Canadian Solar Inc. Debt jumped on 22.2% and Revenue increased on 8.6%
03/18/2021 • About Canadian Solar Inc. (
$CSIQ) • By InTwits
Canadian Solar Inc. reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- The company has potentially unprofitable business model: ROIC is 5.6%
- It operates with high leverage: Net Debt/EBITDA is 3.3x while industry average is 0.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Canadian Solar Inc.'s Revenue increased on 8.6%. Revenue growth showed acceleration in FY20Q4 - it increased 13.2% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 65.1 pp from 20.3% to -44.9% in 2020. During FY2016-FY2020 EBITDA Margin topped in FY2019 at 13.6%.
Gross Margin decreased on 2.6 pp from 22.4% to 19.8% in FY2020. During FY2016-FY2020 Gross Margin topped in FY2019 at 22.4%. SG&A as a % of Revenue showed almost no change in FY2020.
Net Income margin decreased slightly on 1.1 pp from 5.4% to 4.2% in FY2020. During the last 5 years Net Income margin topped in FY2018 at 6.3% and was declining since that time.
Return on investment
The company operates at low ROIC (5.6%) and ROE (9.9%). ROIC decreased on 2.4 pp from 8.0% to 5.6% in FY2020. ROE decreased on 3.2 pp from 13.1% to 9.9% in FY2020. During FY2016-FY2020 ROIC topped in FY2018 at 10.4% and was declining since that time. During FY2016-FY2020 ROE topped in FY2018 at 21.0% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.3x and Debt / EBITDA is 6.1x. Net Debt / EBITDA decreased on 0.024x from 3.4x to 3.3x in FY2020. Debt surged on 22.2% while cash jumped on 76.3%.
Canadian Solar Inc. has short term refinancing risk: cash is only 61.1% of short term debt.
Valuation and dividends
Canadian Solar Inc.'s trades at EV/EBITDA 9.2x and P/E 17.2x.
Management team
Qu Xiaohua "Shawn" is a Canadian Solar Inc.'s CEO. Qu Xiaohua "Shawn" has spent 19 years with the company. The company's CFO Huifeng Chang has spent 4 years with the company.
Financial and operational results
Canadian Solar Inc. ($CSIQ) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 2,853 | 3,390 | 3,745 | 3,201 | 3,476 | 8.6% |
| Gross Profit | 417 | 638 | 775 | 718 | 690 | -4.0% |
| SG&A | 349 | 387 | 411 | 423 | 450 | 6.3% |
| EBITDA | 189 | 369 | 494 | 436 | 428 | -1.8% |
| Net Income | 65 | 100 | 237 | 172 | 147 | -14.5% |
Balance Sheet
|
|---|
| Cash | 511 | 562 | 444 | 669 | 1,179 | 76.3% |
| Short Term Debt | 2,028 | 2,530 | 1,398 | 1,497 | 1,928 | 28.8% |
| Long Term Debt | 619 | 531 | 394 | 640 | 683 | 6.6% |
Cash flow
|
|---|
| Capex | 1,111 | 311 | 316 | 291 | | |
Ratios
|
|---|
| Revenue growth | -17.7% | 18.8% | 10.4% | -14.5% | 8.6% | |
| EBITDA growth | -44.7% | 95.0% | 34.0% | -11.7% | -1.8% | |
|
|---|
| Gross Margin | 14.6% | 18.8% | 20.7% | 22.4% | 19.8% | -2.6% |
| EBITDA Margin | 6.6% | 10.9% | 13.2% | 13.6% | 12.3% | -1.3% |
| SG&A, % of revenue | 12.2% | 11.4% | 11.0% | 13.2% | 12.9% | -0.3% |
| Net Income Margin | 2.3% | 2.9% | 6.3% | 5.4% | 4.2% | -1.1% |
| CAPEX, % of revenue | 39.0% | 9.2% | 8.4% | 9.1% | | |
|
|---|
| ROIC | 2.9% | 7.3% | 10.4% | 8.0% | 5.6% | -2.4% |
| ROE | 7.7% | 10.4% | 21.0% | 13.1% | 9.9% | -3.2% |
| Net Debt/EBITDA | 11.3x | 6.8x | 2.7x | 3.4x | 3.3x | -0.0x |
Canadian Solar Inc. ($CSIQ) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 826 | 696 | 914 | 1,041 | | 70.3% | -32.9% | 20.3% | 13.2% |
| EBITDA | 158 | 93 | 115 | 61 | | 258.4% | -6.9% | -1.8% | -60.7% |
| Net Income | 111 | 21 | 9 | 7 | | - | -67.1% | -84.9% | -90.2% |
Balance Sheet
|
|---|
| Cash | 619 | 579 | 1,103 | 1,179 | | 67.1% | 32.0% | 109.6% | 76.3% |
| Short Term Debt | 1,431 | 1,505 | 1,687 | 1,928 | | -21.0% | -0.9% | 8.9% | 28.8% |
