2020-10-13
Canadian Solar Power Group Co., Ltd. is a wholly foreign-owned enterprise with a foreign shareholder name: Canadian Solar Inc.
Canadian Solar Power Group was founded in 2001 by Dr. Qu Xiaohua, a returned solar energy expert, and was listed on the Nasdaq Stock Exchange (NASDAQ: CSIQ) in 2006. It specializes in silicon ingots, silicon wafers, and solar cells. It is an integrated photovoltaic enterprise engaged in the research and development, production and sales of solar panels, solar modules and solar application products, as well as the design and installation of solar power plant systems.
In July this year, CSIQ announced its decision to return to A shares, stating that with the assistance of external financial advisers and legal advisers, the special committee of independent directors of the company has completed the feasibility assessment of the company’s strategic alternatives.
After evaluating the results of this strategy, Canadian Canadian Board of Directors decided that MSS is going to be listed on the SSE STAR Market or ChiNext Market.
According to the precedent in the Chinese IPO market, the listing process is expected to take 18-24 months. According to China’s securities regulatory requirements, the subsidiary must be transformed into a Sino-foreign joint venture company before listing, and completed through a round of financing by domestic investors.
Faced with whether the MSS sector can be listed on the Chinese capital market and the valuation expectations after the listing, Canadian Solar said: “This depends on the conditions including but not limited to China and global capital markets, the regulatory environment for listed securities, The company’s financial performance and its requirements for listing in China.”
As early as December 2017, Canadian Artes announced its privatization. Unfortunately, in November 2018, the privatization plan for nearly a year was suspended. As for the reasons for the suspension, Canadian Solar did not disclose too much.
On the other hand, as early as 2000, BYD began to get involved in the photovoltaic field, and now has mastered the entire industry chain technology of silicon ingots, silicon wafers, cells, and modules. However, this company, which is well-known at home and abroad in the automotive field, has been relatively low-key in the photovoltaic field, and its achievements have not been obvious.
It remains to be seen whether BYD’s investment in Canadian Solar will affect the next step in the development of both parties in the solar industry.
The patent filed by BYD on December 29, 2017 was published. This patent is “Lightwave Conversion Material and Its Preparation Method and Solar Cell”, the publication number is CN109988370B.
It is reported that the present invention relates to the field of solar cells, in particular to light wave conversion materials and their preparation methods and solar cells. The lightwave conversion material provided by the present invention can enable solar cells to utilize light in a wider wavelength range, for example, ultraviolet light, which fundamentally improves the photoelectric conversion efficiency of solar cells.
In terms of improving the conversion efficiency of solar cells, many photovoltaic companies are studying new battery technologies. For example, TOPCon cells and heterojunction cells have made some progress, but they are all based on changing the surface materials of solar cells. Many companies have not involved in the field of using a wider wavelength range, or have considered such solutions. Found that this road is blocked.
As a technology-focused enterprise, BYD not only has extremely high attainments in the fields of new energy vehicles, power batteries, etc., but also has a broad layout in the photovoltaic industry. At the same time, it has a certain market share in domestic and overseas markets, and its strength cannot be ignored. Such patents can be put into production, and it will bring considerable progress to China’s photovoltaic industry.
In the ranking statistics of Brazil’s PV module imports in 2020, Chinese PV companies occupy nine seats.
Among them, Canadian Solar ranked first with 926MWp of imports, Trina Solar and Risen Energy ranked second and third respectively. The difference between the two is not obvious, and it can even be said to be only a few millimeters apart.
Other companies are JinkoSolar, BYD, and Longi, which are all familiar companies. One of the more surprising is BYD. BYD, which has always been well-known in new energy vehicles and power batteries, has also made considerable achievements in the photovoltaic field, and there are many related patents.
The defeat of leading companies such as Longi and JA Technology in the Brazilian market this time also reflects BYD’s perfect sales network in overseas markets.
In addition, data shows that Brazil’s top ten photovoltaic brands account for 87% of the total imports, and they rely heavily on external sources. This is a great opportunity for Chinese photovoltaic companies.
