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Canadian Solar (CSIQ)

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On 2/20/2019 at 2:11 PM, tupapa said:

Went long csiq yesterday, minimum 6 month target 40s

Is this just gut feeling or do you have a fundamentals / technicals rationale for this PT? 

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1 hour ago, Klothilde said:

Is this just gut feeling or do you have a fundamentals / technicals rationale for this PT? 

Why do you always pick on Canadian Solar? It is so obvious... 🙂 Are you jealous that FSLR is slowly drifts away into nothingness, with its underdeveloped S6 joke, and "Canadian solar" slowly but surely becomes #1 Solar company in the world? ...🙂

Edited by MVA

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1 hour ago, MVA said:

Why do you always pick on Canadian Solar? It is so obvious... 🙂 Are you jealous that FSLR is slowly drifts away into nothingness, with its underdeveloped S6 joke, and "Canadian solar" slowly but surely becomes #1 Solar company in the world? ...🙂

I've expressed concerns not only relating to CSIQ but also to JKS and DQ and even sometimes to FSLR.  

With that out of the way may I ask based on what metric you consider CSIQ #1?  Shipments, earnings, module efficiency, number of press releases, or what else?

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22 minutes ago, Klothilde said:

I've expressed concerns not only relating to CSIQ but also to JKS and DQ and even sometimes to FSLR.  

With that out of the way may I ask based on what metric you consider CSIQ #1?  Shipments, earnings, module efficiency, number of press releases, or what else?

Please make your own analysis and you will see for yourself... But, I think, your objectiveness is seriously impaired by total investment (100%) in FSLR, therefore, whatever conclusions you'll have, it will always be in favor of FSLR... Human mind is prone to self-deception and self-complacency. Good luck with your ER today... Pay attention to S6 factual performance vs planned 🙂 

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4 hours ago, Klothilde said:

Is this just gut feeling or do you have a fundamentals / technicals rationale for this PT? 

After a 3 year accumulation range between 12-20 minimum upside is 100%.

Csiq is also tehnicaly a lot stronger than its peers. It only needs to increase by 100% to return to its 2008 highs whereas fslr would need to go up by 500%. 

The market is telling us that it is extremely unlikely that fslr will outperform csiq this year.

Edited by tupapa

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41 minutes ago, MVA said:

Please make your own analysis and you will see for yourself... 

I'm sick and tired of crunching the numbers for CSIQ.  And every time I do it it doesn't look rosy. (check it out).  I'm waiting for a white knight to show up and rebut my math but all I hear is crickets.

 

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Did you do a similar analysis for CSIQ for quarters past?  What were the results?  Yahoo Finance shows them with quarterly earnings of 1.00, 0.70, 0.20, and 1.10 for 4Q17, 1Q18, 2Q18, and 3Q18 respectively.  Did your calculations come close?

If not, it means you need to rethink your assumptions.

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1 hour ago, Klothilde said:

I'm sick and tired of crunching the numbers for CSIQ.  And every time I do it it doesn't look rosy. (check it out).  I'm waiting for a white knight to show up and rebut my math but all I hear is crickets.

 

For starters, your project numbers are likely substantially low. Their Energy  business has operated at 28.2%+ in margins to over 50% margins in the past several quarters. Your pure project sales(Japan+900MW other) are basically suggesting 17% margins.

 

http://investors.canadiansolar.com/news-releases/news-release-details/canadian-solar-reports-third-quarter-2018-results

Gross margin of the Company's Energy business for the third quarter of 2018 was 28.2%, compared to 54.7% in the second quarter of 2018 and 31.6% in the third quarter of 2017, with both of the prior quarters reflecting the positive impact of the realization of the deferred revenue associated with notice to proceed (NTP) sales in those quarters.

 

 

You might also be overlooking other  factors in the project margins for projects held for sale. They currently hold over 1GW of projects. I have read that they have indicated that instead of claiming revenue for the power generated from these projects, they use the revenue generated to offset the cost of the project. This means that the project margins should increase over time as they are lowering their cost basis faster than just depreciation.

