{"text":[[{"start":7.35,"text":"This article only represents the author's own views."}],[{"start":11.1,"text":"Chinese, Canadian or American?"}],[{"start":13.7,"text":"That’s the big question hovering above solar panel maker Canadian Solar Inc. (CSIQ.US) these days. The company likes to tout its Canadian roots, stating it was founded in Ontario in 2001. But many have considered it a Chinese company for much of that time due to the background of its founder, Shawn Qu, and the use of China as its main manufacturing base for most of its history."}],[{"start":38.45,"text":"Now, Canadian Solar is trying to convince the world – most notably including U.S. President Donald Trump – that it’s a North American company, with a heavy focus on the U.S. part of the continent. In its latest quarterly report, released last Thursday, Canadian Solar said Shawn Qu has yielded his longtime CEO position to company veteran Colin Parkin, who appears to be Canadian, based on his biographical background."}],[{"start":64,"text":"At the same time, the company detailed plans for the ramp-up of a new high-tech production facility in Jeffersonville, in the U.S. state of Indiana, that looks like it could quickly grow to produce half or more of the company’s solar products. This facility’s focus on solar cells, the central component of solar panels, makes it different from many of the other plants we’ve seen Chinese companies building in the U.S. lately. Those other plants produce solar modules, which are a lower-tech product assembled using solar cells imported mostly from China."}],[{"start":94.65,"text":"Canadian Solar said the Jeffersonville plant entered trial production earlier this year, with commercial operation set to start in about two months. The project’s first phase will have 2.1 GWp of capacity, with another 4.2 GWp coming in phase two set for addition in 2027, bringing total capacity to 6.3 GWp."}],[{"start":118.25,"text":"Interestingly, some in the solar and investment communities have been expressing concerns that China may try to block the export of cutting-edge technology like the equipment that will be needed for the Jeffersonville plant. But Qu said that “So far, we don’t see that challenge,” adding his hopes that President Trump’s meeting with China President Xi Jinping in Beijing last week might help to smooth out that element of the rocky U.S.-China trade relationship."}],[{"start":144.3,"text":"No mention of export restrictions by China was made in published remarks by either side following the meeting, which Western media have cast as large on symbolism but lacking much in actual substance. The U.S. has taken repeated steps to block the export of high-tech chips and chip-making equipment to China, while China has countered by restricting the export of rare earths needed to make special magnets used in many cutting-edge electronics."}],[{"start":174.5,"text":"In addition to the new Jeffersonville plant, Canadian Solar also operates an older lower-tech facility in the city of Mesquite, Texas, which assembles solar modules. That facility currently has annual capacity of 5 GWp worth of modules, which the company expects to double to 10 GWp by the end of this year. On the earnings call, Qu emphasized that 45% of Canadian Solar’s 2.5 GW in solar module shipments during the first quarter were manufactured in North America, and that all of its North America sales were produced at the Mesquite plant. With the launch of the new Jeffersonville plant, presumably all of the solar cells used in its U.S.-made panels will also be locally produced, in addition to the final solar modules made in Mesquite."}],[{"start":222.95,"text":"Subsidy eligibility"}],[{"start":224.79999999999998,"text":"Canadian Solar’s positioning as a truly North American company could help the company navigate an increasingly tricky landscape in terms of eligibility for U.S. solar subsidies. That story made headlines last week, when Reuters reported many solar installers in the U.S. had stopped buying panels from locally made producers with links to China due to concerns the Trump administration may exclude those products from eligibility for U.S. subsidies. As we’ve previously noted, most of those producers, with links to names like JinkoSolar (JKS.US; 688223.SH) and Longi (601012.SH), were simply making solar modules in the U.S. using cells imported from their China operations."}],[{"start":272.5,"text":"It wasn’t clear from the Reuters report if Canadian Solar’s U.S.-made panels were ineligible for U.S. subsidies. But the report noted that Canadian Solar was one of several companies recently removed from the list of approved suppliers for leading U.S. solar installer Sunrun (RUN.US). Canadian Solar didn’t raise the issue on its earnings call, nor did analysts, which appears to show the company believes its increasingly U.S.-centric manufacturing may protect it from such risk."}],[{"start":301.95,"text":"Canadian Solar’s increasingly U.S.-centric approach is part of the company’s broader recent strategy of focusing on its most profitable markets, and scaling back or leaving less profitable ones. We’ve already noted that the company gets nearly half of its sales from the U.S., which has helped it post industry-beating margins as the broader global solar sector suffers from massive overcapacity."}],[{"start":324.45,"text":"Canadian Solar’s gross margin was 18.3% last year, and the company said it expects the level to be in the 13% to 15% range for the rest of this year. By comparison, JinkoSolar’s gross margin last year was a far lower 2.2%, while Longi’s was just 0.8%. Part of the difference also owes to Canadian Solar’s other businesses building solar farms and in the emerging energy storage sector, in addition to its solar panel business."}],[{"start":353.8,"text":"Canadian Solar’s first-quarter financials weren’t exactly too impressive, including a 10% year-on-year revenue decline to $1.1 billion, as Parkin described the market as continuing to face myriad ongoing “challenges.” The company’s module shipments fell by a much steeper 64% year-on-year during the quarter. That was partly offset by strong growth for its energy storage business, whose shipments rose 142% year-on-year to 2.1 GWh."}],[{"start":383.3,"text":"On the bottom line, Canadian Solar reported a net loss of $32 million for the quarter, similar to the $34 million loss it reported a year earlier."}],[{"start":393.6,"text":"The company’s stock has been quite volatile over the last year, more than tripling at one point over a three-month period from last September to November on hopes of a sector recovery that later turned out to be premature. The stock fell 11% ahead of the latest results, and then was mostly flat the day after the actual announcement, indicating investors were probably hoping for more beyond the relatively upbeat news in the report."}],[{"start":418.40000000000003,"text":"Going forward, much will depend on how well Canadian Solar can convince both solar panel buyers and investors that it’s gradually shedding its China connections and becoming a North American company. Success in that regard could provide some upside for its U.S.-listed stock, which still trades at a relatively low price-to-sales (P/S) ratio compared with most of its peers."}],[{"start":448.15000000000003,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1779260778_5893.mp3"}