Canadian Solar Inc. (CSIQ), this year’s second-best performer on the Nasdaq Stock Market, has surged more than sevenfold as a shift toward selling power plants led to its first profitable quarter in more than two years.
More than 41 percent of the Guelph, Ontario-based company’s third-quarter revenue came from developing solar farms, especially in Canada, up from 22 percent a year earlier. That led to net income of $27.7 million.
Most of Canadian Solar’s manufacturing facilities are in China, where it’s also building solar farms -- power plants comprising rows of photovoltaic panels. Its operations in Canada, where provincial incentives help it sell solar projects for as much as twice what it gets in Asia, set the company apart from Chinese panel makers, said Jenny Chase, an analyst with Bloomberg New Energy Finance.
“The Canadian pipelines were far more profitable,” she said in a phone interview Dec. 3.
Canadian Solar has surged 687 percent this year through yesterday to $26.77, giving it a market value of $1.24 billion. That makes it the best-performing solar company and second on the Nasdaq (CCMP) ....
Canadian Solar is developing about 327 megawatts of projects in Canada on its own and has contracts to build four more for other companies with 169 megawatts of capacity. That pipeline is worth at least C$1.7 billion ($1.6 billion), Chairman and Chief Executive Officer Shawn Qu said on a Nov. 13 conference call with analysts.
“Our success is being mainly driven by our total solutions business,” which develops and sells solar farms, Qu said on the call. “We are making major progress in our business transformation from a module manufacturer into a one-stop shop and provider of solar power solutions.” .....
In China, the company expects to complete construction on 40 megawatts worth of projects this quarter and it has 278 megawatts of “late-stage projects” in Japan, Qu said on the call.
Demand for solar power has surged in Ontario since the province introduced in 2009 a feed-in tariff, which ensures above-market rates for electricity from photovoltaic panels and other renewable sources. ......The incentives drove up profit for Canadian Solar. At least one of its projects sold in Canada this year for about $4 a watt, double the price it’s getting in China, Chase said.
That pipeline makes Canadian Solar “the best-positioned solar company for growth in profitability” Nitin Kumar, a Singapore-based analyst at Nomura Holdings, wrote in a Nov. 26 note to investors. “We think valuations are still very attractive and investors’ confidence should continue to grow.” He rates the stock a buy with a 12-month price target of $42. .
www.bloomberg.com/news/2013-12-12/...s-of-power-projects.html?