Canadian Solar Inc. (NASDAQ:CSIQ) in Perilous Position


The top solar panels manufacturer, Canadian Solar (NASDAQ:CSIQ) is under risky conditions. As its names suggests, it is a Canadian company but it is marketing its products in China. The company has the most mistaken identity as it is part Chinese and part Canadian. Almost all of the resources are provided by the Chinese government for the development of the products.

Canadian Solar (NASDAQ:CSIQ) depends on the solar projects for its profits and income. Last year in Q4, the company earned more than C$311 million by selling 50 megawatts of large scale grid connected photovoltaic generation. Power purchase agreements were signed by the headquarters in Ontario for high scope projects and schemes.

Solar market can be analyzed according to the “go to market” research report which confirms that last, year the price of utility scale systems was $1.83 per watt in Q4. The promising business can be generated from projects in the Canadian market. Canadian Solar (NASDAQ:CSIQ) had 310.7 mega watt of project arrears in the closing stages of 2013, and were decreased to 127 megawatts in 2014.

This information was mentioned in the backlog of 2013. It is expected that all of the company’s earnings would be dramatically reduced as high margin projects would diminish this year in December. The solar power generation systems of Canadian Solar (NASDAQ:CSIQ) are distinguished in the global markets of Japan, Germany, India and China.

Even then, the company has not invested much in the field of research. Other notable companies are making new calculations and products by spending more time and energy on fact-finding and research. Last year, the company’s expenditures on research and development were merely $12.1 million. Chinese solar power products suppliers, Trina Solar limited (NYSE:TSL) and Yingli Green Energy (NYSE:YGE), have adopted the strategy to take credits on short term basis to make use of the proper tools to enhance the competence of their solar systems.

Canadian Solar (NASDAQ:CSIQ) is unable to introduce more efficient solar panel into the market while its competitors like SunPower (NASDAQ:SPWR) produce 21.5% more efficient panels that are of advanced quality. Last year, First Solar (NASDAQ:FSLR) invested $144 million in research and development while SunPower (NASDAQ:SPWR) invested $73.3 million.

Canadian Solar (NASDAQ:CSIQ) invested $12.1 million in research and latest technology which is a very small sum for such a big business.

Canadian Solar (NASDAQ:CSIQ) has established manufacturing plants by taking short term loans from the banks in China. Around $725 million short term borrowings were reported last year. The balance sheet is not impressive and it is a threat that company would be washed-out of its resources soon.

Canadian Solar (NASDAQ:CSIQ) has Chinese employees and relies heavily upon Chinese banks for financial support. It has turned out to be more of a Chinese company and so its shares are at the brink of disaster. The recent price to earnings ratio is 8 and in the future it is anticipated that shares will be costly.

Get Free Updates and Stock Alerts!

*We only send one email per week

Comments are closed.

Get Winning Stock Alerts!

Our track record speaks for itself! Our last 7 alerts have delivered combined gains in excess of 300% and there are no signs of slowing down. Join now before you miss out on our next big runner!

We will never sell or share your information.