Diese Präsentation wurde erfolgreich gemeldet.
Die SlideShare-Präsentation wird heruntergeladen. ×

Equity Research - Canadian Solar (NASDAQ: CSIQ)

Anzeige
Anzeige
Anzeige
Anzeige
Anzeige
Anzeige
Anzeige
Anzeige
Anzeige
Anzeige
Anzeige
Anzeige

Hier ansehen

1 von 50 Anzeige

Weitere Verwandte Inhalte

Diashows für Sie (20)

Anzeige

Ähnlich wie Equity Research - Canadian Solar (NASDAQ: CSIQ) (20)

Aktuellste (20)

Anzeige

Equity Research - Canadian Solar (NASDAQ: CSIQ)

  1. 1. Canadian Solar Inc. (NASDAQ: CSIQ) Technology – Semiconductor / Renewable Energy Anthony Bianchini, Brian Carpenter, Bryan Hardy, Eric Oh, Zach Wood Strong Buy
  2. 2. This presentation contains certain forward-looking statements that are made pursuant to the safe harbor provisions of the federal securities laws. These forward-looking statements may be identified by a reference to a future period or by the use of forward-looking terminology. They may involve risks and uncertainties that could cause the actual results to differ materially from the results discussed in the forward-looking statements. Important factors that could cause actual results to differ include, but are not limited to, the risks detailed in reports and filings with the Securities and Exchange Commission (SEC) including, but are not limited to, Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Anyone wishing to understand the businesses discussed herein should review such reports and filings. The forward-looking statements speak only as of the date they are made and except for ongoing obligations under the U.S. federal securities laws, there is no obligation to update or revise forward-looking statements whether as a result of new information, future events or otherwise. This presentation contains information from third parties that is believed to be accurate and may be helpful to understanding the businesses discussed herein. Such information has not been independently verified, and no representation or warranty, express or implied, is being made with respect to the information contained in this presentation or presented orally. Forward Looking Statement 2
  3. 3. Table of Contents 3 I. Executive Summary II. Business / Product Description III. SWOT Analysis IV. Financials (Ratios / Multiples) V. Valuation (Public Comps, WACC, DCF) VI.Appendix A~E (Pro-forma 3-Statements, Debt, CapEx schedule)
  4. 4. 4 EXECUTIVE SUMMARY
  5. 5. Executive Summary 5 Investment Thesis Invest in Canadian Solar equities at current $11.90 per share for 27%+ upside in long-term play ▪ Canadian Solar presents a favorable investment opportunity primarily driven by strong top line growth (Sales and EBITDA grew 12.8% and 42.4% annually, each, on average since 2011~2015) ▪ Growing demand in emerging markets such as China, India, etc.(a) ▪ Long-term decrease of fossil fuel consumptions resulting from growing awareness of climate change ▪ Global solar installations is expected to grow 8% in the next fiscal year(b) Key Financial Metrics ▪ P/E trading at 42% lower than comparable solar technology companies → price attractive (CSIQ LTM P/E: 4.4x vs. Industry Median: 7.6x) ▪ FY 2015 EPS: $3.13, FY 2016, 2017 EPS Estimates: $2.88, $3.13 ▪ 16.6% gross margin, 10.6% EBITDA margin, 5.5% profit margin ▪ Target price range: $15.19~$18.31 (27.61%~53.84% premium) Risk Factors ▪ Political risk from Trump Presidency and Republican dominate House → possible decrease in government subsidies in solar space ▪ Reduction in solar panel prices (price pressure) (a) COP21 United Nation Climate Change Conference in Paris, France where 195 countries committed to tackle climate change and report energy saving initiatives (b) Source: S&P Capital IQ
  6. 6. 6 Business Description
  7. 7. What is a Solar Panel? And how does it work? 7 Made up of Solar Cells (silicon layout) Absorb, retain, transfer sun’s energy Metal wires collect electrons Which yield electricity to be used or stored Direct Current (DC) Goes through inverter Alternating Current (AC) Circuit Box/Battery Excess electricity can be sold back to the grid.
  8. 8. Business Description 8 Summary: • Founded in Canada in 2001, Canadian Solar is a multinational renewable energy company that primarily focuses on the production, installation and marketing of photovoltaic solar panels and energy storage business subsidiaries located in over 24 countries globally. • Canadian Solar emphasizes innovating & creating the newest technology for photovoltaic solar panels and storage available on the market. There are more than 400 dedicated scientists and engineers who conduct research to continuously innovate and modernize Canadian Solar’s portfolio of photovoltaic solar panels and energy storage solutions. Its primary operations and segments are: 1. Residential Kits 2. Micro Grid Solutions 3. Utility Scale Farms • Key Facts • Top 3 Biggest Solar Companies in the world • Employs over 8,900 workers worldwide • Customer support in over 18 countries • $600 Million USD on R&D since 2001 • 400 patents located all around the world 3-Year Price Chart $44.67 $40.29 $38.85 $29.27 $22.27 $18.87 $15.32 Current Price $11.90 Revenue EBITDA(a) CAGR: 12.8% CAGR: 42.4% (a) Stock Based Compensation and Non-Recurring Charges such as Goodwill Impairment, Asset Write-Downs, Restructuring, Litigation, etc. are included
  9. 9. Keystone Solar Farm, USA The largest solar project in Pennsylvania, 5 MW. http://www.canadiansolar.com/solar-projects.html
  10. 10. This project was world's largest in 2011. Solarpark Meuro, Germany, 70 MW. Baraclit Solarlab, Italy. 2.5 MW. An open-air solar laboratory. http://www.canadiansolar.com/solar-projects.htmlhttp://www.canadiansolar.com/solar-projects.html
  11. 11. Management 11 CEO / Founder : Dr. Shawn Qu Invited speaker at the U.N. Climate Change Conference, the International Economic Forum Americas, TEDx etc. PhD in Material Science: University of Toronto MSc in Physics: University of Manitoba CFO: Dr. Huifeng Chang 17 years of experience in capital markets. Former Co-Head of Sales and Trading at CICC USA and CEO of CSOP Asset Management Ph.D. in Soil Physics and MBA: University of Hawaii COO: Guangchun Zhang 18 years of experience in the photovoltaic industry. Former Vice Director of China state PV standards Committee; the Chairman of SEMI China PV Standards BSc. in Electronic Engineering: Shandong Industrial Institute. CCO: Yan Zhuang Previously led corporate branding, sales and marketing initiatives in multinational companies across Asia Master in Applied Statistics: University of Alberta Master in Marketing Management: University of Guelph
  12. 12. 12 Industry Overview
  13. 13. Industry Overview Global View: ➢ IEA (International Energy Agency)-renewables like solar and wind will be the clear winners over coal throughout the next 25 years 2040(a) ➢ If countries continue their climate change goals, wind and solar will rise to 60% of the world’s electricity by 2040, making them the world’s largest power source. (Interesting note: The IEA has been known to favor oil and critique renewables)(b) ➢ Renewables were the largest source of new generating energy in 2015 (up to 500,000 solar panels installed every day)(c) (a)(b)(c) Clover, Ian. “Solar to be a clear winner in global energy over next 25 years, says IEA.” PV Magazine. Web, 16 Nov. 2016. 16 Nov. 2016.
  14. 14. Industry Overview America: ➢ Trump: Promised an “energy revolution” favorable to non-renewables, but this doesn’t necessarily mean he’ll cut down on solar ○ Said he would keep an “open mind” ➢ Big factor: 30 % Federal Tax Credit ➢ 2012 expiration, resulted in 92% drop in demand ➢ Even if government keeps it but slashes it down, still negative impact ➢ It has created a significant amount of jobs ○ Hopefully Trump sees this ○ Even if he wants to alter it, GOP and states will likely disagree ➢ Less regulation on non-renewables could also benefit renewables ➢ Gallup(a): When conventional energy is cheaper, investors and consumers seem to feel more comfortable on advancements in renewable research (a) 2016 Gallup Poll
  15. 15. Industry Overview China: ➢ Biggest investor in solar ➢ Recent scale back in demand ○ Bit off too much too fast, became unsustainable and created a deficit in government energy subsidies ➢ Will still continue growing in solar ➢ Regardless of Trump administration, it will not alter China’s carbon cutting goals ➢ With the potential of US stepping back on green energy initiatives, China aims to become the world leader in renewable energy technologies “Action by the international community will not stop because of the new government of the United States” Zou Ji senior Chinese climate negotiator
  16. 16. Industry Overview Canada: ➢ With the help of Prime Minister Justin Trudeau, Canada has been on its way of becoming a green energy superpower(a) ➢ Even with the election of Trump, Trudeau says Canada’s carbon cutting goals won’t change, and that Canada will continue fighting carbon emissions extensively, including a new tax on carbon(b) ➢ Although Canada may have to push their goals further out in the future with a Trump presidency, they still plan to work towards them the best they can without damaging their ability to compete with American manufacturing(c) (a)(b)(c) Cheadle, Bruce. “Trudeau: Trump Presidency Won't Change Canada's Carbon Price Plan.” Huffington Post. Web. 10 Nov. 2016. 16 Nov. 2016.
