Thread by @McBejezzus

$CSIQ

Nerd time. 🧵

2023 EPS projection.☀️

Spoiler alert:
Modest projection gives $6.50-$7.00 EPS.

$CSIQ 2/n

1Q23 EPS was $1.19 on $1.7bn revenue at 18.7% gross margin.

I've seen projection of $2.5bn revenue at 20.5% gross margin.

It would be reasonable to expect that most additional gross margin translates to net profit.

Net profit margin in 1Q was 4.94%.

$CSIQ 3/n

Let's be cautious and say that 2Q net profit margin goes to 6% (rather than 6.64%).

In 1Q, CSIQ owned 80% of CSI Solar.

Now the share is likely at 62% (and now they have around $1 bn extra in cash).

$CSIQ 4/n

So let's say that 77.5% of CSI profits go to CSIQ compared to pre-IPO (calculating the difference between pre-IPO 80% share of CSI and post-IPO 62% share).

$CSIQ 5/n

Their profits from Global Energy/Recurrent business remain unchanged.

So let's round up to around 82% of pre-IPO net profit goes to CSIQ.

So 6% of $2.5bn is $150m. 82% of $150m is $123m. That correlates to $1.90 EPS estimate for 2Q23.

$CSIQ 6/n

Assuming unchanged market conditions in 3Q and 4Q, and that CSIQ meets low end of FY guidance of $9-$9.5 bn, they still have $4.8bn of revenue left in 2023.

$CSIQ 7/n

82% of 6% of $4.8bn is $236.16m, or $3.65 EPS.

Add that to $1.90 and $1.19 and you get $6.74 FY23 EPS.

And I feel that this is a modest estimate.

$CSIQ 8/n

If you take that and assume continued current P/E of 8.43x - you get $56.81 which, again, I find to be exceedingly modest, given the growth prospects and further strengthening of balance sheet post-IPO (+$1 bn in cash).

$CSIQ 9/n

Even without accounting for massive margin improvements once $CSIQ builds own polysilicon plant and can source at cost price

- which could give +$6 EPS on 40 GW deliveries even with low polysilicon market prices (

https://twitter.com/McBejezzus/status/1662103587063824384?s=20

) -

$CSIQ 10/n

I have a 12-month price target closer to the $75-90 range on this stock.

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