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Canadian Solar (CSIQ) to Sell Solar Plants to CSIF for $103M


Canadian Solar Inc. CSIQ recently announced that it has completed the sale of three additional solar power plants totaling 30.4-megawatt peak (MWp) for $103.1 million (JPY11.5 billion) to Canadian Solar Infrastructure Fund, Inc. in Japan. The company has undertaken an asset drop down strategy to monetize solar power plants via transfer to its partner. It plans to use the sale proceeds to reduce its debt balance as well as improve liquidity.

The portfolio consists of three solar plants with a capacity of 27.3 MWp Daisen-cho Plant in Tottori Prefecture, the 2.1 MWp Ena-shi Plant and the 1 MWp Takayama-shi Plant in Gifu Prefecture. These plants started commercial operations in August, September and October 2017, respectively.

Global Portfolio of Canadian Solar

Currently, the company has multiple late-stage 2.3 gigawatt-peak (GWp) utility-scale solar power projects in its pipeline including those under construction. On the global front, it caters to a geographically-diverse customer base spread across the key markets in the United States, China, Japan, the U.K. and Canada as well as witnesses ample emerging market opportunities across Brazil, Argentina, India, Mexico, South Africa and the Middle East.

Such a robust expansion of its global portfolio is likely to boost the company’s revenue generation capability. We anticipate the company’s presence in Japan and across the Asia-Pacific countries to consistently aid its performance in the upcoming quarters.

Renewable Energy: Asia-Pacific Zone

Per U.S. Energy Information Administration, Japan has plans to drive energy generation via renewable energy sources like solar, wind, geothermal and biomass. This in turn, is expected to constitute nearly 22-24% of the total energy generation by 2030. Also, the renewable share of total generation in China is likely to rise from 22% in 2015 to 34% in 2040.

Per a report by Economic Times, at the end of February 2018, India achieved a total of 19.58-gigawatt (GW) capacity. Now the Government of India revised the target of solar energy capacities upward from 20GW to 100 GW by 2022. Given this huge prospect in the Asia-Pacific solar market, we may expect Canadian Solar to invest in more such deals in the coming days.

Price Movement

In the past three months, shares of Canadian Solar have outperformed the Zacks Solar industry. The stock has rallied 16.3% versus the industry’s decline of 1.8%.

Zacks Rank & Stocks to Consider

Canadian Solar currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the Zack Oil-Energy Sector are Ecopetrol S.A. EC, sporting a Zacks Rank #1 (Strong Buy), and Galp Energia SGPS SA GLPEY plus NextDecade Corporation NEXT, both carrying a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Ecopetrol’s earnings are expected to grow at 14.6% over the period of 3-5 years. In the last 30 days, per the consensus estimate, the earnings for 2018 have moved north from $2.04 per share to $2.08 by 2%.

Galp Energia’s bottom line is expected to grow at 15% over the period of 3-5 years. In the last 30 days, per the Zacks Consensus Estimate, the earnings for 2018 have moved up from 58 cents per share to 60 cents by 3.5%.

NextDecade’s earnings are expected to grow at 2.4% over the period of 3-5 years. In the last 30 days, per the consensus mark, the loss for 2018 has narrowed from 44 cents to 35 cents per share by 20.5%.

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