Zacks_Analysts' Blog : CSIQ Modules in the Middle East - Analyst Blog

Canadian Solar Inc. (CSIQ) has entered into an agreement with Al Fahad Group under which it will supply more than 1.5 MW of its solar modules for one of the largest solar Photovoltaic (“PV”) projects in Abu Dhabi, UAE.

Al Fahad Group is a firm with diversified exposure in Defense & Intelligence, Homeland Security, Networking & Communications and Power. The company offers comprehensive energy solutions in the Middle East for a variety of fields of implementation.

Canadian Solar’s CS5A-M solar modules are ideally suitable for the local environmental conditions in the Middle East. The solar project headed by the Al Fahad Group will lead the way for renewables in this region. It is a government venture that recently got approval during the World Future Energy Summit held in Abu Dhabi.

Canadian Solar’s modules seem to be in great demand. In December last year, it entered into a sales agreement with Siemens under which it will supply the latter the MaxPower CS6X 2.5 MW of solar modules for two of its solar projects.

The company also delivered its solar modules to the German project firm saferay for an 8.5 MW power plant located in Lindenhof near Neubrandenburg in the German state of Mecklenburg-Vorpommern. The photovoltaic system will use 36,000 CS6P-P solar modules manufactured and supplied by Canadian Solar.

Despite being a low cost, vertically-integrated solar module producer with predominantly China-based manufacturing assets, we believe that fortunes of Canadian Solar would be impacted by the industry-wide oversupply leading to sharply falling average selling prices, margin pressure, tepid module demand in Europe, and rising competition in the market.

The company presently retains a short-term Zacks #5 Rank (Strong Sell). We have a long-term Underperform recommendation on the stock. The company mainly competes with First Solar, Inc. (FSLR) and SunPower Corporation (SPWR).