Canadian Solar on Recovery Path

Canadian Solar Inc. (CSIQ - Analyst Report) yesterday raised its fiscal 2009 guidance. The company now expects shipments for the third quarter to surpass the high end of its prior guidance. The optimism stems from a high level of interest in Canadian Solar's products at the Hamburg trade show and subsequent purchase orders.
 
Based on its un-audited financial results, Canadian Solar now expects net revenues for the third quarter to be approximately $210 million to $215 million, with shipments of approximately 101 MW to 103 MW, compared to a prior guidance for shipments of approximately 90 MW to 100 MW. The company expects a gross margin of 16% to 17% for the third quarter.
 
Canadian Solar is raising its guidance for full year 2009 shipments to approximately 295 MW-305 MW, including expected shipments of 127 MW-137 MW for the fourth quarter. This compares to a prior guidance for shipments of approximately 260 MW to 270 MW for the full year 2009, and earlier full year 2009 guidance of 200 MW to 220 MW.
 
Separately, the company announced that it intends to offer approximately 6 million shares of common stock. In connection with this offering, the underwriters will have an option to purchase up to an additional 900,000 shares of common stock. Canadian Solar plans to use the net proceeds for general corporate purposes. Pending application of the funds, it expects to invest the net proceeds in short-term interest-bearing securities or bank deposits.
 
Canadian Solar is one of the largest solar module producers in the world with manufacturing based in China. The company plans to increase its solar module manufacturing capacity to 1 GW, its solar cell capacity to 700 MW and its ingot and wafer capacity to 350 MW by the end of 2010. We maintain our Neutral rating on the shares.

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