Canadian Solar Building Heat

Canadian Solar, Inc. (CSIQ - Analyst Report) was incorporated by Dr. Shawn Qu in Canada in 2001. In the People’s Republic of China, the company has three manufacturing facilities located at Suzhou, Changshu and Luoyang. CSIQ came out with its maiden public offering in November 2006.

The company engages in the design, development, manufacture, and sale of solar module products (ranging from 5 W to 300 W and using both polycrystalline and monocrystalline solar cells) that convert sunlight into electricity for various uses. Its products include a range of standard solar modules to general specifications for use in various residential, commercial, and industrial solar power generation systems.

Canadian Solar also designs and produces specialty solar modules and products based on customers’ requirements. Its specialty solar modules and products consist of customized modules that its customers incorporate into their own products, such as solar-powered bus stop lighting, and complete specialty products, such as solar-powered car battery chargers.

Further, the company implements solar power development projects, primarily in conjunction with government organizations, to provide solar power generation in rural areas of China. Due to adverse market conditions, the company revised its expansion programs. As of year-end 2008, the company had annual capacity of around 160 MW of wafers, 270 MW of cells, and 400 MW of modules. In addition, Phase One of Canadian Solar‘s solar ingot and wafer plant at Luoyang became operational in August 2008.

Canadian Solar sells standard solar modules to distributors and system integrators, and specialty solar modules and products to various manufacturers, who integrate these solar modules into their own products or sell and market them as part of their own product portfolio.

The company offers its products to customers located in various markets worldwide, including Germany, Spain, Canada, China, and Japan. Canadian Solar operates through six wholly-owned subsidiaries. During the 3rd quarter of 2008, the company generated the vast majority of its revenue (88.1%) from Europe, while Asia contributed 6.5%, with the remainder being generated from North and South America.

CSIQ curtailed its expansion plans and reduced production due to a tepid demand scenario, credit risk from its customers and its ongoing negotiations with suppliers for improving its cost structure. In the short-run, lower shipments of modules, pruning of customer base to reduce credit risk, foreign exchange losses, tightening credit markets, and inventory write-offs will adversely affect performance.

Going forward, however, extension of product lines, material cost savings through the company’s more vertically-integrated production structure, higher captive generation of solar cells, long-term supply agreements, and a silicon reclamation program should, collectively, generate significant earnings growth.

Read the full analyst report on CSIQ