Another Solar IPO on the horizon - Canadian Solar Inc.(CSIQ)
Although the solar energy stocks have their fair share of ups and downs, the overall sector remains hot. Just last week Citigroup launched coverage on some of the major Solar stocks and was bullish to say the least. Now we have another Solar IPO coming up from a company that might be Canadian by name only. It is important to note that they don’t produce solar cells but produce solar panels. Solar panels are an array of interconnected solar cells encased in a weatherproof package. They buy solar cells from other manufacturers and hope to use IPO proceeds to produce solar cells.
The company sold 6.2 MW of solar module products in the six months ended June 30, 2006, generating revenues of $26.0 million in that period. The company lost $4.56 million in the six month ended June 30, 2006.
IPO - Canadian Solar Inc. (CSIQ) - Price $13-15 a share
Background
(From the Prospectus) We design, manufacture and sell solar module products that convert sunlight into electricity for a variety of uses. We are incorporated in Canada and conduct all of our manufacturing operations in China. Our products include a range of standard solar modules built to general specifications for use in a wide range of residential, commercial and industrial solar power generation systems. We also design and produce specialty solar modules and products based on our customers? requirements. We currently sell our products to customers located in various markets worldwide, including Germany, Spain, Canada, China and Japan.
Numbers
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Net revenues increased from $4.1 million in 2003 to $18.3 million in 2005 (Compound annual growth rate, or CAGR, of 111.1%.)
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Net income increased from $761,245 to $3.8 million over the same period, representing a CAGR of 123.5%.
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Net revenues increased from $7.0 million for the six months ended June 30, 2005 to $26.0 million over the same period in 2006.
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Net loss of $4.56 million in the six month ended June 30, 2006.
If you are familiar with the solar sector then the risks listed below seem pretty familiar.
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Shortage of Polysilicon
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The reduction or elimination of government subsidies and economic incentives for solar power
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Highly competitive industry (BP Solar International Inc., or BP Solar, Sharp Solar Corporation, or Sharp Solar, SolarWorld AG, or SolarWorld, and competitors located in China such as Suntech Power Holdings Co., Ltd. or Suntech Power.)
There is a lot of good information in the prospectus about the solar industry as a whole.
I currently own shares of Suntech Power (NYSE: STP) and am pretty bullish on the solar sector. If you can handle the ups and downs then pick between Suntech Power (NYSE: STP), Sunpower (Nasdaq: SPWR) and Evergreen Solar (Nasdaq: ESLR). All three of these stocks are near their lows at this time and have recent buy ratings from Citigroup.
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