  17. 17. Industry Overview India: ➢ In recent years, India has experienced extreme amounts of growth in solar energy ➢ It has also established very ambitious goals of switching to renewable energy ➢ In fact, solar growth in the country now outpaces coal –> 15% vs. 12.5% ➢ One of the world’s largest solar projects has just been completed in India: Kamthi Solar Plant, which can generate as much electricity as most nuclear or coal plants
  18. 18. 18 SWOT Analysis
  19. 19. SWOT Analysis 19 •Missed opportunities from stiff competition •Natural Disaster • Rapidly growing Mexican market • M&A activities •High leverage ratio → default risk / insolvency •Less efficient solar panel vs. First Solar Inc. •Vertical Integrated Supply Chain •Downstream integration •More module capacity (Competitive advantage) •BIPV S W TO
  20. 20. 20 Financials & Ratio Analysis
  21. 21. Ratio Analysis 21 *FY2011~FY2015 Sales CAGR: 12.8% *Semiconductor Industry Median Profit Margin (LTM): 4.6%
  22. 22. Ratio Analysis (Continued) 22 (a) Yahoo Finance Semiconductor – Specialized: Average(a) ROE: 5.6% Debt / Equity: 0.6x
  23. 23. Public Comparable Analysis 23 Trading at Lower P/E (42% compared to comps. Median) Smaller Cap Larger EV due to high leverage * Enterprise Value (EV) = Market Cap. + Net Debt + Preferred Equity + Minority Interest Lower EBITDA margin results in higher EBITDA multiple
  24. 24. 24 Valuation
  25. 25. Discount Rate (WACC) 25 *Cost of Equity is calculated using the Capital Asset Pricing Model *High Cost of Equity from high beta, however, high leverage drags WACC down
  26. 26. DCF Valuation 26 *Exit EBITDA multiple = CSIQ TTM EV/EBITDA
  27. 27. DCF Valuation (Continued) 27 Bear Case Price Target: $12.01 or +0.94% Base Case Price Target: $15.19 or +27.61% Bull Case Price Target: $18.31 or +53.84% *Current Share Price = $11.90
  28. 28. Valuation Summary 28 Public Comps. DDM DCF Current Price: $11.90 Base Target: $15.19 Bull Target: $18.31
  29. 29. 29 Appendices
  30. 30. Appendix A. Pro-Forma Income Statement 30
  31. 31. Appendix B. Pro-Forma Balance Sheet 31
  32. 32. Appendix C. Pro-Forma Statement of Cash Flow 32
  33. 33. Appendix D. Credit Analysis 33
  34. 34. Appendix E. CapEx / Dep. / Amort. 34
  35. 35. 35 Thank You! Feel free to connect us on LinkedIn Anthony Bianchini: https://www.linkedin.com/in/bianchini55 Bryan Hardy: https://www.linkedin.com/in/bryan-hardy-57b432a5 Eric Oh: www.linkedin.com/in/ericoh12 Zach Wood: https://www.linkedin.com/in/zacharydenwood
  36. 36. ! CSIQ!pg.$1! Canadian Solar (NASDAQ: CSIQ) Strong Buy ★★★★★ Current Price: $11.90 (As of 11/7/2016) Target Price: $15.31 Business Overview: Warren Buffett's first filter in identifying and investing in a value company is truly understanding the business completely. Canadian Solar was founded in Canada in 2001. The company is currently listed on the United States Stock Exchange NASDAQ under the Ticker: CSIQ (Bloomberg $CSIQ Info). Canadian Solar is a renewable energy company that primarily focuses on the production, installation, and marketing of photovoltaic solar panels and energy storage solutions. Canadian Solar is a huge solar company, that is highly regarded in the renewable energy field. It is truly a multinational company, with solar projects, installations, and business subsidiaries located in over 24 countries. It is also among the Top 3 Biggest Solar Companies in the world in terms of revenue. Canadian Solar primarily operates in 3 different segments. 1) Residential Kits: Their Residential Kit sector provides homes and business with 1.5 Kilowatt to 10 Kilowatt solar systems and inverters to power their daily electrical needs. 2) Microgrid Solutions: A microgrid is a local and independent energy system that can generate, distribute, store and regulate the flow of electricity. 3) Utility Scale Farms: Canadian Solar provides development, financing, and construction to customers who wish to develop large scale solar farms (Canadian Solar “About Us”). Canadian Solar employs massive amounts of people in numerous different jobs. The company currently employs over 8,900 workers worldwide (Canadian Solar “Making The Difference). Types of jobs include sales jobs, installers, factory workers, office workers etc. The company was founded, and is currently run by Dr. Shawn Qu. Canadian Solar currently offers customer support in over 18 countries. It emphasizes innovating and creating the newest technology for photovoltaic solar panels and storage available on the market. Canadian Solar operates three PV research centers for cells, modules and systems in Canada and China. The company has invested a total of more than $600 Million USD on R&D since 2001, and has 400 patents located all around the world. Their 400 dedicated scientists and engineers conducting research to continuously innovate and modernize Canadian Solar’s portfolio of photovoltaic solar panels and energy storage solutions. Basically, the company is always trying to innovate to be the best and have the most Analysts: Anthony Bianchini, Brian Carpenter, Bryan Hardy, Eric Oh, Zach Wood 11/7/2013 ~ 11/7/2016 CSIQ Price Chart Target Price Bear Case: $12.01 (+0.94%) Base Case: $15.19 (+27.61%) Bull Case: $18.31 (+53.84%) Beta (Levered): 2.95 Industry Median: 2.39 Potential Catalysts: •! Potential acquisition of SunRun Inc. •! Growing Indian & Mexican markets Canadian&Solar&(CSIQ) Semiconductor&>&Solar 52W&Range: $10.25~$29.83 50&Day&Moving&Avg. $12.89 Dividend&Per&Share: N/A Equity&Value&(LTM): $687.82M Enterprise&Value&(LTM): $2.65B Revenue&(LTM): $3.5B EBITDA&(LTM): $343.79M Diluted&EPS&(LTM): $2.69 P/E&(LTM): 4.4x EV/EBITDA&(LTM): 7.4x FY#2017E FY#2018E FY#2019E FY#2020E EPS$estimates: $$$$$$$$$$$$$2.88$ $$$$$$$$$$$$$3.13$ $$$$$$$$$$$$$3.34$ $$$$$$$$$$$$$3.61$ 0.00% 70.00% 184.62% 40.00% Earnings(Surprise Sep-16 Jun-16 Mar-16 Dec-15 Reported: $0.29 $0.68 $0.37 $1.05 Analyst:Consensus: $0.29 $0.40 $0.13 $0.75
  37. 37. ! CSIQ!pg.$2! efficient solar panels/systems available on the planet (Canadian Solar “About Us”). Solar Panels are made up of smaller units called solar cells. The top of the solar panel is made of transparent glass that tries to absorb as much sunlight as possible. Most solar cells use a silicon based inner layout which allows the sun's energy to flow from one layer of the silicon to the other using oppositely charged silicon layers of as electron transport (Dhar). Electrons are then collected by metal wires at the top of the cell, which can then yield electricity to be used or stored. Solar Panels create (DC) Direct Current, which is inefficient for travel and to power things. The DC current then goes to an inverter which makes the DC current into (AC) Alternating Current, which is the standard electrical current in the world. After that it goes into the circuit box and/or a battery pack to be distributed as needed. If more solar electricity is created than used, excess electricity can be sold back to the grid, depending on local laws and locations (Energy.gov). A couple of Canadian Solar’s notable projects are as follows: Keystone Solar Farm is the largest solar project in Pennsylvania which is a 5 MW solar plant. It actively produces clean solar energy for Exelon Generation, which serves the southeastern region of the state (PECO). The plant produces enough energy to power 950 homes each year. The plant offsets 4,200 tons of carbon per year, equivalent to a capacity of 28,000 trees. The plant is located along Lancaster Pike south of the city of Lancaster, Pennsylvania (Canadian Solar Projects). Solarpark Meuro is located in Germany and is a 70 MW Utility Scale Farm. This plant was the world's largest of its kind in 2011. This solar plant is a green energy source for 17,500 households (Canadian Solar Projects). Management: The top-level management at Canadian Solar possesses an extensive background in the solar industry. CEO Dr. Shawn Qu has been a notable speaker of solar power in the past. He has given presentations at several international climate change events, including TEDx talks and U.N. Climate Change Conferences. Dr. Qu has also been persistent in his efforts to maximize shareholder value. Despite volatile economic conditions in the industry, Dr. Qu has stayed committed to achieving Canadian Solar’s financial goals during the company’s 15 years of existence. Industry: Global: From a global perspective, the International Energy Agency’s annual outlook report has forecasted that renewables such as wind and solar will experience the largest growth of any energy source in the next 25 years. This report also concluded that renewables will provide 60% of the world’s electricity by 2040, officially making them the new largest source of energy in the world (Clover). As long as countries stay relatively close to their climate change goals established by the Paris Conference, the future of renewables looks extremely promising for investors. Job Growth Solar vs. Coal Mining vs. Oil and Gas Extraction Sources: Solar Energy Industries Association Solar Installation vs. Prices Sources: Solar Energy Industries Association Residential vs. Non-Residential Installation Sources: Solar Energy Industries Association
  38. 38. ! CSIQ!pg.$3! America: Although Donald Trump has expressed clear support for nonrenewable energy sources, this doesn’t necessarily mean that he will try to put a halt on the renewables industry. Despite previous criticisms of global warming, he recently told the New York Times that he would “keep an open mind” about climate change (Koerth). The biggest factor to stress for the solar industry in America is the current 30% federal tax investment credit on solar projects. This tax credit is a government subsidy given to solar panel purchasers in order to alleviate installation costs and make solar more affordable. This tax credit is detrimental to the success of the solar industry. For example, in 2012 when the tax credit expired, solar demand dropped by 92%. Even if the government wishes to keep the tax credit but slashes it down to 10%, some analysts have calculated that demand could still fall by as much as 60% (Robinson). However, it seems Future Growth Rates of Different Energy Sources: CarbonBrief.org though Trump’s republican constituents may not want the 30% credit to go anywhere. For some states (Nevada, Arizona), wind and solar are actually more inexpensive means of energy than nonrenewable sources. The state of Texas, which is the largest producer of crude oil, also possesses the largest capacity for wind energy. Now that republican politicians are starting to become aware of these energy alternatives, they don’t want the federal subsidies to go away anytime in the near future. The tax credit has also created approximately 200,000 jobs in the last few years, and will likely create at least 200,000 more in the next few years (Robinson). Hopefully Trump realizes these positive growth potentials for America, and will continue to support the tax credit. China: One big factor that contributed to the recent drop in stock price for Canadian Solar was a slow in demand from China. China, the biggest buyer of solar, cut back on solar government subsidies in order to put a halt on the growing deficit in the government’s renewable energy subsidy funds. This occurred primarily because China had been buying so much into solar that it became unsustainable. With China’s shrinkage of demand, the result was an oversupply of solar panels, forcing companies like First Solar and Canadian Solar to lower prices in order to stay alive in the market. However, this isn’t to suggest that China will not continue its efforts in renewable energy growth. This is only a temporary move until China begins to invest at a sustainable rate again. In fact, the recent election of Trump may present an opportunity for China to become the new leading force of green innovation in the world (“China Could Be”). Canada: With the help of Prime Minister Justin Trudeau, Canada has been on its way of becoming a green energy superpower. Even with the election of Trump, Trudeau has said that Canada’s climate goals won’t change, and that Canada will continue fighting carbon emissions extensively through strict regulations and a new carbon tax (Pothecary). Although Canada may have to push their goals further out into the future without the help of the Obama administration, the country still plans on pursuing these goals without damaging their ability to compete with American manufacturing. India: In recent years, India has experienced extreme amounts of growth in solar energy and has established very ambitious goals of switching to renewable energy. In fact, solar growth in the country now outpaces coal 15% vs. 12.5% (Warren). The country is now the third largest in solar power, behind China and the United States. It recently finished the Kimathi Plant, generating as much energy as most nuclear and coal plants in the country.
