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Canadian Solar (CSIQ)

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Explo, I got to be honest. I did not care if this was a test how they tasted. There are many tests out there, measuring many things and I am glad companies meet expectations more or less. The biggest test is selling modules. Does CSIQ sell modules? Yes. If any of those tests point to loss of sales, I will pay more attention. Thus far being the best in any of those has not increased sales for anyone (judging that some of the winners of those are nearly bankrupt or went bankrupt). That is the real meaning of my reply.

I agree. Topping the test does not mean anything. Coming in low probably does not mean anything. Panel sales does. The test does not rank companies, it only tests 170 modules from 100 different providers under real use for a long time and to see how many kWh they produce and then compare it to get the pecentage that's the basis for the ranking.

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Guest nanofrogfish_spf

I had to go check after reading the above Nano... you are absolutely correct. CSIQ seems to be the only Chi-Solar to have even one analyst predicting a profit. It was an -$0.80 loss a week ago. I of course hope the $1.77 analyst is correct as they are one of my four Chi-Solar holdings. So who are the analysts?

I don't look too often, so I too was surprised to finally see black there again. Of the 4 analysts they have listed here, my guess is that the recent revision up to $1.77 came from Nomura, since they're the ones that just put out a buy on CSIQ a couple weeks ago with a $6.90 PT. Note that TSL has 13/14 analysts weighing in (19 for 2013 full year). I'm guessing that's the only reason it trades higher than CSIQ right now...based on fundamentals it should be a lot less (or more accurately, CSIQ should be a lot more).

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CSIQ has one other thing than the project pipeline going for them. ASPs in Canada are crazy high compared to Germany and US, they even make Japan look like a low ASP country. If CSIQ can just sell modules in Canada I think that's also a quick profit from them. More of this will be nice: http://phx.corporate-ir.net/phoenix.zhtml?c=196781&p=irol-newsArticle&ID=1774011&highlight= I think we'll see CSIQ attain highest module ASP among solar 11.

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Guest nanofrogfish_spf

ASPs in Canada are crazy high compared to Germany and US, they even make Japan look like a low ASP country.

Good observation explo...from an article in solarserver last October;

"prices declined 1.9% to 3.5% in every major PV market except Canada in October 2012."

and

"Canadian prices rose 5.5% over September 2012, and remained the highest of all recorded national PV markets at USD 0.96 per watt."

prices at 69c/W in USA, and 58c/W in China...

The high Canadian prices are due to the local content rules (much higher demand than supply), and they can even use cheap Chinese cells...great for CSIQ while they last, but obviously needs to come way down at some point if solar will ever be a viable option there w/o significant subsidy help...but at least it does help out the local manufacturing base.

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Guest larryvand

http://www.pv-tech.org/friday_focus/friday_focus_rd_spending_analysis_of_top_10_pv_module_manufacturers

Canadian Solar needs ELPS

One of the most surprising revelations from the analysis has been how little emphasis has been placed on R&D by Canadian Solar. Although this has increased, they have been lagging its nearest rivals for the last 5-years.

It is hard to believe that Canadian Solar only spent US$1 million on R&D in 2007, while this equated to only 0.3% of revenue, the lowest of the top 5 producers. Even accounting for its increased spending and employee numbers, R&D investment as a percentage of revenue has yet to exceed 1%.

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Guest Klothilde

Superior, cost effective technology and production processes are the basis for competitive advantage and corporate value in a commodity business. That's why I would never ever invest in CSIQ and JKS. Of course jmho.

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In my debt articles I have done comparisons on the R&D, yes Jinko certainly spent the least. Canadian have picked up, however. They are not in house as much, do not forget, someone else is doing wafers and cells for them. This is the reason, mostly.

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Guest Klothilde

In my debt articles I have done comparisons on the R&D, yes Jinko certainly spent the least. Canadian have picked up, however. They are not in house as much, do not forget, someone else is doing wafers and cells for them. This is the reason, mostly.