 

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10 hours ago, SCSolar said:

For starters, your project numbers are likely substantially low. Their Energy  business has operated at 28.2%+ in margins to over 50% margins in the past several quarters. Your pure project sales(Japan+900MW other) are basically suggesting 17% margins.

http://investors.canadiansolar.com/news-releases/news-release-details/canadian-solar-reports-third-quarter-2018-results

Gross margin of the Company's Energy business for the third quarter of 2018 was 28.2%, compared to 54.7% in the second quarter of 2018 and 31.6% in the third quarter of 2017, with both of the prior quarters reflecting the positive impact of the realization of the deferred revenue associated with notice to proceed (NTP) sales in those quarters.

 

My 17% margin is better than their Energy GM for the first nine months ( $180.5M / $1239.4M = 14.6% ).  The thing with CSIQ is they only tell you the good but not the bad.  They had $883M in Energy sales in Q1 at a lousy 6.1% GM.  Of course it's up to the investor to figure that out.

 

10 hours ago, SCSolar said:

You might also be overlooking other  factors in the project margins for projects held for sale. They currently hold over 1GW of projects. I have read that they have indicated that instead of claiming revenue for the power generated from these projects, they use the revenue generated to offset the cost of the project. This means that the project margins should increase over time as they are lowering their cost basis faster than just depreciation.

You might be overlooking that the resale value of the projects held for sale also decreases with time as the remaining PPA / FIT periods gets shortened, so the net effect is zero.

Besides I see way more risk than chance in the projects held for sale.  Almost half of the volume is CN plants which imo will be hard to sell given the subsidy conundrum there.  Also if you isolate out the Japanese plants you will see that the expected ASP for the remainder is already horrendously low, likely near or even below cost on the balance sheet:

From their latest investor presentation:
"~1,148 MWp Solar power plants owned and operated, with an estimated resale value of $1.23 billion"

Assuming the 92.9MW of included Japanese plants sell for an ASP of $3.4/W (total $316M) the remaining plants have an ASP of $914M / 1055.1MW = $0.87/W.  Go figure what GM you can expect from this keeping in mind where and when these plants were built.

 

 

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It's taking off folks! Watch out for 40 before August, now is not the time to take a quick buck.

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16 hours ago, Klothilde said:

So how do you guys feel about the ER? Anybody getting bad vibes regarding outlook?

Hi Kloth, no bad vibes. Just patiently waiting for it to hit 40 before August :)

Remember that in stock speculation the big money is not made by thinking but by sitting.

Edited by tupapa

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earnings out . $901M revenue 30% margins including CVD reversal and profits of 

net income of $1.81EPS.

They had over 2GW of modules recognized in the revenue stream.

They disposed of about 900MW of projects.

If my estimates are anywhere within range, these projects sold for around $275M depending on how they account for the modules in the projects for revenue.(NTPvsCOS) That is around $0.30 on the Watt. This would indicate the company is claiming only  their owned portion and not their financed portions of the projects.This lowers revenues but will  look like high margins as described in the ER

http://investors.canadiansolar.com/news-releases/news-release-details/canadian-solar-reports-fourth-quarter-and-full-year-2018-results

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OMG looks like I won on estimize you guys.  I was closest on EPS with $1.30.  Philip Shen had $0.65 and Colin Rash $0.40. 

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Forward guidance really sucks. Projecting 16-18% margins and 1.35GW of shipments on $400M for Q1 revenues.(you are now seing the impact of lower ASP as contracts expired). 

Guidance of only 7.4-7.8GW in shipments for 2019. That is a 10% increase.

They are cautioning that due to lower ASP suppressing the revenues from growing year over year that profits in 2019 will be down compared to 2018.

 

Great earnings bad future guidance could be a bad day on the markets for them.

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based on Guidance, they might be targeting a cost to manufacture around $0.23 for 2019.

It would appear they are looking at 50%  or around $1.8B revenue being Energy revenues

This would suggest much of the sales in 2018 are going to be COD sales and not NTP sales. These projects should be in the 10-15% margin range.

