Canadian Solar Completes Divestiture of Power Plant in Japan

Canadian Solar Inc. CSIQ recently completed the divestment of an operating solar power plant in Izu-shi, Shizuoka Prefecture of Japan to Canadian Solar Infrastructure Fund (CSIF) for $42.1 million. The solar plant, powered by 30,202 Canadian Solar KuMax modules, boasts a generating capacity of 10.8 megawatt-peak (MWp).

Solar Market Prospects in Japan

Per a report published by Fitch last year, an additional 17 gigawatts (GW) of solar photovoltaic plants are predicted to be connected to the Japanese grid between 2018 and 2020. This indicates that Japan has a flourishing solar energy market, which offers growth prospects for solar companies like Canadian Solar.

Currently, in Japan, Canadian Solar's late-stage portfolio of ready to build, under construction or operational projects stands at approximately 217 MWp. Considering the expanding solar market in this nation, monetization of this project pipeline should boost Canadian Solar’s profit margin, in the coming days.

Project Monetization

With the rapidly expanding solar market across the globe, monetization of projects is significantly favoring solar players and boosting their top-line performance. To this end, it is imperative to mention that Canadian Solar’s global late-stage project pipeline stands at 3.4 gigawatts as of Sep 30, 2019, which the company is committed to monetize in the coming days.

Other solar players like Canadian Solar, which offer valuable solar energy solutions, are following this strategy to reap the benefits of the enhancing solar market globally. For instance, in October 2019, ReneSola SOL entered into agreements to sell 24 small-scale DG projects in Hungary to Optum — a leading international solar investment company.

In November, JinkoSolar JKS signed an agreement to sell two solar power plants in Mexico, with a combined capacity of 155 megawatts.
Considering this well-practiced trend, we may expect to witness more such solar project divestment deals in future.

Price Performance

Shares of Canadian Solar have slipped 0.5% in a year’s time against the industry’s 36.2% growth.

Zacks Rank & Key Pick

Canadian Solar currently has a Zacks Rank #3 (Hold). A better-ranked stock in the same sector is Shell Midstream Partners, L.P. SHLX, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shell Midstream surpassed the Zacks Consensus Estimate in trailing four quarters, with an average positive earnings surprise of 2.16%. The company boasts a solid long-term earnings growth rate of 1%.

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