  39. 39. ! CSIQ!pg.$4! SWOT Analysis Strengths After researching the company, it was clear that Canadian solar has various strengths, weaknesses, opportunities, and threats. One strength that stood out was they use a vertical supply chain by operating through their in-house production capabilities. What this means is that they produce and manufacture their products within the company rather than outsourcing. By operating within the company, they are able to reduce the cost of raw materials, but also reduce raw material cost volatility (Hoium). This gives the company higher flexibility when responding to short-term demand changes. Along with being vertically integrated, they focus more on downstream activities in the supply chain such as creating meaningful relationships and focusing on new markets; essentially being more customer oriented rather than focusing on the production process. This puts the company in a great position when trying to penetrate emerging markets. Their main competitive advantage is that they hold more module capacity versus cell and wafer capacity. This move became prosperous for Canadian Solar because polysilicon, a step upstream from wafer, became an oversupplied commodity that led to the downfall of many solar companies such as LDK Solar in 2012. Controlling module capacity gave Canadian Solar the advantage to sell and install their products wherever they please (Hoium). Weaknesses Their main weakness is geared towards their main competitor, First Solar. In any business or company, cutting cost is very important, but in the solar market being more efficient is more significant. For example, Canadian Solar operates mainly with a silicon based panel that has 16.53% efficiency, while First Solar operates with a Thin-film based panel that is 29.27% efficiency (Hoium). Due to the fact that silicon based panels are becoming a commodity, this gives First Solar the advantage over Canadian Solar in terms of pricing power. Another weakness that the company shows is that they take out billions of dollars in debt from short-term borrowings to expand and manufacture up and coming projects. By taking out an extensive amount of debt, it makes the company a big risk for investors and could potentially lead to falling margins and even losses for the company. Opportunities Canadian Solar is continuously expanding every year in several regions, so there is a lot of room for growth and opportunities. One opportunity in particular that stood out this year was when Mexico held its first auction in search for new energy that included fossil fuels and renewables (Pothecary). The Solar market won three-fourths of that contract, with Canadian Solar winning a huge part of that portion. Starting in 2018, Canadian Solar will generate up to 63 MW of energy in projects in Aguascalientes, Mexico. This agreement includes a 15-year power purchase agreement and 20-year Clean Energy Certificate (Pothecary). Threats Being that Canadian Solar is global and has projects almost everywhere in the world, one of the biggest threats is a natural disaster happening. In fact, this past June a tornado struck and destroyed one of their newest cell factories in Funing County, Jiangsu Province, China. This was a major setback for the company because that particular cell factory was forecasted to generate 15-20% of their cell requirements for this year (Morgan). Lastly, another major threat is that the company isn’t diversifying into improved technology for their panels. Instead, they are focusing more on the production for their silicon based panels. Like stated before, the silicon based panels are approaching a commodity status, with more and more manufacturers replicating it. This move makes it challenging to cover cash costs and to have an advantage in the solar market overall (Hoium).
  40. 40. ! CSIQ!pg.$5! Ratio / Multiple Analysis and Public Comparables From fiscal year 2013 to fiscal 2014, we saw whopping revenue growth of 79% and 17.1% from 2014 to 2015. Our past five years’ sales CAGR was 12.8%. This is an outstanding growth projection for prospective investors. Our gross profit margin last year was 6.6% and our EBITDA margin was 10.6%. Our profit margin was 5.5%, which is slightly over the industry average of 4.6%. Our return on invested capital was 8.1% last year. Our total debt to EBITDA ratio was 5.2x. We believe that our ratio will decrease as we begin to pay off $650 million of long-term debt. That will bring our total debt to total capitalization ratio from 0.7x to 0.5x. In terms of liquidity, we see that our Current Ratio will stay around 1x, and quick ratio will stay around 0.5x. In 2015 our return on equity was 22.7%, nearly 4 times that of the industry standard of 5.6%. Our largest competitor is First Solar at an equity value of $3.4 billion. Canadian Solar is a rather small company with an equity value of $687 million, lower than the industry average of $874 million. In contrast to that, Canadian Solar has an enterprise value of $2.6 billion, where the industry median is $2.1 billion. This EV multiple is highly skewed by long-term debt. We will instead switch our focus to the PE ratio, which is an equity multiple. Canadian Solar’s PE multiple is 4.4x, approximately 42% less than the industry average PE ratio of 7.6x. Exhibit 1: Public Comparable Multiple Analysis Valuation)Statistics Capitalization Enterprise)Value)/) Enterprise)Value)/) Equity Enterprise Revenue EBITDA P)/)E)Multiple Company)Name Value Value TTM CY)2016E CY)2017E TTM CY)2016E CY)2017E TTM CY)2016E CY)2017E First&Solar&Inc. 3,437.01$&&& 2,849.41$&&& 0.8x 0.9x 1.0x 3.6x 4.1x 4.2x 6.8x 7.6x 17.1x Trina&Solar&ltd. 961.27$&&&&&& 2,432.17$&&& 0.7x 0.7x 0.7x 5.6x 5.6x 5.7x 10.8x 8.3x 7.3x SunPower&Corp 952.19$&&&&&& 3,018.39$&&& 1.6x 1.1x 1.1x NA NA NA NA 36.2x 18.6x Hanwha&Q&CELLS&Co&Ltd 776.26$&&&&&& 1,734.56$&&& 0.8x 0.7x 0.7x 6.2x 5.7x 5.8x 4.2x 5.6x 13.0x SolarEdge&Technologies&Inc 565.13$&&&&&& 413.33$&&&&&& 0.8x 0.8x 0.8x 4.6x 6.9x 6.5x 7.6x 10.1x 8.0x Sunrun&Inc. 516.92$&&&&&& 1,668.12$&&& 3.9x 3.6x 2.7x NA NA NA 10.9x NA 99.6x Maximum 3,437.01$&&& 3,018.39$&&& 3.9&x 3.6&x 2.7&x 6.2&x 6.9&x 6.5&x 10.9&x 36.2&x 99.6&x 75th&Percentile 959.00$&&&&&& 2,745.10$&&& 1.4&x 1.0&x 1.0&x 5.7&x 6.0&x 6.0&x 10.8&x 10.1&x 18.2&x Median 864.22$)))))) 2,083.36$))) 0.8)x 0.9)x 0.9)x 5.1)x 5.6)x 5.8)x 7.6)x 8.3)x 15.0)x 25th&Percentile 617.91$&&&&&& 1,684.73$&&& 0.8&x 0.7&x 0.7&x 4.3&x 5.2&x 5.3&x 6.8&x 7.6&x 9.3&x Minimum 516.92$&&&&&& 413.33$&&&&&& 0.7&x 0.7&x 0.7&x 3.6&x 4.1&x 4.2&x 4.2&x 5.6&x 7.3&x Candaian&Solar&Inc. 687.82$&&&&&& 2,655.62$&&& 0.8x 0.7x 0.7x 7.4x 6.9x 6.5x 4.4x 4.1x 3.8x
  41. 41. ! CSIQ!pg.$6! Exhibit 2: Ratio Analysis
