We came across a bullish thesis on Canadian Solar Inc. (NASDAQ:CSIQ) on Substack by Koneko Research. In this article, we will summarize the bulls’ thesis on CSIQ. Canadian Solar Inc. (NASDAQ:CSIQ)’s share was trading at $11.52 as of Dec 26th. CSIQ’s trailing and forward P/E were 29.90 and 4.66 respectively according to Yahoo Finance. A residential home with solar panels installed on its roof, showing the company’s commitment to renewable energy.Canadian Solar (NASDAQ:CSIQ), a leading global solar energy company, is currently trading at an 87% discount to its sum-of-the-parts valuation, presenting a compelling opportunity for investors. Despite market concerns surrounding intense competition and overcapacity in China, as well as uncertainties about U.S. renewable energy policies, the company’s strengths and growth catalysts suggest a significant upside potential over the next two years.CSIQ operates two primary segments: CSI Solar and Recurrent Energy. CSI Solar, its China-based manufacturing arm, is a fully integrated operation spanning polysilicon to solar modules and has made significant strides in energy storage solutions. Investments in U.S. manufacturing, such as a $250 million solar module plant in Texas and an $800 million solar cell plant in Indiana, will insulate the company from tariff risks and align with domestic production incentives. Furthermore, CSI Solar remains profitable even amid China’s challenging market conditions, thanks to its “profit-first” strategy and focus on exports to higher-margin markets. Its energy storage business has shown tremendous growth, with record utility-scale battery shipments in Q3 2024 contributing significantly to overall profits. Aggressive net income growth targets, reflected in employee incentive plans, signal confidence in achieving substantial gains by 2025.Recurrent Energy, CSIQ’s project development segment, has transitioned to a build-and-hold model, prioritizing long-term revenue stability over immediate capital recycling. This strategic pivot has temporarily dampened segment profits but positions the company to generate substantial earnings starting in 2025. The segment’s future visibility will improve with plans for a U.S. IPO within the next two years, which will enhance capital access and investor sentiment. A 2024 sale of preferred shares to BlackRock underscores the segment’s value and growth potential.Valuation concerns have overshadowed CSIQ’s strengths, but the discount appears unwarranted given the company’s financial health and prospects. While solar module pricing pressures and U.S. policy uncertainties have been headwinds, CSIQ has mitigated these risks through diversification, robust global operations, and strategic investments. U.S. policies under the Inflation Reduction Act are incentivizing domestic production, benefiting CSIQ’s expansion, although potential political shifts remain a watchpoint.Catalysts for appreciation include CSI Solar’s battery
Sab. Dic 28th, 2024
