Sunday Dec 04, 2022

Canadian Solar: Beneficial Guidance And Undervalued – Seeking Alpha


Eloi_Omella/E+ via Getty Images

Canadian Solar (NASDAQ:CSIQ) operates in a growing industry, which many governments all over the world intend to promote right now. Management also gave very beneficial guidance for the year 2022. In my view, if the company’s battery storage evolves as promised by management, free cash flow will likely trend north. Using very conservative figures, the company’s fair price looks significantly higher than the current price mark.

Canadian Solar

Founded in 2001, Canadian Solar manufactures solar PV modules, and runs large-scale solar projects.

With massive investments in the solar industry worldwide, in my view, it is a great time to have a look at the manufacturer of solar panels. If we also add the most recent commentary from management, Canadian Solar becomes even more interesting. Management noted double-digit sales growth and double-digit gross profit margin, and billed itself as one of the top 5 global module manufacturers. In my view, if management successfully delivers more innovations, free cash flow will likely trend north:

We ended 2021 on a high note, delivering 47% year-over-year revenue growth and a nearly 20% gross margin in the fourth quarter. Over the past decade, we have consistently been a top 5 global module manufacturer and have pioneered numerous solar crystalline PV technology advancements as well as business model innovations. Source: 10-Q

Management is also investing in other fast-growing business models to boost growth even more. Keep in mind that the company expects its battery storage business to deliver two times more MWh than that in 2022:

This includes our fast growing battery storage business, where we delivered nearly 900 MWh in our first year of launching, and which we expect to double in 2022. While we continue to manage challenging market conditions, we remain focused on leveraging the competitive advantages of our integrated business model to build greater long-term value for our shareholders. Source: 10-Q

Finally, management mentioned that obtaining recurring revenue is among the company’s core strategies. The following words will likely be music for the ears of most investors. If recurring revenue is reported, management will likely be able to sell more equity in its announced IPO in China:

Our focus remains on growing our base of recurring revenue both from retained assets and contracted services. Source: 10-Q


With The Guidance Given Recently, In My View, The Implied Price Is $72

Canadian Solar has given fantastic guidance for 2022, which is why I am starting my research about the company. Management reported a 45% increase in module shipments, and 100% battery storage shipments in 2022 y/y. Canadian Solar believes that it could reach 35% sales growth in 2022.


I also noted that the global solar annual installations could grow at a CAGR of 14% from 2022 to 2026. If we also assume a 35% CAGR in energy storage capacity additions, in my view, Canadian Solar really becomes a must-follow stock:


I also expect an eventual increase in the subsidies from governments worldwide. Canadian Solar, with more than twenty years’ operation in the industry, has …….


Leave a Reply

Your email address will not be published.

Back to Top