Canadian Solar Enters Chinese JV, Shares Up - Analyst Blog

Canadian Solar Inc. CSIQ has entered into a joint venture (JV) with GCL-Poly Solar System Integration (China) Co., Ltd., a unit of GCL-Poly Energy Holdings Limited for building a manufacturing site in Funing, Jiangsu Province, China.

This agreement evoked a positive market reaction with the shares gaining 2.44% to close at $26.05 yesterday.

The JV aims at manufacturing crystalline silicon solar cells at the plant. Canadian Solar will own an 80% interest, while the balance 20% will be owned by GCL.

Initially, this plant will have a generating capacity of 300 megawatts MW per annum. Canadian Solar expects multi-crystalline conversion efficiency to reach 19% by the end of 2014 at the Funing plant. Post completion, the plant's production capacity will reach 1.2 gigawatts (GW) per annum. However, the expansion of the plant following its initial phase is subject to market conditions.  

GCL-Poly is a leading provider of polysilicon and wafer in the solar industry. This latest agreement will help Canadian Solar to manufacture and deliver top quality solar modules to its worldwide customers. This partnership will expand Canadian Solar's cell manufacturing capacity to a total of 1,560 MW from 1,500 MW at 2013 end.  

The company has recently started another module workshop in its flagship factory in Jiangsu Province. This brings its total annual module production capacity to 3 GW.

This U.S.-based company is also committed to expanding its domestic solar market. In a separate release, Canadian Solar announced that it will supply photovoltaic modules for South Carolina's first solar farm – The Colleton Solar Farm. This plant is expected to generate 4,556,000 kWH per year, which will be enough to power 300 homes.

Canadian Solar is a leading global manufacturer of high-efficiency solar PV modules and provides the industry's maximum power production per panel. It expects total annual shipments in the range of 2.5 GW to 2.7 GW and total revenues in the $2.7 billion to $2.9 billion band for 2014.

The demand for renewable energy is on the rise across the world mainly due to greater consciousness among the masses regarding its benefits. Solar companies like Canadian Solar and First Solar Inc. FSLR among others are making the most of this favorable trend with an increasingly diversified customer base.

Canadian Solar presently holds a short-term Zacks Rank #3 (Hold). Other better-ranked solar operators are JA Solar Holdings Co., Ltd. JASO and Yingli Green Energy Holding Co. Ltd. YGE. While JA Solar holds a Zacks Rank #1 (Strong Buy) Yingli Green Energy carries a Zacks Rank #2 (Buy).