  42. 42. ! CSIQ!pg.$7! Valuation We conclude that the company’s Weighted Average Cost of Capital is approximately 11.4%. The Cost of Equity, using the Capital Asset Pricing Model, seems unusually high at 32%, given high beta (2.95) with risk free rate of 2.5% and risk premium of 10%. We also believe that the company’s Cost of Debt is approximately 7.5% as we computed =(total interest expense)/(total debt). Even though Canadian Solar has high Cost of Equity, the company is heavily leveraged with a debt ratio of 78%. With a corporate tax rate of 25%, the WACC came out to be 11.4%, which we used in our DCF model. Based on our revenue growth driver model, EBIT, EBITDA margin, Capital Expenditure schedule, Depreciation & Amortization, and Working Capital estimates (see Exhibit 7, 11), we were able to forecast the company’s next five-year future free cash flows. Also, to compute the terminal value of the company, we used Gordon Growth Perpetuity Model using the perpetual growth rate of 3%, or equivalent to EV/EBITDA multiple of 7.4x. As a result, we valued our company’s Enterprise Value at $2.89 billion. After subtracting Net Debt amount of $1.95 billion, we believe our Equity Value should worth $941 million, or $15.03 per share. Based on the current stock price of $11.90 per share and our P/E trading at a lower multiple compared to our industry peers, we conclude that the stock is significantly undervalued and has the potential upside of 26%. Exhibit 3: Weighted Average Cost of Capital WACC$Reference$Data WACC$Sensitivity$Analysis Risk%Free)Rate: 2.5% US)30)Year)Treasury)2016)Avg. 11.44% 2.50 2.60 2.70 2.80 2.90 3.00 3.10 Equity)Risk)Premium: 10.0% 5.5% 9.25% 9.47% 9.69% 9.91% 10.13% 10.35% 10.57% 7%)+)Small%Cap,)High)Leverage)Premium:)3% 6.0% 9.55% 9.77% 9.99% 10.20% 10.42% 10.64% 10.86% 6.5% 9.84% 10.06% 10.28% 10.50% 10.72% 10.94% 11.16% Cost)of)Equity: 32.0% 7.0% 10.13% 10.35% 10.57% 10.79% 11.01% 11.23% 11.45% Assuming)Beta)of)2.95 7.5% 10.42% 10.64% 10.86% 11.08% 11.30% 11.52% 11.74% Cost)of)Debt: 7.5% 8.0% 10.72% 10.94% 11.16% 11.38% 11.59% 11.81% 12.03% Beta$Comps.$@$Unlevered$Beta$Calculation Levered Total Total Net Equity Net$Debt$/ Unlevered Name Ticker Beta Currency Debt$(mm) Cash$(mm) Debt$(mm) Value$(mm) Equity$Ratio Tax$Rate Beta First)Solar)Inc. FSLR 1.96 USD 826.60$))))) 1,414.20$) (587.60)$))) 3,437.01$) %17.1% 35.0% 1.70 Trina)Solar)ltd. TSL 2.42 USD 2,075.40$) 648.10$))))) 1,427.30$) 961.27$))))) 148.5% 35.0% 1.01 SunPower)Corp SPWR 2.99 USD 2,296.80$) 383.90$))))) 1,912.90$) 952.19$))))) 200.9% 35.0% 1.16 Hanwha)Q)CELLS)Co)Ltd HQCL 2.2 USD 1,183.70$) 225.40$))))) 958.30$))))) 776.26$))))) 123.5% 25.0% 1.03 SolarEdge)Technologies)Inc SEDG N/A USD %$))))))))))) 151.80$))))) (151.80)$))) 565.13$))))) %26.9% 35.0% N/A Sunrun)Inc. RUN N/A USD 993.40$))))) 207.50$))))) 785.90$))))) 516.92$))))) 152.0% 34.0% N/A Mean 2.39 96.8% 33.2% 1.22 Median 2.31 136.0% 35.0% 1.10 Austal$Ltd$(ASX:$ASB)$@$Levered$Beta$&$WACC$Calculation Unlevered Total Total Net Equity Net$Debt$/ Re@levered Name Ticker Beta Currency Debt$(mm) Cash$(mm) Debt$(mm) Value$(mm) Equity$Ratio Tax$Rate Beta Candaian$Solar$Inc. CSIQ 2.95 USD 2,449.00$$ 495.10$$$$$$ 1,953.90$$ 687.82$$$$$$ 284.1% 25.0% 10.83$$$$$$$$$ Cost$of$Equity$Based$on$Comparables: 26.4% Cost$of$Equity$Based$on$Historical$Beta: 32.0% WACC)=)Cost)of)Equity)*)%)Equity)+)Cost)of)Debt)*)%)Debt)*)(1)%)Tax)Rate)) WACC 11.4% Historical$Beta Cost$of$Debt
  43. 43. ! CSIQ!pg.$8! Exhibit 4: DCF Model Exhibit 5: DCF Sensitivity Analysis In#USD Historicals Projected 5/Year CY/2013 CY/2014 CY/2015 CY/2016E CY/2017E CY/2018E CY/2019E CY/2020E CAGR 1 2 3 4 5 x Sales 1,654.36$000 2,960.63$000 3,467.63$000 3,606.33$000 3,750.58$000 3,900.61$000 4,056.63$000 4,218.90$000 4.0% EBITDA 183.80$000000 448.94$000000 368.99$000000 386.56$000000 405.76$000000 425.89$000000 446.97$000000 469.06$000000 4.9% Less:00Depreciation (79.73)$0000000 (81.07)$0000000 (91.98)$0000000 (95.66)$0000000 (99.49)$0000000 (103.47)$00000 (107.61)$00000 (111.91)$00000 Less:00Amortization (1.10)$000000000 (1.56)$000000000 (2.24)$000000000 (2.20)$000000000 (2.29)$000000000 (2.38)$000000000 (2.48)$000000000 (2.58)$000000000 x EBIT 102.98$000000 366.31$000000 274.77$000000 288.69$000000 303.98$000000 320.04$000000 336.89$000000 354.57$000000 5.2% Less:0Taxes0@ 25.0% (25.75)$0000000 (91.58)$0000000 (68.69)$0000000 (72.17)$0000000 (76.00)$0000000 (80.01)$0000000 (84.22)$0000000 (88.64)$0000000 NOPAT 77.24$00000000 274.74$000000 206.08$000000 216.52$000000 227.99$000000 240.03$000000 252.66$000000 265.93$000000 Plus:00Depreciation 95.66$00000000 99.49$00000000 103.47$000000 107.61$000000 111.91$000000 Plus:00Amortization 2.20$0000000000 2.29$0000000000 2.38$0000000000 2.48$0000000000 2.58$0000000000 Less:00Capital0expenditures (79.34)$0000000 (82.51)$0000000 (85.81)$0000000 (89.25)$0000000 (92.82)$0000000 0+0/0R00Changes0in0working0capital (83.57)$0000000 (1.32)$000000000 (1.41)$000000000 (1.49)$000000000 (1.58)$000000000 x Unlevered/Free/Cash/Flow 151.47$////// 245.93$////// 258.66$////// 272.01$////// 286.02$////// Unlevered(Free(Cash(Flow(Growth(Rate 62.4% 5.2% 5.2% 5.1% Gordon/Growth/Perpetuity/Method EBITDA/Exit/Multiple/Method Weighted/average/cost/of/capital: 11.4% Weighted/average/cost/of/capital: 11.4% Net0present0value0of0free0cash0flow 863.72$000000 Net0present0value0of0free0cash0flow 863.72$000000 Growth/rate/of/FCF/after/Year/5 3.0% Exit/multiple 7.4x Terminal/value 3,492.01$000 Terminal/value 3,480.58$000 Present0value0of0the0terminal0value 2,032.07$000 Present0value0of0the0terminal0value 2,025.42$000 Enterprise/Value 2,895.79$/// Enterprise/Value 2,889.14$/// 0LESS:0Net0Debt 1,953.90$000 0LESS:0Net0Debt 1,953.90$000 Equity/Value 941.89$////// Equity/Value 935.24$////// Diluted0shares: 62.672 Diluted0shares: 62.672 x Equity/Value/Per/Share 15.03$//////// Equity/Value/Per/Share 14.92$//////// alysis DCF$Sensitivity$Table$2$Perpetuity WACC 15.03$''''''' 10.0% 10.3% 10.5% 10.8% 11.0% 11.3% 11.5% 11.8% 1.8% 18.11$''''''' 16.60$''''''' 15.18$''''''' 13.83$''''''' 12.56$''''''' 11.36$''''''' 10.22$''''''' 9.13$''''''''' 2.0% 19.29$''''''' 17.70$''''''' 16.21$''''''' 14.80$''''''' 13.47$''''''' 12.21$''''''' 11.01$''''''' 9.88$''''''''' 2.3% 20.55$''''''' 18.87$''''''' 17.30$''''''' 15.82$''''''' 14.42$''''''' 13.10$''''''' 11.85$''''''' 10.67$''''''' 2.5% 21.89$''''''' 20.12$''''''' 18.46$''''''' 16.90$''''''' 15.43$''''''' 14.05$''''''' 12.74$''''''' 11.51$''''''' 2.8% 23.32$''''''' 21.45$''''''' 19.69$''''''' 18.05$''''''' 16.50$''''''' 15.05$''''''' 13.68$''''''' 12.38$''''''' 3.0% 24.86$''''''' 22.87$''''''' 21.01$''''''' 19.27$''''''' 17.64$''''''' 16.11$''''''' 14.67$''''''' 13.31$''''''' DCF$Sensitivity$Table$2$Multiple WACC $14.92 10.0% 10.3% 10.5% 10.8% 11.0% 11.3% 11.5% 11.8% 6.5x 13.37$''''''' 12.93$''''''' 12.49$''''''' 12.07$''''''' 11.64$''''''' 11.22$''''''' 10.81$''''''' 10.40$''''''' 6.8x 14.53$''''''' 14.08$''''''' 13.63$''''''' 13.19$''''''' 12.75$''''''' 12.32$''''''' 11.90$''''''' 11.48$''''''' 7.0x 15.69$''''''' 15.23$''''''' 14.77$''''''' 14.31$''''''' 13.86$''''''' 13.42$''''''' 12.98$''''''' 12.55$''''''' 7.3x 16.85$''''''' 16.38$''''''' 15.90$''''''' 15.43$''''''' 14.97$''''''' 14.52$''''''' 14.07$''''''' 13.62$''''''' 7.5x 18.02$''''''' 17.52$''''''' 17.04$''''''' 16.56$''''''' 16.08$''''''' 15.61$''''''' 15.15$''''''' 14.70$''''''' 7.8x 19.18$''''''' 18.67$''''''' 18.17$''''''' 17.68$''''''' 17.19$''''''' 16.71$''''''' 16.24$''''''' 15.77$''''''' Terminal$ Growth$Rate Exit$EBITDA$ Multiple