That means someone else is making the products where the differentiation, the competitive advantage, and the long-term margin lies. I know first hand that some of the solar 11 see R&D as a nuisance and sth to keep as low as possible. They focus heavily on partnerships with universities and research institutions and try to limit in-house development. I'm not sure that this is the best approach. You may get great lab results but then you may stumble and fall in the ramp-up. Remember Pluto? No, I don't mean the dog but the fantastic technology developed at UNSW.

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Pluto..LOL, you are right. It would be hard for CSIQ to differentiate agreed. I guess the interview with ECN should give us some clues what they think of Chinese markets and their n-type. They did agree to the interview, see what will happen.

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Guest eysteinh

Anyone know the cash cost of suntech now by the way? I think suntech failed because of using the university of wales instead of onsite research, and also because they tried to use UMG polysilicon and the quality was just not enough for high efficient modules.

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Guest Klothilde

Anyone know the cash cost of suntech now by the way? I think suntech failed because of using the university of wales instead of onsite research, and also because they tried to use UMG polysilicon and the quality was just not enough for high efficient modules.

Hmmm I'm not sure about the UMG. I know one vendor who got into UMG modules and the efficiency and performance was ok. However they were not able to sell those modules without a heavy discount because of degradation concerns by investors and banks. One key problem that Suntech had was simply the massiv debt load. in Q1 they had 32.2 M net interest expense with 384 MW shipments, i.e. enough to say holy guacamole. Odyd12 may know better how debt piled up so horribly, but probably it just came down to lousy management decisions like diversifying into thin film, etc.

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Guest nanofrogfish_spf

Powerful upgrades by Citi...downstream solars really outperforming today;

FSLR +7.27%

CSIQ +6.20%

SPWR +4.36%

Here's what the Citi analysts are looking for;

The analyst notes that the stocks Citi is recommending have two common themes:

[*]Heavy downstream exposure.

[*]They have or are gaining exposure globally in sustainable growth regions.

I think they just described CSIQ perfectly...expect this out-performance of downstream solars to continue...

NICE!

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Larry, please do me a favor and post just links. I cannot uphold this format, if copyright will come after me. Add comments, couple of paragraphs, that is it, rest is just link. Your own commentary, take 3 pages, if you must. I appreciate your cooperation.

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Guest MichaelZhao

I agree 100% with their analysis ... Good for CSIQ...not so good for SOL....

I like FSLR/CSIQ, but now I am worry because Citi's upgrade. My experience tells me that it is time to sell. I don't like STP, but because Citi said "sell", so I will keep my eye close on it. Why did you say "not so good for SOL"?

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Personally I believe SOL is best play.... One of highest rated modules and they production cost is very low. Management kept debt at reasonable levels.... And they look like they will be one of first solars to be profitable is year

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Guest larryvand

Maybe nobody clicked the link... based on Citigroup, he upgraded U.S. companies SPWR, FSLR, WFR and AEIS to buy, and downgraded to SELL China based STP, and put on hold China based TSL and YGE. He clearly is bearish on China based companies. And he made no mention of CSIQ or SOL as the original poster implied. The fact remains that SOL management has been perfect in timing the market with their expansion. They have done everything at the right time. With poly at $20-$30/kg in 2013, they will have a massive pricing advantage over anyone. Add to that their technological breakthrough with Virtus II, and you have the perfect storm. IMO, SOL could double their module and wafer capacity in 2013, with the best margins in the industry.

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Maybe nobody clicked the link... based on Citigroup, he upgraded U.S. companies SPWR, FSLR, WFR and AEIS to buy, and downgraded to SELL China based STP, and put on hold China based TSL and YGE. He clearly is bearish on China based companies. And he made no mention of CSIQ or SOL as the original poster implied. The fact remains that SOL management has been perfect in timing the market with their expansion. They have done everything at the right time. With poly at $20-$30/kg in 2013, they will have a massive pricing advantage over anyone. Add to that their technological breakthrough with Virtus II, and you have the perfect storm. IMO, SOL could double their module and wafer capacity in 2013, with the best margins in the industry.

Agree 100%...