As one of the important countries in South America, Brazil has very good light conditions and the local area also supports the development of renewable energy. As the cost of photovoltaic power generation is getting lower and lower, photovoltaics are one of the renewable energy sources that Brazil attaches great importance to. At the same time, the country lacks strong photovoltaic companies and requires overseas companies to stimulate the local market.
On March 18, 2021, Canadian Solar Inc. announced its fourth-quarter and full-year financial report for 2020.
1. The total module shipments increased by 32% year-on-year, reaching 11.3GW, which was in line with the company and industry expectations. It is also one of the few companies with module shipments exceeding 10GW, proving Canadian Solar’s strength.
2. Annual net revenue increased by 9%, reaching 3.5 billion US dollars.
3. A total of 1.4GW solar projects were sold throughout the year, and the total project reserves exceeded 20GW.
4. It is expected that the battery storage business in the United States will have a market share of about 10% in 2021 after winning a nearly 1GWh battery storage contract.
5. The total amount of energy storage projects is nearly 9GWh;
6. The spin-off and listing of CSI Solar, a subsidiary of MSS components and system solutions business, is on track.
7. The net profit attributable to Canadian Solar was US$147 million, or diluted earnings per share of US$2.38.
As the world’s leading photovoltaic company, Canadian Solar has achieved year-on-year growth in a number of businesses such as module sales and revenue. At the same time, Canadian Solar has also launched an in-depth layout in the energy storage business. The combination of photovoltaic and energy storage is also considered by the industry to be an important trend in the future of photovoltaic development, and it can effectively solve the problems of solar abandonment and instability of photovoltaic power generation.
But in terms of net profit, which investors are most concerned about, Canadian Solar only provided the amount, but did not explain the growth. Check Canadian Canadian’s 2019 annual report, which shows that its net profit for the whole year of 2019 is 171.6 million U.S. dollars.
In other words, in the case of rising module shipments and revenue, the net profit of Canadian Solar declined, about 14.3%, becoming another photovoltaic leader with a year-on-year decline in net profit.
The data shows that my country’s new installed photovoltaic capacity will be 48.2GW in 2020, a surge of about 60% year-on-year, which is also a new high in the past three years. Most photovoltaic companies have achieved rapid development in 2020 and have delivered good transcripts, especially leading companies such as Longi and Sungrow.
However, when many companies released announcements of performance forecasts one after another, Risen Energy issued a “unique” performance forecast. The company expects a net profit of 160 million to 240 million yuan, a decrease of 75.35% to 83.57% from the same period last year; the net profit after deduction is expected to be a loss of 60 million to 140 million yuan, causing an uproar.
At the same time, this performance forecast also caused panic in the secondary market, allowing Risen Energy to lead other photovoltaic companies, and the share price began to fall. Data shows that on January 29, Risen Energy’s share price was 24.11 yuan, and as of the close of February 8, it had fallen to 13.27 yuan, a year-on-year decline of nearly 45%. During the same period, other leading photovoltaic companies, such as Longi, Tongwei and Sungrow, were still in the upward trend of stock prices, which shows the “power” of this performance forecast.
The decline in Canadian Canadian’s net profit this time is also surprising, perhaps because Canadian Canadian did not mention the important reason for the growth of net profit in this financial report.
However, unlike Risen Orient, the secondary market has taken a diametrically opposite attitude towards the decline in Canadian Canadian’s net profit in 2020.
As of the close on March 18, Eastern Time, Canadian Solar’s stock price closed at 42.86 US dollars, an increase of 3.53%, and the total market value was 2.531 billion US dollars. On the same day, both the Dow Jones Index and Nasdaq were falling, of which Nasdaq fell by 3.02%, and Tesla, which also belongs to the field of new energy, fell nearly 7%. It is not easy for Canadian Solar to keep rising.
Of the two companies with the same net profit decline, only Risheng Oriental’s decline was far ahead of Canadian Solar.
