Recommendation: Speculative Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside |
|---|---|---|---|---|---|---|---|
| 10 Sep, 24 | CSIQ | Speculative Buy | USD 12.37 | USD 13.607 | USD 14.988 | 1 day | 21.2% |
Data Powered by EOD Historical Data (“EODHD”).
Canadian Solar Inc., together with its subsidiaries, provides solar energy and battery energy storage products and solutions in in Asia, the Americas, Europe, and internationally. The company operates through two segments, CSI Solar and Recurrent Energy. The CSI Solar segment designs, develops, and manufactures solar ingots, wafers, cells, modules, and other solar power and battery storage products. It offers standard solar modules and battery storage solutions; solar system kits, such as inverters, racking systems, and other accessories; power electronic products; and engineering, procurement, and construction (EPC) services, as well as operates battery energy storage projects. The Recurrent Energy segment engages in the development, construction, maintenance, and sale of solar power and battery storage projects; and operation of solar power plants; and sale of electricity. This segment provides operation and maintenance (O&M) services, including monitoring, inspections, repair, and replacement of plant equipment; and site management and administrative support services for solar projects, as well as asset management services. It has a fleet of solar and battery energy storage plants in operation with an aggregate capacity of approximately 1,005 MWp and 600 MWh. It serves distributors, system integrators, project developers, and installers/EPC companies, as well as utility companies or grid operators, public utilities, licensed suppliers, corporate offtakers, and commercial, industrial or government end users. It sells its products primarily under its Canadian Solar brand name. Canadian Solar Inc. was incorporated in 2001 and is based in Guelph, Canada.
Interest Expenses Declined: USD 33.02 mn in Q2FY24 vs USD 34.87 in Q1FY24
Net Revenue Increased: USD 1,635.43 mn in Q2FY24 vs USD 1,329.11 in Q1FY24
Operating Expenses Increased: USD 243.44 mn in Q2FY24 vs USD 203.68 mn in Q1FY24
Net Income Declined: USD 3.82 mn in Q2FY24 vs USD 12.35 mn in Q1FY24
Market Competition, Supply Chain Disruptions, Technological Changes, Forex Risk, etc.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 12.37 | 10.205 | 13.607 | 14.988 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Key Financial Indicators:
In Q2FY24, CSIQ's revenue surged by ~23% sequentially to USD 1,635.43mn supported by higher module shipments, which grew 30% qoq to 8.2 GW. However, net income attributable to Canadian Solar in Q2FY24 fell to USD 4mn, compared to USD 12mn in Q1FY24 because of higher operating expenses.
Growth Catalysts:
For Q3FY24, CSIQ expects total revenue to be between USD 1.6bn and USD 1.8bn. Gross margin is expected to be between 14% and 16%. Total module shipments recognized as revenues by CSI Solar are expected to be between 9.0 GW and 9.5 GW.
Technical Commentary:
As per the chart analysis, the important support levels for the stock are at USD 11.158 followed by USD 10.205 whereas the resistance levels are USD 13.607 followed by USD 14.988
Considering the above-mentioned factors, expected solar module shipments and revenue guidance for Q3FY24 and FY24, recent partnership with SOLARCYCLE, improved cash position following USD 200mn private placement, upside potential as indicated by the valuation, current trading levels and key risks associated with the business, a 'Speculative Buy' recommendation has been given to Canadian Solar Inc (NASDAQ: CSIQ) at the closing market price of USD 12.37 as of 10 September 2024.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Technology Industry: Solar
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| CSIQ Canadian Solar Inc |
-0.32 2.83% | 11.00 | 6.34 | 4.84 | 0.13 | 0.41 | 0.46 | 5.70 |
| FSLR First Solar Inc |
-6.2596 3.40% | 178.01 | 28.97 | 13.44 | 5.89 | 2.92 | 5.44 | 14.89 |
| ENPH Enphase Energy Inc |
-2.82 4.10% | 65.98 | 64.37 | 38.91 | 6.95 | 16.18 | 6.78 | 26.01 |
| NXT Nextracker Inc. Class A Common Stock |
-0.86 2.46% | 34.13 | 16.44 | 12.44 | 2.71 | 15.50 | 2.46 | 15.56 |
| XISHY Xinyi Solar Holdings Limited |
-0.1 1.25% | 7.87 | 11.55 | 14.93 | 0.22 | 1.24 | 0.24 | 1.12 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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