 

From this using 15-16% margins on modules and projects gross profit may be between $550M to $600M.

Opex at $450M

Interest at $90-$110

profits looks slim

 

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On 2/20/2019 at 8:11 AM, tupapa said:

You are clueless.

 

Went long csiq yesterday, minimum 6 month target 40s

This didn't age well at all. 

Edited by stolypin

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1 hour ago, stolypin said:

This didn't age well at all. 

Just a healthy correction IMHO.

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42 minutes ago, tupapa said:

Just a healthy correction IMHO.

I think it's a bit more than that, don't you?

They're guiding for revenues of what--half the previous quarter (don't have the numbers in front of me right now)?

They'll still make a profit, so forecasts of losses are overly pessimistic IMO.  And of course the future for all solar looks rosy in 2020 and beyond, when California's mandate kicks in and solar just becomes ever more competitive vs. fossil fuels.  So long-term they should be just fine.

But $40 by August?  While I welcome your optimism, I don't share it.  Maybe by August 2020....

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14 minutes ago, solarpete said:

I think it's a bit more than that, don't you?

They're guiding for revenues of what--half the previous quarter (don't have the numbers in front of me right now)?

They'll still make a profit, so forecasts of losses are overly pessimistic IMO.  And of course the future for all solar looks rosy in 2020 and beyond, when California's mandate kicks in and solar just becomes ever more competitive vs. fossil fuels.  So long-term they should be just fine.

But $40 by August?  While I welcome your optimism, I don't share it.  Maybe by August 2020....

They should make a profit for the year. They will have a sizable loss in Q1 with guidance suggesting $80M+/- gross profit. Then you add that  they have warned of a big forex loss in the con call due to the sudden appreciation of the yen. That makes purchase contracts they have signed less profitable.

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Some food for thought on their revenue guidance.

Their 2019 mid-range revenue guidance of $3.65B is 2.5% below FY2018 rev., i.e. roughly flat yoy.

Module ASP will be down roughly 20% yoy imo (33 to 27cts).  To maintain module revenue, shipments must increase 25%.  However they guide only 15% increase yoy at mid-range.

Moreover they are guiding flat shipments in Q1 yoy (~1350MW), so in order to achieve 25% shipment growth for the whole year shipments in Q2-Q4 have to increase roughly by 30% yoy.  How likely is such a boost given their 2018 shipments even dropped slightly yoy?

On the projects side they have already signaled lower volume vs. 2018.  ASP is also bound to drop imo because of a newer project mix and less Japan sales.  Means project revenue bound to drop.

Not seeing them meeting their revenue guidance with the above.

Thoughts?

 

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58 minutes ago, Klothilde said:

Moreover they are guiding flat shipments in Q1 yoy (~1350MW), so in order to achieve 25% shipment growth for the whole year shipments in Q2-Q4 have to increase roughly by 30% yoy.  How likely is such a boost given their 2018 shipments even dropped slightly yoy?

Second half recovery!  Everybody's doing it. It's all the rage.  (MU, NVDA, AMD).. why not the solar stocks too?

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1 hour ago, Klothilde said:

Some food for thought on their revenue guidance.

Their 2019 mid-range revenue guidance of $3.65B is 2.5% below FY2018 rev., i.e. roughly flat yoy.

Module ASP will be down roughly 20% yoy imo (33 to 27cts).  To maintain module revenue, shipments must increase 25%.  However they guide only 15% increase yoy at mid-range.

Moreover they are guiding flat shipments in Q1 yoy (~1350MW), so in order to achieve 25% shipment growth for the whole year shipments in Q2-Q4 have to increase roughly by 30% yoy.  How likely is such a boost given their 2018 shipments even dropped slightly yoy?

On the projects side they have already signaled lower volume vs. 2018.  ASP is also bound to drop imo because of a newer project mix and less Japan sales.  Means project revenue bound to drop.

Not seeing them meeting their revenue guidance with the above.

Thoughts?

