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Canadian Solar (CSIQ)

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Travis out with more CSIQ analysis:

What to Expect From Canadian Solar Inc. in 2018
https://www.fool.com/investing/2017/12/05/what-to-expect-from-canadian-solar-inc-in-2018.aspx

I've said time and time again that projects equal high risk at low margins, and Travis seems to share my conviction:

"One strange development is that Canadian Solar seems to be doubling down on its project development business at a time when other solar manufacturers are paring down self-development... What this does is adds another layer of risk for Canadian Solar. Now investors have to be worried about executing on projects and factors like currencies and interest rates, rather than having a focus on manufacturing. And it's not clear right now that the risk is worth it for this solar manufacturer. "

 

Edited by Klothilde

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16 minutes ago, Klothilde said:

Travis out with more CSIQ analysis:

What to Expect From Canadian Solar Inc. in 2018
https://www.fool.com/investing/2017/12/05/what-to-expect-from-canadian-solar-inc-in-2018.aspx

I've said time and time again that projects equal high risk at low margins, and Travis seems to share my conviction:

"One strange development is that Canadian Solar seems to be doubling down on its project development business at a time when other solar manufacturers are paring down self-development... What this does is adds another layer of risk for Canadian Solar. Now investors have to be worried about executing on projects and factors like currencies and interest rates, rather than having a focus on manufacturing. And it's not clear right now that the risk is worth it for this solar manufacturer. "

He has always said this.  He has also said that SPWR's business is improving and a good investment (meanwhile not mentioning LG & Panasonic's high efficiency offerings)

You had said that price to book is important & Robert has shown how the book value will improve as these system sales pay down debt & free up cash.  He has shown how the margins on these projects are actually quite good.  But you never really said if you agree with that or not -- if you did I missed it.  

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I think one dilemma for CSIQ is that it this decade went down a path of not being a very competitive manufacturer, but a competitive project developer by access to in-house sourcing. Their strength was that they were active in the whole chain. Similar to FSLR when they lost their manufacturing edge. Now that the value-chain has cycled back to the state of previous decade where project development is tougher FSLR found a way to gain back some of its former manufacturing advantage and CSIQ is trying to create one, but there is much more risk to CSIQ’s outlook of success in competing with LONGi etc., that’s why I think they have to remain in downstream despite the harshening environment there.

This decade downstream: crashing capital cost, crashing sourcing cost at fixed FiT/PPA terms -> maximizing sourcing and construction delay maximizes margins. In this downstream world it was easy to make money without a lot of specialized competence in that part of the chain.

 

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47 minutes ago, sunnypease said:

You had said that price to book is important & Robert has shown how the book value will improve as these system sales pay down debt & free up cash.  He has shown how the margins on these projects are actually quite good.  But you never really said if you agree with that or not -- if you did I missed it.  

I've said time and time again that the Japanese pipeline is a gold mine for CSIQ.  And that their project monetization can increase book equity significantly.  Try this post on for size:
https://solarpvinvestor.com/topic/32-trading-solars/?page=3649&tab=comments#comment-95783

I understand that in this day and age it is easier to think of things in simple categories and this may be the reason why some people unintentionally put me in the CSIQ basher category and unintentionally forget all the good things I've said about CSIQ.  It's the mind playing games.

One further point regarding CSIQ: It's not the legacy projects on balance sheet and in the pipeline that are the problem.  It's the fresh projects that emerge from these hopelessly oversubscribed tenders that are the problem, where some wannabes throw in strategic bids at zero or negative margins and screw up deals even for the most efficient companies.  We just read about Trina getting desperate in India because of the low prices there, this is indicative of what happens when competitive bidding is enforced.

Edited by Klothilde

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5 minutes ago, dydo said:

Should drop 5% and JKS will go up 2%

That is a very good news.  Let's hope not.  CSIQ got some love today.  It ended up getting more gain than JKS (% wise).The tide may change any time.  The street is fickle.

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10 hours ago, Jetmoney said:

That is a very good news.  Let's hope not.  CSIQ got some love today.  It ended up getting more gain than JKS (% wise).The tide may change any time.  The street is fickle.

Well crapo, just our luck...  NYT is *finally* running an article about the negative to RE language in the tax bill.  The turd could hit the fan.

https://www.nytimes.com/2017/12/07/climate/tax-overhaul-energy-wind-solar.html

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