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Guest nanofrogfish_spf

Wow, I guess you can interpret things anyway you want. But twisting things to make you feel better may not be the best way to approach investing. Read the article again, it says nothing about Chinese vs. US...it was about downstream vs. upstream. Do you really think anyone with an open mind would interpret this any differently, just because you say so? And btw, where are all of CSIQ’s projects? And how come no mention of those high margin US and Canada projects that will be 60% of total revenue this year?...I think that qualifies them as a downstream company...like a first solar but with better modules. I think it would be a good idea to really read and listen to what Citi and others are saying (like Nomura who just upgraded CSIQ to buy with a $6.90 PT), because it’s what the market is looking at. And right or wrong, how the market votes is the only thing that really matters. Some of the posters’ repeated, feeble and obviously desperate attempts at trying to discredit the company’s management and accomplishments falls on deaf ears in the large-funded investment community. They actually look at earnings potential, believe it or not...how much...how visible...and how steady. I’ve already well documented all this for CSIQ. I normally don’t respond to people who already have their mind made up, with obvious agendas, and it does seem personal against both the company and myself. It’s amazing how much time and effort goes into trying to knock down another company that the poster supposedly doesn’t even own (maybe representing someone with a large short position?). How does that possibly help the SOL investment? And I don’t really care either...I’m not trying to convince anybody of doing anything...makes no difference because the market is much bigger than the small fry here, including myself. I have no desire to waste all my time trying to attack SOL or any other company...and believe me those that are throwing the stones are living in glass houses But this reply is actually intended for the open-minded investors without personal agendas; let me make it clear I have no ill will towards SOL! And those that own it...I wish you luck. All these companies performance is tied together to some extent, so what’s good for one is typically good for all. I actually think they are a good company and will do well going forward. And when the conditions are right, I may even buy some some day...because this market is about making money, not about holding a grudge. And the only reason I ever even bring up SOL (and it’s not often) is because of the repeated attacks on CSIQ and comparisons to SOL at every turn...and somehow turning just about every discussion on every board (especially the CSIQ board) into a pump-SOL thread, all by 1 or 2 posters. So my advice to the others, when reading all this stuff consider the source, and then do your own DD before making any decisions.

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Guest larryvand

You did the "interpreting" while I posted a FACT. And the fact is that Citigroup upgraded ONLY U.S. based companies and downgraded China based STP and has China based TSL and YGE at hold with "challenging industry fundamentals”. And another FACT that Citigroup made no mention of CSIQ or SOL as your original post implied.

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I do not think Citi upgraded anyone, did they had those on neutral before anyway? Neither SOL nor CSIQ were named in the upgrade. CSIQ is more of downstream than SOL of course it is. I also like that global exposure means something (read Export Data). This is why I chuckle because ReneSola, can be argued as the top shipper.

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Guest nanofrogfish_spf

Credit Suisse‘s Satya Kumar had the following bullish comment on CSIQ and JKS today;

(iii) relative stability allows some companies to potentially surprise on the upside through execution (e.g., JinkoSolar Holding (JKS) and Canadian Solar (CSIQ) downstream EPC activities could positively surprise investors in 2Q13; SCTY & WFR could benefit from the US market).

Again with the downstream theme...of course they did just loan CSIQ $40 Mil., so they must have some insight into their downstream side. It's interesting that they had 2Q as the surprise turn-around quarter...I didn't have it until Q3.

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Guest Klothilde

The risk with CSIQ is a high exposure to the spot market when project price is fixed. Should poly and wafer prices rise significantly they can face significant margin compression in the projects, especially since the project revenue is backloaded towards Q4 2013 and Q1 2014. How much will the project margins drop if wafers rise to 40 cents for instance?