 

I think their shipment guidance is very conservative (7.4 - 7.8 GW)... Otherwise what is the point to increase module capacity up to 11.2 GW? Obviously shipment will be dramatically increased after Q-1, especially after China ratifies its PV 2019 policy. Also, as per Qu (CEO), their shipment to domestic (China) market planned at the level of 10% only... Module ASPs in foreign markets are mostly higher, and container logistics are very cheap...

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On 3/19/2019 at 9:08 AM, tupapa said:

Hi Kloth, no bad vibes. Just patiently waiting for it to hit 40 before August :)

Remember that in stock speculation the big money is not made by thinking but by sitting.

Sounds like a great advice - buy high (sell low?). So there was no reason to buy CSIQ in low teen$ for most of last year, but all the reasons to buy it in low (almost mid) $20s earlier this week? I think I need to go back to school as I'm missing all the logic behind it. 

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Oppenheimer analyst Colin Rusch maintained a Buy rating on Canadian Solar Inc (CSIQ) today and set a price target of $22

Rusch observed:

“CSIQ posted 4Q18 results ahead of upwardly revised guidance on strong project sales, module margin, and reversal of import tariffs. At the same time, 2019 guidance disappointed. CSIQ indicated its project business would monetize a lower than expected portion of its project portfolio. Management indicated project timelines point to a rebound in project revenue in 2020. We continue to see CSIQ as having an industry-leading cost structure for modules, compelling product portfolio, and robust global sales infrastructure, and expect it to continue making prudent decisions on where to sell and protecting margins, most notably limiting China sales to ~10% of volume. As we lower 2019E revenue, we are raising our EPS forecast and our PT (to $22 from $19) to reflect that discipline.”

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On ‎3‎/‎22‎/‎2019 at 7:53 PM, pg6solar said:

Sounds like a great advice - buy high (sell low?). So there was no reason to buy CSIQ in low teen$ for most of last year, but all the reasons to buy it in low (almost mid) $20s earlier this week? I think I need to go back to school as I'm missing all the logic behind it. 

I have discovered when looking broadly at the stock universe that it is usually good to buy into strength. I think the point pg6solar is making here is that these CN solar stocks have not shown any clear long-term uptrend. They have however shown extremely cyclical behaviour, which means buying in the trough post weakness and pre strength is extremely profitable and buying post strength can be tepid and turn extremely costly later. You have to be contrarian to get best risk and reward trade off in these stocks. I rode the 2009 and 2013 recoveries and it was "yeeha" wild 4 digit percentage appreciation from bottoms to tops. The recent ride from below teens to above 20's in CSIQ pales with one zero less in rise. So maybe that's a sign it still has the big multiple 100's of percentage appreciation left but I doubt it since we never went deep enough, the trough might not be in and we might just have bounced. The alternative is that the stock is finally ready to break the high of 2008 and start forming some evidence of long-term growth. Some perspective. CSIQ traded in 30's during industry good times in 2010. Later it bottom in the 2's after several large fake bounces. The easiest decision to handle this was simply to buy when very cheap and sell when no longer very cheap. Remember a rise from 20 to 40 is no better than a rise from 2 to 4.

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Exactly, Explo. CN solars should be bought when everyone is selling them (or better yet sold alredy) and sold when everyone is buying them (or better yet bought already), not the other way around.  I.E.:JKS should have been bought last quarter of last year at $8-9 and sold earlier this month once it hit $20 (none can pick absolute top and bottom); just like CSIQ should have been bought for much of last half of last year at $12-13 and sold this month in $22-23.

I believe we won't see irrational move in solar circa 2009/10 and 2012/13 again. So double is good enough, triple is great. Just do no think CSIQ will get to $40 (without yieldco anticipation of 2014) nor JKS will hit $30+ without Power. Those days are done. Possibility of high margins return is hard to see when all legacy projects are gone and only low margin businesses remain where volume will be everything. Brian Lee asked JKS on Friday where are they going to get $500M without an equity raise they need to expend to 15GW. I did not hear a clear answer from Jinko's side, cause there isn't. 

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What's strange (or maybe natural investor psychology) is that there's more of "this could double from here" when it's at $40 than at $10.

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