Canadian Solar saw demand for its products increase ahead of expectations in the second quarter of 2020, though revenues were hit by a drop in average selling prices and a slowdown in project sales.
The company shipped 2.9 GW of modules in Q2, a 31% increase over the previous quarter, and exceeding the company’s forecast of 2.5-2.7 GW. At $696 million, net revenue also came in ahead of the forecast $630-680 million but fell significantly from $826 million in the previous quarter and $1.036 billion in Q2 2019. The company attributed this fall to lower average selling prices for modules and delays to project execution and sales related to the ongoing impacts of COVID-19. Gross profits also fell quarter on quarter, from $223 million in Q1 2020 to $147 million in the second quarter.
“We are benefiting from a demand rebound across most of our markets, with our order backlog for the second half of 2020 and even next year already exceeding our previous expectations,” said Canadian Solar President and COO Yan Zhuang. “While the current polysilicon supply disruption and shortage present a near-term challenge, we are positioning ourselves for long-term growth.”
A major part of this long term growth positioning is the company’s plan for a new listing on a Chinese stock exchange. Two weeks ago plans were announced for a listing on either the Shanghai Stock Exchange’s Science and Technology Innovation Board (“STAR market”) or the Shenzhen Stock Exchange’s ChiNext Market.
Canadian Solar says it has begun the pre-IPO process of raising capital and converting part of the business to a Sino-foreign joint-stock company, as is required by the listing regulations. This investment round is expected to be completed by the end of September, while the listing process overall is set to take 18-24 months.
“If successful, it [the new listing] will give us greater access to additional, lower-cost sources of capital and allow us to grow faster at a time when we believe growth in the solar industry and market consolidation are both set to accelerate,” said Canadian Solar Chairman and CEO Shawn Qu. “In addition, we believe the listing will help us unlock value for shareholders by addressing our valuation gap relative to China-listed solar companies.”
Qu added that the company remained fully committed to its existing listing on the U.S.-based NASDAQ stock exchange.
The company has slightly increased its guidance for full-year 2020 shipments from 10 GW to 11-12 GW. And in 2021, preparations are being made for 18-20 GW in shipments. “We are encouraged to see demand rebounding globally, as more companies and consumers worldwide insist on sustainable power sources,” Qu said. “We expect the impact of the polysilicon supply disruption to lessen over the coming quarters as polysilicon suppliers restore their temporarily shut-down capacities and restart some of the currently idled, higher-cost capacities.”
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