According to the report of Risen Energy for the first three quarters of 2020, its net profit is about 302 million yuan, a year-on-year increase of 1.31%. In the annual report, only 160 million to 240 million yuan were left. After deducting non-recurring gains and losses, there was a loss. That is to say, in the fourth quarter of my country’s installed capacity soaring, Risen Energy fell into a loss instead. So Panic is also reasonable.
In this regard, Risen Energy also explained in the supplementary statement of the performance forecast. In this period, the company’s output of photovoltaic cells and modules has increased, and the sales revenue of related photovoltaic products has increased. Due to the dual impact of the decline in sales prices, the gross profit margin of the sales of photovoltaic products during the reporting period decreased compared with the same period of the previous year.
Especially in the fourth quarter, the average gross profit margin of module sales dropped by about 13-15% compared with the previous three quarters, and the impact on operating profit was about 450 million yuan to 540 million yuan.
This situation is also reflected in other leading companies. For example, LONGi’s annual net profit growth was not as good as the previous three quarters. It can be seen that in the fourth quarter, many photovoltaic companies seem to be successful, but in fact they are likely to lose money.
But Canadian Artes, which is listed on the US stock market and has a relatively low share of business in the Chinese market, just avoids this situation. According to the announcement, Canadian Solar’s market performance in the fourth quarter was very good, exceeding the company and the industry’s expectations.
Among them, the module shipment volume in the fourth quarter of 2020 was 3GW, accounting for 26.5% of the annual sales volume; the fourth-quarter sales amounted to US$1.041 billion, a month-on-month increase of 14%, exceeding the original sales forecast by 980 million-1 billion U.S. dollars.
The gross profit margin in the fourth quarter was 13.6%, which exceeded the original gross profit margin expectation by 8%-10%; the net profit in the fourth quarter was US$7 million, accounting for 4.76% of the annual net profit.
This is an important reason why the secondary market is optimistic about Canadian Solar. Although the net profit in the fourth quarter was not high, it did not fall into a loss.
But it is undeniable that Canadian Solar’s gross profit margin is indeed declining. This is the root cause of the decline in its net profit despite the growth in shipments and revenue.
According to Canadian Solar’s 2019 annual report, its gross profit margin is as high as 22.4%. The gross profit margin of 13.6% in the fourth quarter of this year has been 8-10% higher than expected, which can see the gap.
However, from the perspective of the photovoltaic industry, this is also the inevitable result of photovoltaics entering the era of parity. Leading companies have expanded their production to improve their competitiveness, and they will inevitably fall into the “price war”. What’s more, 2020 is still an important stage in the development of large-size modules. Compared with the decline in gross profit, companies are more afraid of inventory. When the market share of large-size modules becomes higher and higher, the current 158 and 166 modules are “hot potato”.
Of course, Canadian stock has no reason for the decline, and the low valuation is also an important factor. Ten years ago, my country’s photovoltaic industry was still in its infancy. At that time, photovoltaic companies chose to list in the United States in order to get more investors’ attention and higher valuations.
Who would have thought that after only ten years, my country has become the country with the highest installed capacity of photovoltaics in the world, and the annual new installed capacity is also far ahead.
Backed by the Chinese market, Longi has become the world’s most valuable photovoltaic company. Many photovoltaic companies listed in the United States have also chosen to return to A shares, such as Trina Solar. Canadian Solar’s valuation in the United States is not high, only about 16.5 billion yuan, which is less than one-tenth of LONGi’s shares, the performance is fairly good. However, it is worth mentioning that Canadian Solar also expressed its intention to split its business and list it in A shares in 2020, and has already begun to advance it. It is estimated that it will land in A shares in 2021.
Dongguan Slocable Photovoltaic Technology Co.,LTD.
Add：Guangda Manufacturing Hongmei Science and Technology Park, No. 9-2, Hongmei Section, Wangsha Road, Hongmei Town, Dongguan, Guangdong, China
TEL：0769-22010201