  44. 44. ! CSIQ!pg.$9! Credit Analysis We expect CSIQ's leverage to remain high as the company will keep its aggressive investment activities. We expect CSIQ to continue to raise long-term debt while paying off outstanding $650 million in long-term debt that is scheduled to mature. However, as it did in the past, we expect that the company will keep its outstanding growth track in revenue and unlevered free cash flow that will be used to slowly lower its debt-to-EBITDA ratio over the next three years, from 5.2x to a 3.9x range. The company has been putting in strict working capital controls, and we believe that the Quick Ratio will continue to stay around 0.5 and the Current Ratio at 1.0. According to Standard and Poor’s, the deleveraging estimate also factors in our expectation that the company will reduce its capital expenditure for its upstream manufacturing business to $550 million in 2016 owing to slowing demand growth. We project that CSIQ's EBITDA margin will slightly increase to reach 11% level in the coming three years, from 10.6% in the Fiscal 2015 based on the company’s cost-control and efficiency-improvement efforts. Due to its sensible capital management and adjustable manufacturing capabilities, it appears that CSIQ will continue to outperform its solar competitors throughout industry downturns (S&P). According to S&P Credit Rating services, the company may run into liquidity problem of (1) the disposal of solar farm projects is delayed, or (2) CSIQ's profitability deteriorates materially; or (3) the company's working capital management weakens; or (4) the company adopts more aggressive debt-funded investments in solar projects or capital expenditure. However, based on the outstanding sales growth and major contract bake-off win over its competitors in Mexico, capturing more market share, and considering talented, reliable, and proven management team, we are not bearish on the company’s future earnings power. Exhibit 6: Debt Schedule In#$USD Historical*Year*Ending*December*31 Projected*Year*Ending*December*31 CY*2013 CY*2014 CY*2015 CY*2016E CY*2017E CY*2018E CY*2019E CY*2020E Cash%flow%available%for%financing%activities 64.18$%%%%% 216.27$%%%%%% 230.55$%%%%%% 247.99$%%%%%% 258.28$%%%%%% Repurchase%of%equity D$%%%%%%%%% D$%%%%%%%%%%%% D$%%%%%%%%%%%% D$%%%%%%%%%%%% D$%%%%%%%%%%%% Dividends D$%%%%%%%%% D$%%%%%%%%%%%% D$%%%%%%%%%%%% D$%%%%%%%%%%%% D$%%%%%%%%%%%% Option%proceeds D$%%%%%%%%% D$%%%%%%%%%%%% D$%%%%%%%%%%%% D$%%%%%%%%%%%% D$%%%%%%%%%%%% Plus:%beginning%cash%balance 557.41$%% 549.03$%%%%%% 724.26$%%%%%% 766.73$%%%%%% 903.16$%%%%%% Less:%minimum%cash%balance (100.00)$% (100.00)$%%%% (100.00)$%%%% (100.00)$%%%% (100.00)$%%%% Cash%available%for%debt%repayment 521.59$%% 665.30$%%%%%% 854.81$%%%%%% 914.72$%%%%%% 1,061.44$%% LongDterm%debt%issuance 100.00$%% 100.00$%%%%%% 100.00$%%%%%% 100.00$%%%%%% 100.00$%%%%%% LongDterm%debt%(repayment) (145.23)$% (141.04)$%%%% (288.08)$%%%% (211.56)$%%%% (3.70)$%%%%%%%%% x Excess*cash*available*for*revolver 476.36$** 624.26$****** 666.73$****** 803.16$****** 1,157.74$** LongIterm*debt Beginning%balance 773.94$%% 732.90$%%%%%% 544.82$%%%%%% 433.26$%%%%%% 529.56$%%%%%% Issuance 100.00$%% 100.00$%%%%%% 100.00$%%%%%% 100.00$%%%%%% 100.00$%%%%%% (Repayment) (145.23)$% (141.04)$%%%% (288.08)$%%%% (211.56)$%%%% (3.70)$%%%%%%%%% ShortDterm%portion 136.45$%%%%%% 54.88$%%%%%%%% 145.23$%%%%%% 141.04$%% 288.08$%%%%%% 211.56$%%%%%% 3.70$%%%%%%%%%% D$%%%%%%%%%%%% x Ending*balance 151.39$****** 284.30$****** 773.94$****** 732.90$** 544.82$****** 433.26$****** 529.56$****** 629.56$****** Ave.%Interest%Rate 6.8% 6.4% 7.9% 8.6% 8.0% LT*Debt*/*EBITDA 1.9x 1.3x 1.0x 1.2x 1.3x LongITerm*Debt: Due 2016 2017 2018 2019 2020 Interest*Rate Balance 2016 0.50 0.00 0.00 0.00 0.00 5.0% 141.04$%%%%%% 3.53$%%%%%%% D$%%%%%%%%%%%% D$%%%%%%%%%%%% D$%%%%%%%%%%%% D$%%%%%%%%%%%% 2017 1.00 0.50 0.00 0.00 0.00 5.0% 288.08$%%%%%% 14.40$%%%%% 7.20$%%%%%%%%%% D$%%%%%%%%%%%% D$%%%%%%%%%%%% D$%%%%%%%%%%%% 2018 1.00 1.00 1.00 0.00 0.00 5.0% 211.56$%%%%%% 10.58$%%%%% 10.58$%%%%%%%% 10.58$%%%%%%%% D$%%%%%%%%%%%% D$%%%%%%%%%%%% 2019 1.00 1.00 1.00 1.00 0.00 5.0% 3.70$%%%%%%%%%% 0.18$%%%%%%% 0.18$%%%%%%%%%% 0.18$%%%%%%%%%% 0.18$%%%%%%%%%% D$%%%%%%%%%%%% Thereafter 1.00 1.00 1.00 1.00 1.00 5.0% 103.24$%%%%%% 5.16$%%%%%%% 5.16$%%%%%%%%%% 5.16$%%%%%%%%%% 5.16$%%%%%%%%%% 5.16$%%%%%%%%%% 5.0% 5.00$%%%%%%% 5.00$%%%%%%%%%% 5.00$%%%%%%%%%% 5.00$%%%%%%%%%% 5.00$%%%%%%%%%% 5.0% 5.00$%%%%%%%%%% 5.00$%%%%%%%%%% 5.00$%%%%%%%%%% 5.00$%%%%%%%%%% 5.0% 5.00$%%%%%%%%%% 5.00$%%%%%%%%%% 5.00$%%%%%%%%%% 5.0% 5.00$%%%%%%%%%% 5.00$%%%%%%%%%% 5.0% 5.00$%%%%%%%%%% ShortITerm*Borrowings: 2.0% $1,015.54 $20.31 $20.31 $20.31 $20.31 $20.31 x Total*Interest*Expense $59.17 $53.44 $51.24 $45.66 $50.47 Historicals*not*needed Historicals*not*needed Historicals*not*needed New*Debt Period'"n"
  45. 45. ! CSIQ!pg.$10! Exhibit 7: Income Statement Income'StatementIncome'Statement In#USD Historical'Year'Ending'Dec.'31 Projected'Year'Ending'Dec.'31 8Y FY'2013 FY'2014 FY'2015 FY'2016E FY'2017E FY'2018E FY'2019E FY'2020E CAGR 1 2 3 4 5 6 7 8 x Revenue /$//1,654.36/ /$//2,960.63/ /$//3,467.63/ 3,606.33$// 3,750.58$// 3,900.61$// 4,056.63$// 4,218.90$// 12.4% Cost/Of/Goods/Sold /$//1,378.66/ /$//2,379.63/ /$//2,890.86/ 3,006.49$// 3,123.00$// 3,244.02$// 3,369.72$// 3,500.29$// ''Gross'Profit '$'''''275.70' '$'''''580.99' '$'''''576.77' '$'''''599.84' '$'''''627.59' '$'''''656.59' '$'''''686.91' '$'''''718.60' Selling/General/&/Admin/Exp. /$/////161.03/ /$/////202.62/ /$/////284.94/ 298.06$///// 309.98$///// 322.38$///// 335.28$///// 348.69$///// R/&/D/Exp. /$///////11.69/ /$///////12.06/ /$///////17.06/ 19.30$/////// 20.07$/////// 20.87$/////// 21.71$/////// 22.58$/////// ''Other'Operating'Exp.,'Total '$'''''172.71' '$'''''214.68' '$'''''302.00' '$'''''317.36' '$'''''330.05' '$'''''343.26' '$'''''356.99' '$'''''371.27' x EBIT '$'''''102.98' '$'''''366.31' '$'''''274.77' '$'''''282.48' '$'''''297.53' '$'''''313.33' '$'''''329.92' '$'''''347.34' 16.4% Interest/Expense /$/////(46.20) /$/////(48.90) /$/////(53.60) (59.17)$////// (53.44)$////// (51.24)$////// (45.66)$////// (50.47)$////// Interest/and/Invest./Income /$///////11.97/ /$///////14.36/ /$///////19.17/ 19.17$/////// 19.17$/////// 19.17$/////// 19.17$/////// 19.17$/////// ''Net'Interest'Exp. '$'''''(34.23) '$'''''(34.54) '$'''''(34.43) '$'''''(39.99) '$'''''(34.26) '$'''''(32.06) '$'''''(26.48) '$'''''(31.30) EBT'excl.'unusaul'items '$'''''''68.75' '$'''''331.78' '$'''''240.34' '$'''''242.49' '$'''''263.27' '$'''''281.27' '$'''''303.44' '$'''''316.04' 21.0% Income/Tax/Expense /$/////////7.64/ /$///////77.43/ /$///////49.51/ 60.62$/////// 65.82$/////// 70.32$/////// 75.86$/////// 79.01$/////// ''Earnings'from'Cont.'Ops. '$'''''''61.11' '$'''''254.35' '$'''''190.83' '$'''''181.87' '$'''''197.45' '$'''''210.95' '$'''''227.58' '$'''''237.03' Minority/Int./in/Earnings /$/////(13.90) /$///////(4.40) /$///////(1.50) (1.50)$//////// (1.50)$//////// (1.50)$//////// (1.50)$//////// (1.50)$//////// x ''Net'Income '$'''''''47.21' '$'''''249.95' '$'''''189.33' '$'''''180.37' '$'''''195.95' '$'''''209.45' '$'''''226.08' '$'''''235.53' 22.2% Weighted/Avg./Basic/Shares/Out. ////////46.307/ ////////54.408/ ////////55.729/ ////////57.800/ ////////57.800/ ////////57.800/ ////////57.800/ ////////57.800/ Weighted/Avg./Diluted/Shares/Out. ////////50.388/ ////////59.355/ ////////60.426/ ////////62.672/ ////////62.672/ ////////62.672/ ////////62.672/ ////////62.672/ Dilution(Ratio 108.8% 109.1% 108.4% 108.4% 108.4% 108.4% 108.4% 108.4% Basic/EPS /$/////////1.02/ /$/////////4.59/ /$/////////3.40/ /$/////////3.12/ /$/////////3.39/ /$/////////3.62/ /$/////////3.91/ /$/////////4.07/ x Diluted/EPS /$/////////0.94/ /$/////////4.21/ /$/////////3.13/ /$/////////2.88/ /$/////////3.13/ /$/////////3.34/ /$/////////3.61/ /$/////////3.76/ Supplemental/Items FY/2013 FY/2014 FY/2015 FY/2016E FY/2017E FY/2018E FY/2019E FY/2020E EBITDA /$/////183.80/ /$/////448.94/ /$/////368.99/ 386.56$///// 405.76$///// 425.89$///// 446.97$///// 469.06$///// EBITA /$/////104.08/ /$/////367.87/ /$/////277.01/ 290.90$///// 306.27$///// 322.42$///// 339.36$///// 357.15$///// EBIT /$/////102.98/ /$/////366.31/ /$/////274.77/ 282.48$///// 297.53$///// 313.33$///// 329.92$///// 347.34$///// Ratios/&/assumptions FY/2013 FY/2014 FY/2015 FY/2016E FY/2017E FY/2018E FY/2019E FY/2020E Sales/growth/rate 79.0% 17.1% 4.0% 4.0% 4.0% 4.0% 4.0% COGS///Sales 83.3% 80.4% 83.4% 83.4% 83.3% 83.2% 83.1% 83.0% 0.1% Gross/margin 16.7% 19.6% 16.6% 16.6% 16.7% 16.8% 16.9% 17.0% SG&A/expenses/(as/a/%/of/sales) 9.7% 6.8% 8.2% 8.3% 8.3% 8.3% 8.3% 8.3% R&D/expenses/(as/a/%/of/sales) 0.7% 0.4% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% StockZBased/Comp. /$/////////6.18/ /$/////////5.09/ /$/////////5.97/ 6.21$///////// 6.45$///////// 6.70$///////// 6.96$///////// 7.23$///////// %(of(OpEx 0.40% 0.20% 0.19% 0.19% 0.19% 0.19% 0.19% 0.19% Effective/tax/rate 11.1% 23.3% 20.6% 25.0% 25.0% 25.0% 25.0% 25.0%
  46. 46. ! CSIQ!pg.$11! Exhibit 8: Balance Sheet In#USD Historical*Year*Ending*Dec.*31 Projected*Year*Ending*Dec.*31 FY*2013 FY*2014 FY*2015 FY*2016E FY*2017E FY*2018E FY*2019E FY*2020E Cash%And%Equivalents %$%%%%%%%%%228.25% %$%%%%%%%%%549.54% %$%%%%%%%%%557.41% 549.03$%%%%%%%%%% 724.26$%%%%%%%%%% 766.73$%%%%%%%%%% 903.16$%%%%%%%%%% 1,257.74$%%%%%%% Accounts%Receivable %$%%%%%%%%%299.33% %$%%%%%%%%%395.56% %$%%%%%%%%%537.75% 555.97$%%%%%%%%%% 578.20$%%%%%%%%%% 601.33$%%%%%%%%%% 625.39$%%%%%%%%%% 650.40$%%%%%%%%%% Other%Receivables %$%%%%%%%%%%%16.16% %$%%%%%%%%%%%20.91% %$%%%%%%%%%%%45.06% 35.85$%%%%%%%%%%%% 37.29$%%%%%%%%%%%% 38.78$%%%%%%%%%%%% 40.33$%%%%%%%%%%%% 41.94$%%%%%%%%%%%% Inventory %$%%%%%%%%%231.16% %$%%%%%%%%%432.33% %$%%%%%%%%%334.49% 448.48$%%%%%%%%%% 465.86$%%%%%%%%%% 483.92$%%%%%%%%%% 502.67$%%%%%%%%%% 522.15$%%%%%%%%%% Prepaid%Exp. %$%%%%%%%%%%%69.57% %$%%%%%%%%%140.81% %$%%%%%%%%%%%75.78% 136.12$%%%%%%%%%% 141.41$%%%%%%%%%% 146.91$%%%%%%%%%% 152.62$%%%%%%%%%% 158.55$%%%%%%%%%% Deferred%Tax%Assets,%Curr. %$%%%%%%%%%%%29.14% %$%%%%%%%%%%%40.81% %$%%%%%%%%%%%30.01% 30.01$%%%%%%%%%%%% 30.01$%%%%%%%%%%%% 30.01$%%%%%%%%%%%% 30.01$%%%%%%%%%%%% 30.01$%%%%%%%%%%%% Restricted%Cash %$%%%%%%%%%451.15% %$%%%%%%%%%439.96% %$%%%%%%%%%534.71% 534.71$%%%%%%%%%% 534.71$%%%%%%%%%% 534.71$%%%%%%%%%% 534.71$%%%%%%%%%% 534.71$%%%%%%%%%% Other%Current%Assets %$%%%%%%%%%394.60% %$%%%%%%%%%295.96% %$%%%%%%%%%148.88% 148.88$%%%%%%%%%% 148.88$%%%%%%%%%% 148.88$%%%%%%%%%% 148.88$%%%%%%%%%% 148.88$%%%%%%%%%% **Total*Current*Assets *$******1,719.36* *$******2,315.89* *$******2,264.09* *$******2,439.06* *$******2,660.63* *$******2,751.27* *$******2,937.76* *$******3,344.39* Property,%Plant%&%Equipment %$%%%%%%%%%407.60% %$%%%%%%%%%469.35% %$%%%%%%1,531.49% 1,515.17$%%%%%%% 1,498.20$%%%%%%% 1,480.54$%%%%%%% 1,462.18$%%%%%%% 1,443.09$%%%%%%% LongPterm%Investments %$%%%%%%%%%%%34.07% %$%%%%%%%%%%%38.82% %$%%%%%%%%%187.13% 187.13$%%%%%%%%%% 187.13$%%%%%%%%%% 187.13$%%%%%%%%%% 187.13$%%%%%%%%%% 187.13$%%%%%%%%%% Goodwill %P% %P% %$%%%%%%%%%%%%%7.61% 7.61$%%%%%%%%%%%%% 7.61$%%%%%%%%%%%%%% 7.61$%%%%%%%%%%%%%% 7.61$%%%%%%%%%%%%%% 7.61$%%%%%%%%%%%%%% Other%Intangibles %$%%%%%%%%%%%24.43% %$%%%%%%%%%%%19.89% %$%%%%%%%%%108.03% 105.83$%%%%%%%%%% 103.53$%%%%%%%%%% 101.15$%%%%%%%%%% 98.67$%%%%%%%%%%%% 96.10$%%%%%%%%%%%% Deferred%Tax%Assets,%LT %$%%%%%%%%%%%62.95% %$%%%%%%%%%%%66.86% %$%%%%%%%%%%%97.13% 97.13$%%%%%%%%%%%% 97.13$%%%%%%%%%%%% 97.13$%%%%%%%%%%%% 97.13$%%%%%%%%%%%% 97.13$%%%%%%%%%%%% Other%LongPTerm%Assets %$%%%%%%%%%205.32% %$%%%%%%%%%161.62% %$%%%%%%%%%221.76% 221.76$%%%%%%%%%% 221.76$%%%%%%%%%% 221.76$%%%%%%%%%% 221.76$%%%%%%%%%% 221.76$%%%%%%%%%% x Total*Assets *$******2,453.74* *$******3,072.42* *$******4,417.25* *$******4,573.69* *$******4,776.00* *$******4,846.60* *$******5,012.26* *$******5,397.21* Accounts%Payable %$%%%%%%%%%639.38% %$%%%%%%%%%800.99% %$%%%%%%%%%985.76% 1,025.19$%%%%%%% 1,064.92$%%%%%%% 1,106.18$%%%%%%% 1,149.05$%%%%%%% 1,193.57$%%%%%%% Accrued%Exp. %$%%%%%%%%%%%19.51% %$%%%%%%%%%%%17.51% %$%%%%%%%%%%%28.21% 31.20$%%%%%%%%%%%% 32.42$%%%%%%%%%%%% 33.68$%%%%%%%%%%%% 34.98$%%%%%%%%%%%% 36.34$%%%%%%%%%%%% ShortPterm%Borrowings %$%%%%%%%%%642.06% %$%%%%%%%%%670.63% %$%%%%%%1,015.54% 1,015.54$%%%%%%% 1,015.54$%%%%%%% 1,015.54$%%%%%%% 1,015.54$%%%%%%% 1,015.54$%%%%%%% Curr.%Port.%of%LT%Debt %$%%%%%%%%%136.45% %$%%%%%%%%%%%54.88% %$%%%%%%%%%145.23% 141.04$%%%%%%%%%% 288.08$%%%%%%%%%% 211.56$%%%%%%%%%% 3.70$%%%%%%%%%%%%% P$%%%%%%%%%%%%%%% Curr.%Port.%of%Cap.%Leases %P% %P% %$%%%%%%%%%%%%%9.50% P$%%%%%%%%%%%%%%% P$%%%%%%%%%%%%%%% P$%%%%%%%%%%%%%%% P$%%%%%%%%%%%%%%% P$%%%%%%%%%%%%%%% Def.%Tax%Liability,%Curr. %$%%%%%%%%%%%57.92% %$%%%%%%%%%%%94.71% %$%%%%%%%%%%%%%1.43% 1.43$%%%%%%%%%%%%% 1.43$%%%%%%%%%%%%%% 1.43$%%%%%%%%%%%%%% 1.43$%%%%%%%%%%%%%% 1.43$%%%%%%%%%%%%%% Other%Current%Liabilities %$%%%%%%%%%283.04% %$%%%%%%%%%310.54% %$%%%%%%%%%470.67% 470.67$%%%%%%%%%% 470.67$%%%%%%%%%% 470.67$%%%%%%%%%% 470.67$%%%%%%%%%% 470.67$%%%%%%%%%% **Total*Current*Liabilities *$******1,778.36* *$******1,949.27* *$******2,656.32* *$******2,685.06* *$******2,873.04* *$******2,839.05* *$******2,675.36* *$******2,717.54* LongPTerm%Debt %$%%%%%%%%%151.39% %$%%%%%%%%%284.30% %$%%%%%%%%%773.94% 732.90$%%%%%%%%%% 544.82$%%%%%%%%%% 433.26$%%%%%%%%%% 529.56$%%%%%%%%%% 629.56$%%%%%%%%%% Capital%Leases %P% %P% %$%%%%%%%%%%%17.84% P$%%%%%%%%%%%%%%% P$%%%%%%%%%%%%%%% P$%%%%%%%%%%%%%%% P$%%%%%%%%%%%%%%% P$%%%%%%%%%%%%%%% Def.