally the problem is that they have been lying to investors for the past year and a half.  In regards to project development they are no longer to be trusted in my opinion.

That is a bit harsh.  Can you list out their lies?  I see them as adapting to market conditions.  You don't want to invest in a company that sticks with a road map when knowing that market conditions have changed that it is no longer sensible.

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There are lies of omission as well as of commission.  They committed two blunders:  they waited too long to implement their initial plan, and as far as I can tell, they just plain don't have a backup plan yet.

They fed the hype for their May 15 Investors Day event, where everyone expected them to announce their plans for a yieldco.  They did not do so at the time.  Some six months later, when market conditions had indeed deteriorated for yieldcos, they finally acknowledged they had dropped that plan.  If they had implemented their yieldco a year earlier, when several other companies did so, it would have been in a successful environment.  What you call "adapting to market conditions" I therefore call "missing the boat."

Now that they have missed the boat, their "adaptation" consists of not formulating a new plan.  They have a ton of projects on the books, and more to come.  What do they plan to do with them?  Sell them?  Keep them?  Some of each?  They just don't say.  Their Q1 statement was "we MAY sell SOME."  And I didn't see any specifics improving on that prognostication in their Q2 update.  Wow, be still my beating heart--that level of detail is absolutely staggering (dripping sarcasm intended).

Their "plan" appears to be to just wait for now, see what happens to the solar market, and figure out what to do later.  That's not a plan.  That doesn't inspire confidence.  And that's why I'm so disgusted with them.

 

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3 hours ago, Jetmoney said:

That is a bit harsh.  Can you list out their lies?  I see them as adapting to market conditions.  You don't want to invest in a company that sticks with a road map when knowing that market conditions have changed that it is no longer sensible.

 

What you call adjusting to market, some might call lying. Here are 5 examples of shift changing and corrections to both values and executions.  What is interesting is that once Recurrent was bought, the guidelines for all other regions of what is perceived as better margin projects such as Japan and the China FIT have been pushed out and not met.

 

There  is a pattern of missing projections of project builds over and over and adjusting them out and dropping some that seemingly had approvals for building. As a company that once stated they only proceed with a project when a buyer is arranged, to be stating that they have projects and apparently not grid approval of clients is basically lying to the public.

 

Lie  number 1                     - China projects

March 15, Identified in the PR connecting 320W DC in China

At the end of 2015 they had connected 196MW in China  or 61% of guidance

By the end of Q2 2016 the high FIT and they had 218MW  r 68% of target 2015 connections

 

Lie number 2 – Q2 Report China projects

338MW under developement- Note this was after the Recurrent acquisition. See Q2 2016 report for reality.

 

Lie number 3 – Q2 Report 2015 japan

336MW of projects have grid connection approval.

Q42015 ER indicates that 200MW have interconnection agreements.

 

Lie Number 4 – Japan project and timelines

Q4 2015 ER  600MW to be connected in Japan through 2017

March 2016 56.2MW to be connected in 2016 363 connected in 2017 the remainder of the 600MW pushed out to 2020

Q2 ER 2016 44MW connected in 2016 106MW in 2017 576MW total with the remainder pushed to 2022.

 

Lie #5 Project worth

Pipeline of Recurrent was worth 2.5B

Pipeline of projects was worth $2.20/watt

Current projects adjusted to $1.80/watt

Future projects to added to pipeline value $1.40.

Big Big Big disconnect on claimed valuations.

 

I wont even go into the comments on declining gross profits  that once was over 20% then 20% then 18% now 15% and I bet some are in single digit or at a loss now.

Edited by SCSolar
added Japan to a lie
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I know enough about the industry and its dynamic not to feel cheated by the reality of the company trying to adjust to business conditions. I look at their business model as one of the best out there. I will be watching the market, industry and stock prices to set myself for the comeback. Just look at the chart for SPWR, FSLR, and CSIQ. This is industry wide issue, certainly not Canadian's.

                                                                                                                                                                                                                    

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