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Canadian Solar Lauded for Plan to List Unit on Shanghai Exchange

Canadian Solar applied for an IPO of its CSI Solar subsidiary on the Shanghai Stock Exchange. Roth Capital likes the idea.
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Canadian Solar  (CSIQ) - Get Canadian Solar Inc. Report shares rose on Tuesday as Roth Capital praised the company's application for a initial public offering of its CSI Solar subsidiary on the Shanghai Stock Exchange.

The IPO would offer Canadian Solar a lower cost of capital, and it can use the funds to increase capacity and boost earnings growth, analyst Philip Shen said, according to Bloomberg. 

Shen has a buy rating and a $55 price target for Canadian Solar. The shares recently traded at $46.60, up 2.4%. 

The target indicates 21% potential upside from Monday's close. The stock in late January touched a 52-week high above $67.

According to CSI Solar's IPO documents, it plans to issue as many as 541.1 million shares, which will account for at least 15% of its total share capital after the IPO.

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Canadian Solar now owns about 80% of CSI Solar's shares.

The stock also received support from Canadian Solar‘s report that it has been awarded 86 megawatts peak in Japan's eighth solar energy auction, accounting for the largest share of the total capacity auctioned.

That includes six projects. Once constructed, these projects will enter a 20-year power-purchase agreement with Tohoku Power Electric Co., Canadian Solar said.

Canadian Solar expects the projects to reach commercial operation between 2024 and 2026.

On Friday, Stephens analyst Gail Nicholson published a commentary on the solar industry. She sees the recent decline of solar stocks presenting a buying opportunity.

Meanwhile, Citigroup analyst J.B. Lowe initiated coverage on Enphase  (ENPH) - Get Enphase Energy, Inc. Report and Generac Holding  (GNRC) - Get Generac Holdings Inc. Report, rating them buy, and on SolarEdge  (SEDG) - Get SolarEdge Technologies, Inc. Report, rating it neutral.