%Tax%Liability,%NonPCurr. %$%%%%%%%%%%%24.04% %$%%%%%%%%%%%10.35% %$%%%%%%%%%%%19.03% 19.03$%%%%%%%%%%%% 19.03$%%%%%%%%%%%% 19.03$%%%%%%%%%%%% 19.03$%%%%%%%%%%%% 19.03$%%%%%%%%%%%% Other%NonPCurrent%Liabilities %$%%%%%%%%%%%87.50% %$%%%%%%%%%%%96.43% %$%%%%%%%%%117.62% 117.62$%%%%%%%%%% 117.62$%%%%%%%%%% 117.62$%%%%%%%%%% 117.62$%%%%%%%%%% 117.62$%%%%%%%%%% x Total*Liabilities *$******2,041.29* *$******2,340.34* *$******3,584.74* *$******3,554.60* *$******3,554.51* *$******3,408.95* *$******3,341.57* *$******3,483.76* Common*Equity *$*********390.53* *$*********716.61* *$*********818.97* 1,005.55$******* 1,207.95$******* 1,424.10$******* 1,657.14$******* 1,899.91$******* Minority%Interest %$%%%%%%%%%%%21.92% %$%%%%%%%%%%%15.47% %$%%%%%%%%%%%13.54% 13.54$%%%%%%%%%%%% 13.54$%%%%%%%%%%%% 13.54$%%%%%%%%%%%% 13.54$%%%%%%%%%%%% 13.54$%%%%%%%%%%%% x Total*Equity *$*********412.45* *$*********732.09* *$*********832.51* *$******1,019.09* *$******1,221.49* *$******1,437.64* *$******1,670.69* *$******1,913.45* x Total*Liabilities*And*Equity *$******2,453.74* *$******3,072.42* *$******4,417.25* *$******4,573.69* *$******4,776.00* *$******4,846.60* *$******5,012.26* *$******5,397.21* Balance'Check 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Balance%Sheet%Analysis%and%Drivers FY%2013 FY%2014 FY%2015 FY%2016E FY%2017E FY%2018E FY%2019E FY%2020E Current%ratio 0.97 1.19 0.85 0.91 0.93 0.97 1.10 1.23 Average%asset%turnover 0.67 0.96 0.79 0.79 0.79 0.80 0.81 0.78 Accounts%receivable%turnover 5.53 7.48 6.45 6.49 6.49 6.49 6.49 6.49 Inventory%turnover 5.96 5.50 8.64 6.70 6.70 6.70 6.70 6.70 Accounts%payable%turnover 2.16 2.97 2.93 2.93 2.93 2.93 2.93 2.93 Prepaid%Expenses,%%%of%OpEx 4.5% 5.4% 2.4% 4.1% 4.1% 4.1% 4.1% 4.1% Other%receivables,%%%of%sales 1.0% 0.7% 1.3% 1.0% 1.0% 1.0% 1.0% 1.0% Accrued%Expenses,%$%of%OpEx 1.3% 0.7% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% Number%of%days%in%the%period 365 Days%sales%outstanding 66.04 48.77 56.60 56.27 56.27 56.27 56.27 56.27 Days%in%inventory 61.20 66.31 42.23 54.45 54.45 54.45 54.45 54.45 Days%payable%outstanding 169.27 122.86 124.46 124.46 124.46 124.46 124.46 124.46 Cash*Conversion*Cycle P42.03 P7.78 P25.63 P13.74 P13.74 P13.74 P13.74 P13.74 Return%on%Asset 1.9% 8.1% 4.3% 3.9% 4.1% 4.3% 4.5% 4.4% Return%on%Equity 11.4% 34.1% 22.7% 17.7% 16.0% 14.6% 13.5% 12.3% Gross%cash 228.25$%%%%%%%%%% 549.54$%%%%%%%%%% 557.41$%%%%%%%%%% 549.03$%%%%%%%%%% 724.26$%%%%%%%%%% 766.73$%%%%%%%%%% 903.16$%%%%%%%%%% 1,257.74$%%%%%%% Net*debt* 701.65$%%%%%%%%%% 460.27$%%%%%%%%%% 1,377.29$%%%%%%% 1,340.44$%%%%%%% 1,124.18$%%%%%%% 893.63$%%%%%%%%%% 645.64$%%%%%%%%%% 387.36$%%%%%%%%%% Net%debt%per%share 13.92$%%%%%%%%%%%% 7.75$%%%%%%%%%%%%%% 22.79$%%%%%%%%%%%% 21.39$%%%%%%%%%%%% 17.94$%%%%%%%%%%%% 14.26$%%%%%%%%%%%% 10.30$%%%%%%%%%%%% 6.18$%%%%%%%%%%%%%% Debt%to%capital%ratio 63.0% 38.6% 62.3% 56.8% 47.9% 38.3% 27.9% 16.8% Cash*per*share 4.53$%%%%%%%%%%%%%% 9.26$%%%%%%%%%%%%% 9.22$%%%%%%%%%%%%%% 8.76$%%%%%%%%%%%%% 11.56$%%%%%%%%%%%% 12.23$%%%%%%%%%%%% 14.41$%%%%%%%%%%%% 20.07$%%%%%%%%%%%% Book%value%per%share 8.19$%%%%%%%%%%%%%% 12.33$%%%%%%%%%%%% 13.78$%%%%%%%%%%%% 16.26$%%%%%%%%%%%% 19.49$%%%%%%%%%%%% 22.94$%%%%%%%%%%%% 26.66$%%%%%%%%%%%% 30.53$%%%%%%%%%%%%
  47. 47. ! CSIQ!pg.$12! Exhibit 9: Statement of Cash Flows Dollars'in'Millions,'except'per'share In#USD Historical*Year*Ending*Dec.*31 Projected*Year*Ending*Dec.*31 FY*2013 FY*2014 FY*2015 FY*2016E FY*2017E FY*2018E FY*2019E FY*2020E Cash*Flow*from*Opeartions: Net$Income $$$$$$$$31.66$ $$$$$$239.50$ $$$$$$171.86$ 180.37$$$$$ 195.95$$$$$ 209.45$$$$$ 226.08$$$$$ 235.53$$$$$ Non)cash#adjustments Depreciation$ $$$$$$$$79.73$ $$$$$$$$81.07$ $$$$$$$$91.98$ 95.66$$$$$$$ 99.49$$$$$$$ 103.47$$$$$ 107.61$$$$$ 111.91$$$$$ Amort.$of$Goodwill$and$Intangibles $$$$$$$$$$1.10$ $$$$$$$$$$1.56$ $$$$$$$$$$2.24$ 2.20$$$$$$$$$ 2.29$$$$$$$$$ 2.38$$$$$$$$$ 2.48$$$$$$$$$ 2.58$$$$$$$$$ (Gain)$Loss$From$Sale$Of$Assets $$$$$$$$$$3.61$ $$$$$$$$$$1.48$ $$$$$$$$$$1.80$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ (Gain)$Loss$On$Sale$Of$Invest. $J$ $J$ $$$$$$$$15.64$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ Asset$Writedown$&$Restructuring$Costs $$$$$$$$$$5.22$ $$$$$$$$$$3.88$ $$$$$$$$$$6.99$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ (Income)$Loss$on$Equity$Invest. $$$$$$$$$$3.06$ $$$$$$$$(0.50) $$$$$$$$$$0.64$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ StockJBased$Compensation $$$$$$$$$$6.18$ $$$$$$$$$$5.09$ $$$$$$$$$$5.97$ 6.21$$$$$$$$$ 6.45$$$$$$$$$ 6.70$$$$$$$$$ 6.96$$$$$$$$$ 7.23$$$$$$$$$ Provision$&$WriteJoff$of$Bad$debts $$$$$$$$(1.00) $$$$$$$$(8.50) $$$$$$$$$$3.67$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ Other$Operating$Activities $$$$$$$$26.64$ $$$$$$$$26.47$ $$$$$$(51.80) J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ Changes#to#Working#Capital Change$in$Acc.$Receivable $$$$$$(21.00) $$$$$$(91.10) $$$$$$(47.70) (9.01)$$$$$$$$ (23.67)$$$$$$ (24.62)$$$$$$ (25.60)$$$$$$ (26.63)$$$$$$ Change$In$Inventories $$$$$$$$28.92$ $$$$(256.30) $$$$$$$$58.79$ (113.99)$$$$ (17.38)$$$$$$ (18.05)$$$$$$ (18.75)$$$$$$ (19.48)$$$$$$ Change$in$Acc.$Payable $$$$$$$$44.23$ $$$$$$135.81$ $$$$$$(24.00) 39.43$$$$$$$ 39.73$$$$$$$ 41.27$$$$$$$ 42.86$$$$$$$ 44.52$$$$$$$ Change$in$Other$Net$Operating$Assets $$$$$$$$21.16$ $$$$$$126.69$ $$$$$$177.60$ (57.35)$$$$$$ (4.08)$$$$$$$$ (4.24)$$$$$$$$ (4.40)$$$$$$$$ (4.57)$$$$$$$$ x Net*Cash*From*Operating*Activities *$****229.51* *$****265.14* *$****413.68* *$****143.51* *$****298.78* *$****316.36* *$****337.23* *$****351.10* Capital$Expenditure $$$$$$(23.10) $$$$$$(65.10) $$$$(642.80) (79.34)$$$$$$ (82.51)$$$$$$ (85.81)$$$$$$ (89.25)$$$$$$ (92.82)$$$$$$ Sale$of$Property,$Plant,$and$Equipment $J$ $$$$$$$$$$0.79$ $$$$$$$$$$0.22$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ Cash$Acquisitions $J$ $J$ $$$$(196.80) J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ Divestitures $J$ $J$ $$$$$$$$(0.60) J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ Invest.$in$Marketable$&$Equity$Securt. $$$$$$$$(4.30) $$$$$$$$$$0.27$ $$$$$$(82.70) J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ Net$(Inc.)$Dec.$in$Loans$Originated/Sold $J$ $$$$$$(24.40) $$$$$$$$24.47$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ Other$Investing$Activities $$$$$$(10.10) $$$$$$(27.60) $$$$(100.90) J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ x Net*Cash*From*Investing*Activities *$****(37.50) *$**(116.04) *$**(999.12) *$****(79.34) *$****(82.51) *$****(85.81) *$****(89.25) *$****(92.82) Issuance$(Payment)$of$Short$Term$Debt (305.12)$$$$ (116.72)$$$$ 128.75$$$$$ (13.68)$$$$$$ 147.04$$$$$ (76.52)$$$$$$ (207.86)$$$$ (3.70)$$$$$$$$ Issuance$(Payment)$of$Long$Term$Debt 149.83$$$$$ 206.99$$$$$ 511.37$$$$$ (58.87)$$$$$$ (188.08)$$$$ (111.56)$$$$ 96.30$$$$$$$ 100.00$$$$$ Issuance$of$Common$Stock $$$$$$$$60.79$ $$$$$$118.35$ $$$$$$$$$$1.87$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ Other$Financing$Activities $$$$$$(10.40) $$$$$$(16.70) $$$$$$(22.50) J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ J$$$$$$$$$$$ x Net*Cash*From*Financing*Activities *$**(104.89) *$****191.92* *$****619.49* *$****(72.56) *$****(41.04) *$**(188.08) *$**(111.56) *$******96.30* Foreign(Exchange(Rate(Adj. ($(((((((0.90) ($(((((19.70) ($(((((30.50) =$((((((((( ( =$((((((((( ( =$((((((((( ( =$((((((((( ( =$((((((((( ( !!Net!Change!in!Cash !$!!!!!!86.21! !$!!!!321.32! !$!!!!!!!!3.55! !$!!!!!!(8.38) !$!!!!175.23! !$!!!!!!42.47! !$!!!!136.43! !$!!!!354.58! Beginning(Cash(Balance 557.41$((( ( 549.03$((( ( 724.26$((( ( 766.73$((( ( 903.16$((( ( Ending(Cash(Balance 557.41$((( ( 549.03$((( ( 724.26$((( ( 766.73$((( ( 903.16$((( ( 1,257.74$(
