Solar is getting sick of being shunned in equity markets
December 12 2017 09:18 PM

Bloomberg/New York

Add Canadian Solar to the growing list of panel manufacturers looking to ditch public markets and go private.
The company’s chief executive officer, Shawn Qu, said on Monday he’s offering $18.47 in cash for all common shares that he and his wife don’t already own. In March, rival Trina Solar finished a $1.1bn privatisation deal. JA Solar Holdings Co, the world’s third-biggest publicly traded solar manufacturer, agreed last month to be taken private.
Consider them the start of what could prove to be a global trend as solar manufacturers, which have fought somewhat unsuccessfully for years to be valued more in Wall Street’s eyes, grapple with high levels of debt and volatility in demand.
“Investors in general have struggled to value solar stocks, and now you have the US market up in the air” because of tax reforms that threaten the solar industry, Bloomberg Intelligence analyst Kit Konolige said. “The point of being in the public markets is you have more financing available on better terms. If you don’t have that, what’s the point of being public?”
Since the beginning of 2010, spot prices for solar modules have plummeted 83%, averaging just 31.4 cents a watt as of December 6, according to PVinsights pricing data compiled by Bloomberg. The slide, driven largely by more efficient manufacturing and capacity in China, have been squeezing panelmakers’ profits, making them increasingly difficult to value.
So is the US tax plan that threatens to cripple a tax-equity investment vehicle that the industry has relied on for years to finance projects.
For another reason Qu may be trying to take Canadian Solar private, consider Longi Green Energy Technology Co, a silicon wafer maker listed in China that has a market value in excess of $10bn. Canadian Solar has a market capitalisation of about $1bn.
“One answer is Shawn Qu becomes a much richer man,” said Gordon Johnson, an analyst at Axiom Capital Management. “If I simply delist from the US stock exchange and relist on the Chinese stock exchange, the value of my stock will probably increase substantially.”
That could also be the reason Trina went private and JA Solar agreed to – they’re both based in China. Qu grew up in China and built some of his company’s operations there. David Pasquale, a spokesman for Canadian Solar, declined to comment beyond the company’s statement on Monday.
Motivations aside, Qu’s offer price may prove too low to entice shareholders, according to Brad Meikle, a renewable energy analyst at Coker & Palmer. It’s below $32 a share, Meikle’s estimate for what Canadian Solar is worth, and well below his $45 upside target.

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