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Guest larryvand

The risk with CSIQ is a high exposure to the spot market when project price is fixed

Plus they haven't taken the loss of 248.9 million RMB ($40 million) from the arbitration case they lost to LDK on Dec 12. They have set aside only $10 million so based on 43..21m shares outstanding we are looking at another $30 million or -70c/sh loss just from that alone. If they take it in Q4, CSIQ should be posting more than -$1.50 in losses. http://finance.yahoo.com/news/ldk-solar-announces-arbitration-award-102417806.html

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Guest sc_solar

Its amazing everytime Nano posts something positive about CSIQ the same faces show up to bash it lol. Nomura, Citibank "Downstream" (without naming CSIQ directly), but implication is there IMO, and now Credit Suisse (naming CSIQ) all within 2 or so weeks and you guys can only think of worst case scenarios. Glad someone has optimism. I am on board with Nano here. CSIQ is possibly in the sweet spot with EPC biz raking in nice profits by Q2 and well beyond into 2014, maybe 2015. Most visibility. See what happens. Thanks Nano ;) :)

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Guest nanofrogfish_spf

Hey sc...good to have you on board! I think you’ll find most of the posters are here to engage in friendly discussions on the solar industry, and to amicably share thoughts, ideas and info and to learn from others. Unfortunately, these boards also attract those who’s only real purpose is to pump and bash for their own self-interests. Yahoo keeps deleting their posts so I guess this is the only other option. Out of respect for respectful posters like explo, I try to refrain from responding to every “change of subject” bash after every one of my posts, turning this into an endless SOL vs. CSIQ debate (and believe me I very easily could). But explo has also properly pointed out that the 2 companies are mostly operating at opposite ends of the food chain...most comparisons would be like apples to oranges anyways, so what’s the point of even responding (also, what’s the point of all the bashing?) It’s funny how the 1 or 2 bashers NEVER want to talk about; - CSIQ’s project business in NA...$1.2 BILLION at over 20% GM in 2013 alone...ALL VISIBLE - Estimated $2.2 BILLION in revenues for 2013 - Rising and positive EPS from analysts (I believe CSIQ is the only Chinese-based company so far with 2013 EPS estimates in the black). They still haven’t caught up with my estimate of $3.65 (before taxes, excl. forex), but at least one is getting close. - Strong backing from Western Banks - Global joint venture with SkyPower - Numerous analyst upgrades recognizing all this in the past couple weeks. It’s also funny how the SOL pumpers never want to talk about (sorry explo, just can’t resist this one time); - the last reported quarter’s HUGE negative GM’s (-18%) and OM’s (-38%). CSIQ never had anything remotely close to this bad, but for some reason they’re the ones with the bad management? - what happens to the “SOL the Powerhouse” theme if poly prices don’t reach fantasy dream levels of $30 & above? - how come to date, SOL’s costs have been higher and ASP’s have been much lower than CSIQ’s? - what is SOL’s EPS projections for 2013 (keep in mind NONE of it is visible, so it’ll all just be a bunch of guesses if anyone even wants to stick their neck out that far.)? And the analysts all think it’ll be Red. - how come no product offerings designed to reduce BOS costs? - how come no upgrades from any analysts? And why do they prefer the downstream companies over the upstream companies right now? I’ll stop there, there’s plenty more, but you get my points (you can throw stones at any of the solar companies...since they ALL live in glass houses) . Basically you know what you’re getting with CSIQ in 2013, with the other companies it’s much more a roll of the dice. I don’t think anyone really listens to what these 1 or 2 bashers have to say anymore anyways...most smart investors will consider the source. And what’s funny, the louder they yell and the harder they stomp their feet, the less people actually pay attention to them...

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Guest larryvand

When you include one time items that are taken during a quarter then all solars including CSIQ posts -20 to -30% margins. SOL posted a -0.91/sh loss and CSIQ -1.01/sh so CSIQ had higher per share loss than SOL. In Q3 SOL took a one time item $31.6m inventory write down. Those margins you posted include that one time item. Actual margins without the inventory write down were about -3%. When companies post -0.91/sh loss and -1.01/sh loss is ludicrous to be talking about positive margins in any of them. In Q4 CSIQ could post -$1.50/sh in losses if they take the $40 million arbitration loss, while SOL estimated only -38c/sh. Both in Q3 and Q4, CSIQ will have bigger losses per share than SOL.

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