Canadian Solar Inc. (CSIQ) has supplied 2,800 solar modules for a rooftop system built in the Danish city of Virum, north of Copenhagen. The rooftop system is Denmark’s largest photovoltaic (“PV”) system with a generation capacity of 605 KW and is built by SRU Solar AG in collaboration with Greengo Energy.
The young Danish energy company Greengo Energy and SRU Solar AG, based in the city of Berga in Saxony-Anhalt, Germany have constructed and made the solar installation on two roofs of an office complex located in Virum.
In January this year, Canadian Solar entered into another agreement with Al Fahad Group under which it will supply more than 1.5 MW of its solar modules for one of the largest solar Photovoltaic projects in Abu Dhabi, United Arab Emirates (“UAE”). In December last year, the company entered into a sales agreement with Siemens under which it will supply the latter 2.5 MW of solar modules for two solar projects. The twin projects, a rooftop system and a carport, are being built by Siemens for the University of Murcia, Spain.
The trend shows an increasing demand for solar modules globally. It seems that countries world over are realizing the importance of solar energy as it offers great potential for a cost-effective and reliable source of electricity. Particularly, for a country like Denmark, with a decentralized structure and many small islands, solar installation would prove favorable.
Egged on by customers, the company recently announced a hike to its solar module shipment guidance, to a band of 430 MW to 440 MW, exceeding shipments in the preceding two quarters. For fiscal 2011, the company expects shipments to be in the range of 1,316 MW to 1,326 MW, up from its prior guidance of 1,200 MW to 1,300 MW.
At the end, Canadian Solar despite being a low cost, vertically-integrated solar module producer with predominantly China-based manufacturing assets, would be impacted by the industry-wide oversupply glut leading to sharply falling Average Selling Prices, tepid module demand in Europe, and rising competition in the market over the near term.
Moreover, given the industry-wide high inventory level, we do not foresee any short-term improvement in margins of the company. The company presently retains a short-term Zacks #3 Rank (Hold). We have a long-term Underperform recommendation on the stock.
On March 7, 2012, the company is expected to release its fourth quarter and fiscal 2011 results. The Zacks Consensus Estimates for fourth quarter 2011 and fiscal year 2011 are currently a loss of 42 cents per share and $1.05 per share, respectively.
Only this month, its competitor, SunPower Corporation (SPWR) reported fourth quarter and fiscal 2011 results. In the fourth quarter, the company reported adjusted loss (including stock-based compensation but excluding amortization of intangibles) of 21 cents per share, narrower than the Zacks Consensus Estimate of a loss of 26 cents per share, but in contrast to the year-ago earnings of $1.33 per share.
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