Canadian Solar Inc.
(
CSIQ
) announced that it has closed a purchase transaction with SkyPower
Global, under which Canadian Solar acquired a majority stake in 16
solar projects from SkyPower.
Each of the 16 solar projects was awarded a 20-year power purchase
contract by the Ontario Power Authority. The projects are in the
advanced permitting stage and are expected to commence construction
in 2013 and be fully operational in 2014, with the capacity to
generate over $785 million in revenue.
The aggregate transaction price is approximately $181 million
payable in accordance with certain milestones. A $69 million
partial payment for the transaction has been made.
The companies also launched their new international 50:50 joint
venture agreement, called CSI SkyPower. The companies said the
venture agreement creates a new opportunity leveraging the
expertise of Canadian Solar, one of the world's leading solar
module manufacturers, and SkyPower, Canada's largest owner and
developer of solar power projects. The international joint venture
will operate in Africa, the Middle East and South America.
SkyPower Global is Canada's largest owner and developer of solar
energy projects. SkyPower also has one of the most impressive
pipelines of solar projects in North America. With 250 MW of
awarded power purchase contracts, including 67 MW of installed
operating capacity and more than 2.0 GW at advanced stages of
development worldwide, SkyPower prospects, develops, finances, owns
and operates solar energy projects from the initial discovery
stages through to commercial operation. SkyPower is majority-owned
by Los Angeles-based real estate and infrastructure investment firm
CIM Group.
Canadian Solar is a vertically integrated manufacturer of silicon
ingots, wafers, cells, solar modules, panels and custom-designed
solar power applications. The company designs, manufactures and
delivers solar products and solar system solutions for both on-grid
and off-grid use by customers worldwide. It mainly focuses on
delivering best value in solar with recognized high-performance
modules.Canadian Solar has its module agreements spread worldwide.
Recently, in May, the company delivered its solar modules for a
photovoltaic plant in the German city of Dreieich-Buchschlag. The
plant has a generation capacity of 8 MW.
Being a low cost solar module producer, Canadian Solar focuses on
delivering high-performance modules. The prospects for Canadian
Solar look favorable based on a geographically diverse customer
base and improving operating efficiencies through its vertically
integrated manufacturing operation.
However, in the near term, we are concerned about the industry-wide
oversupply, leading to sharply falling Average Selling Prices,
tepid module demand in Europe and rising competition in the market.
Moreover, given the industry-wide high inventory level, we do not
foresee any short-term improvement in margins of the company. The
company retains a short-term Zacks #3 Rank (Hold) that corresponds
with our long-term Neutral recommendation on the stock. It mainly
competes with
First Solar Inc.
(
FSLR
) and
Suntech Power Holdings Co. Ltd.
(
STP
).
CANADIAN SOLAR (CSIQ): Free Stock Analysis
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FIRST SOLAR INC (FSLR): Free Stock Analysis
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