  48. 48. ! CSIQ!pg.$13! Exhibit 10: Statement of Shareholder Equity Exhibit 11: Depreciation & Amortization Disclaimer: The EPS / target price is likely to vary after the Q4 earnings call. We do not hold any shares of Canadian Solar Inc. stock. We are not related to / do not know any employees of CSIQ. This report contains certain forward-looking statements that are made pursuant to the safe harbor provisions of the federal securities laws. These forward-looking statements may be identified by a reference to a future period or by the use of forward-looking terminology. They may involve risks and uncertainties that could cause the actual results to differ materially from the results discussed in the forward-looking statements. Important factors that could cause actual results to differ include, but are not limited to, the risks detailed in reports and filings with the Securities and Exchange Commission (SEC) including, but are not limited to, Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Anyone wishing to understand the businesses discussed herein should review such reports and filings. The forward-looking statements speak only as of the date they are made and except for ongoing obligations under the U.S. federal securities laws, there is no obligation to update or revise forward-looking statements whether as a result of new information, future events or otherwise. This presentation contains information from third parties that is believed to be accurate and may be helpful to understanding the businesses discussed herein. Such information has not been independently verified, and no representation or warranty, express or implied, is being made with respect to the information contained in this presentation or presented orally. This report is not to be construed as an offer or the solicitation of an offer to buy or sell the securities herein mentioned. The model assigns each stock a rank from 1 star through 5 stars. = Strong Buy. = Weak Buy. = Hold. = Weak Sell. = Strong Sell. In#USD Historical*Year*Ending*Dec*31 Projected*Year*Ending*Dec*31 FY*2013 FY*2014 FY*2015 FY*2016E FY*2017E FY*2018E FY*2019E FY*2020E Beginning&equity&balance 832.51$&&&&& 1,019.09$& 1,221.49$&& 1,437.64$& 1,670.69$&& Net&income 180.37$&&&&& 195.95$&&&&& 209.45$&&&&& 226.08$&&&&& 235.53$&&&&& StockAbased&compensation&expense 6.21$&&&&&&&&& 6.45$&&&&&&&&& 6.70$&&&&&&&&& 6.96$&&&&&&&&& 7.23$&&&&&&&&& Repurchase&of&equity A$&&&&&&&&&&& A$&&&&&&&&&&& A$&&&&&&&&&&& A$&&&&&&&&&&& A$&&&&&&&&&&& Dividends A$&&&&&&&&&&& A$&&&&&&&&&&& A$&&&&&&&&&&& A$&&&&&&&&&&& A$&&&&&&&&&&& x Ending*equity*balance 412.45$***** 732.09$***** 832.51$***** 1,019.09$** 1,221.49$** 1,437.64$** 1,670.69$** 1,913.45$** Historicals*not*needed In#USD Historical*Year*Ending*Dec*31 Projected*Year*Ending*Dec*31 FY*2013 FY*2014 FY*2015 FY*2016E FY*2017E FY*2018E FY*2019E FY*2020E Sales 1,654.36$. 2,960.63$. 3,467.63$. 3,606.33$. 3,750.58$. 3,900.61$. 4,056.63$. 4,218.90$. x Capital.Expenditures.(PP&E) 23.10$....... 65.10$....... 642.80$.... 79.34$....... 82.51$....... 85.81$....... 89.25$....... 92.82$....... Capital'Expenditures'(PP&E)'as'%'of'Sales 1.4% 2.2% 18.5% 2.2% 2.2% 2.2% 2.2% 2.2% x Depreciation.expense 79.73$....... 81.07$....... 91.98$....... 95.66$....... 99.49$....... 103.47$.... 107.61$.... 111.91$.... Depreciation.as.%.of.Sales 4.8% 2.7% 2.7% 2.7% 2.7% 2.7% 2.7% 2.7% Depreciation'as'%'of'PP&E,'net 19.6% 17.3% 6.0% 6.3% 6.6% 7.0% 7.4% 7.8% Beginning.PP&E,.net 1,531.49$. 1,515.17$. 1,498.20$. 1,480.54$. 1,462.18$. Capital.expenditures 79.34$....... 82.51$....... 85.81$....... 89.25$....... 92.82$....... (Depreciation.expense) (95.66)$..... (99.49)$..... (103.47)$... (107.61)$... (111.91)$... (Asset.sales.and.writeKoffs) K$........... K$........... K$........... K$........... K$........... x Ending*PP&E,*net 407.60$**** 469.35$**** 1,531.49$* 1,515.17$* 1,498.20$* 1,480.54$* 1,462.18$* 1,443.09$* FY*2013 FY*2014 FY*2015 FY*2016E FY*2017E FY*2018E FY*2019E FY*2020E Sales 1,654.36$. 2,960.63$. 3,467.63$. 3,606.33$. 3,750.58$. 3,900.61$. 4,056.63$. 4,218.90$. x Amortization.expense 1.10$......... 1.56$......... 2.24$......... 2.20$......... 2.29$......... 2.38$......... 2.48$......... 2.58$......... Amortization'as'%'of'sales 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% Beginning.definite.life.intangibles,.net. 108.03$.... 105.83$.... 103.53$.... 101.15$.... 98.67$....... (Amortization.expense) (2.20)$....... (2.29)$....... (2.38)$....... (2.48)$....... (2.58)$....... (WriteKoffs) K$........... K$........... K$........... K$........... K$........... x Ending*intangibles,*net 24.43$******* 19.89$******* 108.03$**** 105.83$**** 103.53$**** 101.15$**** 98.67$******* 96.10$******* Historicals*not*needed Historicals*not*needed
  49. 49. ! CSIQ!pg.$14! Works Cited Baker, Jill. "First Solar Slashes Revenue Expectations By $1B As Demand For Solar In China Slows." Forbes. N.p., 4 Nov. 2016. Web. "Bloomberg Markets, CSIQ." Bloomberg.com. Bloomberg, n.d. Web. 09 Dec. 2016. Cheadle, Bruce. "Trump Presidency Won't Change Canada's Climate Plan: Trudeau." The Huffington Post. N.p., 2016. Web. 09 Dec. 2016. "China Could Be the New World Leader on Climate Change." Inverse. N.p., Web. 09 Dec. 2016. Clover, Ian. "Solar to Be a Clear Winner in Global Energy over next 25 Years, Says IEA." PV Magazine. N.p., 16 Nov. 2016. Web. "CSIQ Financial Data." S&P Capital IQ. S&P Capital IQ, 2016. Web. Hoium, Travis. "Canadian Solar Inc., Best Moves in 2016 So Far." The Motley Fool. N.p., 2016. Web. 09 Dec. 2016. Hoium, Travis. "Better Buy: Canadian Solar Inc. vs. First Solar." The Motley Fool. N.p., 2016. Web. 09 Dec. 2016. Koerth-Baker, Maggie. "It’s Hard To Tell Whether Trump Supports Renewable Energy — And That May Not Matter Much." FiveThirtyEight. N.p., 2016. Web. 09 Dec. 2016. "Making the Difference to Every Life We Touch." Canadian Solar. N.p., n.d. Web. 09 Dec. 2016. "Making the Difference to Solar Projects." Projects | Canadian Solar. N.p., n.d. Web. 09 Dec. 2016. Persinos, John. "This Solar Stock Could Rise Nearly 75% in 2016." TheStreet. N.p., 2016. Web. 09 Dec. 2016.
  50. 50. ! CSIQ!pg.$15! Pothecary, Sam. "Canadian Solar Enters into New Distribution Agreement in Mexico." PV Magazine. N.p., 2016. Web. Robinson, David. "Will a Trump Presidency Mean the End of America." Government Technology. N.p., 2016. Web. 09 Dec. 2016. "S&P Downgrades Canadian Solar (CSIQ) to 'BB-'; Outlook Is Negative." Street Insider. N.p., 31 Aug. 2016. Web. "The Canadian Solar Difference." Canadian Solar. N.p., n.d. Web. 09 Dec. 2016. "U.S. Energy Information Administration - EIA - Independent Statistics and Analysis." International Energy Agency. N.p., n.d. Web. 09 Dec. 2016. Warren, Chris. "Renewables Are Outpacing Coal in India." Greentech Media. N.p., 2016. Web. 09 Dec. 2016. Zino, Angelo. S&P Capital IQ Equity Research Canadian Solar, CSIQ. Web. 09 Dec. 2016.

×