| Long Term Debt | 683 | 596 | 860 | 683 | | 47.0% | 22.5% | 57.2% | 6.6% |
Ratios
|
|---|
| Gross Margin | 27.0% | 21.2% | 19.5% | 13.6% | | 4.9% | 3.5% | -6.7% | -11.4% |
| EBITDA Margin | 19.2% | 13.4% | 12.6% | 5.9% | | 10.1% | 3.7% | -2.8% | -11.1% |
| Net Income Margin | 13.4% | 3.0% | 1.0% | 0.6% | | 16.9% | -3.1% | -6.7% | -6.7% |
Peers in Semiconductors
Below you can find Canadian Solar Inc. benchmarking vs. other companies in Semiconductors industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inphi Corporation ($IPHI) | - | 30.8% | -15.4% | 24.2% | 86.8% |
| Sequans Communications S.A. ($SQNS) | - | 5.9% | -16.6% | -23.3% | 65.0% |
| MaxLinear, Inc ($MXL) | - | 8.4% | -8.4% | -17.6% | 50.9% |
| Advanced Micro Devices, Inc. ($AMD) | - | 21.6% | 23.3% | 4.0% | 45.0% |
| Kopin Corporation ($KOPN) | - | 23.0% | -12.1% | 20.7% | 35.9% |
| |
|---|
| Median (43 companies) | 1.2% | 10.9% | 4.4% | -3.0% | 1.0% |
|---|
| Canadian Solar Inc. ($CSIQ) | - | 18.8% | 10.4% | -14.5% | 8.6% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| CEVA, Inc. ($CEVA) | 91.6% | 92.1% | 89.8% | 88.4% | 89.3% |
| Universal Display Corporation ($OLED) | 83.9% | 80.8% | 75.5% | 78.5% | 80.1% |
| Rambus, Inc. ($RMBS) | 80.1% | 79.9% | 76.8% | 77.1% | 75.0% |
| Analog Devices, Inc. ($ADI) | 65.1% | 59.9% | 68.3% | 67.0% | 65.9% |
| MoSys, Inc. ($MOSY) | 49.0% | 46.9% | 61.8% | 61.0% | 65.7% |
| |
|---|
| Median (43 companies) | 48.0% | 49.1% | 50.4% | 50.7% | 49.4% |
|---|
| Canadian Solar Inc. ($CSIQ) | 14.6% | 18.8% | 20.7% | 22.4% | 19.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Texas Instruments Incorporated ($TXN) | 43.5% | 46.7% | 48.6% | 47.5% | 47.6% |
| Intel Corp ($INTC) | 35.2% | 41.7% | 45.7% | 45.9% | 46.7% |
| Broadcom Inc. ($AVGO) | 19.9% | 40.4% | 44.2% | 40.9% | 46.2% |
| Universal Display Corporation ($OLED) | 44.8% | 51.6% | 35.3% | 48.0% | 45.9% |
| Analog Devices, Inc. ($ADI) | 36.2% | 32.1% | 43.2% | 42.1% | 42.0% |
| |
|---|
| Median (41 companies) | 9.2% | 10.7% | 9.3% | 12.9% | 17.4% |
|---|
| Canadian Solar Inc. ($CSIQ) | 6.6% | 10.9% | 13.2% | 13.6% | 12.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Micron Technology, Inc. ($MU) | 46.9% | 23.3% | 29.2% | 41.8% | 38.4% |
| Sequans Communications S.A. ($SQNS) | 11.8% | 13.3% | 22.9% | 29.6% | 27.1% |
| Intel Corp ($INTC) | 16.2% | 18.8% | 21.4% | 22.5% | 18.6% |
| First Solar, Inc. ($FSLR) | 7.9% | 17.5% | 33.0% | 21.8% | 15.4% |
| Power Integrations, Inc. ($POWI) | 3.1% | 7.5% | 5.9% | 5.7% | 14.5% |
| |
|---|
| Median (41 companies) | 3.6% | 4.7% | 4.2% | 3.7% | 3.7% |
|---|
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Texas Instruments Incorporated ($TXN) | 34.9% | 43.1% | 47.5% | 39.7% | 38.2% |
| Applied Materials Inc ($AMAT) | 19.0% | 31.2% | 36.4% | 27.7% | 32.1% |
| Advanced Micro Devices, Inc. ($AMD) | -21.7% | 7.3% | 21.6% | 21.5% | 31.8% |
| QUALCOMM Incorporated ($QCOM) | 15.8% | 5.7% | 2.2% | 38.0% | 28.1% |
| NVIDIA Corporation ($NVDA) | 13.1% | 27.3% | 35.3% | 36.9% | 22.7% |
| |
|---|
| Median (45 companies) | 1.4% | 3.2% | 2.2% | 2.2% | 5.3% |
|---|
| Canadian Solar Inc. ($CSIQ) | 2.9% | 7.3% | 10.4% | 8.0% | 5.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| SunPower Corporation ($SPWR) | - | - | - | - | 8.2x |
| MACOM Technology Solutions Holdings, Inc. ($MTSI) | 3.0x | 7.2x | 98.6x | - | 6.6x |
| Rambus, Inc. ($RMBS) | -0.1x | -0.1x | - | - | 5.9x |
| Inphi Corporation ($IPHI) | 4.5x | 33.7x | 32.2x | 4.5x | 3.4x |
| Broadcom Inc. ($AVGO) | 4.0x | 0.9x | 1.4x | 3.0x | 3.1x |
| |
|---|
| Median (31 companies) | -0.0x | 0.4x | 0.3x | 0.5x | 0.1x |
|---|
| Canadian Solar Inc. ($CSIQ) | 11.3x | 6.8x | 2.7x | 3.4x | 3.3x |
