Canadian Solar Inc. (CSIQ) has signed a supply contract with GP Joule. Per the contract, Canadian Solar will supply 97 MW of its high performance solar modules to GP Joule. The company expects to finish all deliveries by the end of fiscal 2011.
GP Joule operates four offices in the North and South of Germany and has joint ventures in North America and France. In the PV sector, the company mostly focuses on implementing ground mounted large solar power plants.
Based in Markham, Canada, Canadian Solar, together with its subsidiaries, engages in the design, development, manufacture and marketing of solar cells and solar module products that convert sunlight into electricity for various domestic and international uses.
Canadian Solar offers one of the broadest crystalline silicon solar module product lines in the industry, ranging from modules made of medium power, low-cost upgraded metallurgical-grade silicon, to high efficiency, high power output mono-crystalline modules, along with a range of specialty products.
Canadian Solar’s standard solar modules are sold to distributors and system integrators. Specialty solar modules and products are sold to various manufacturers, who integrate these solar modules into their own products or sell and market them as part of their own product portfolio.
Canadian Solar’s China-based manufacturing assets have a distinct cost advantage over its peers. The company also pursues a balanced and diversified supply channel mix by entering into long-term supply contracts and toll manufacturing arrangements.
In addition to its in-house solar cell, wafer and ingot manufacturing, it is also ramping up its internal solar cell capacity to reduce its reliance on third party solar cells for the manufacture of solar modules.
Canadian Solar’s earnings per share in the fourth quarter and fiscal year 2010 were lower than the Zacks Consensus Estimates but its shipments for 2010 were 803 MW, substantially higher than the 2009 level of 310 MW. The company presently expects its shipments in 2011 to surpass 2010 levels and presently pegs it at the 1,200 MW–1,300 MW range.
Looking ahead, the prospects for Canadian Solar are favorable based on a geographically-diversified customer base, ongoing capacity expansion programs, improving operating efficiencies, rising margins and material cost savings through its vertically integrated manufacturing operations.
However, in the near-term its shipments were curtailed by higher solar cell prices in the market, which were eating into its margins. The company is addressing this by ramping up its captive solar cell capacity. However, it will take some time before the company becomes self-sufficient for its solar cells requirements.
We maintain a long-term Neutral rating on Canadian Solar stock. In the near term, we believe the Zacks #1 Rank (Strong Buy) peer — JinkoSolar Holding Company (JKS), offers more promise compared to the Zacks #4 Rank (Sell) on Canadian Solar.
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