Japan's government passed a bill in 2013, which goes into effect in November of this year, effectively fast-tracking the approval of stem cell therapies for marketing. According to the law, stem cell regenerative medicine therapies can receive conditional, time-limited approval for marketing, and be eligible for reimbursement, upon proof of safety but prior to verification of efficacy; safety and effectiveness need to be confirmed after the conditional approval.
Waterfield HealthCom's Mr. Mizuta commented, "With its broad portfolio of indications and its commercial scale 3D cell manufacturing capabilities, Pluristem is a very desirable partner for Japanese pharmaceutical companies looking to bring cell therapies to the market in the near term."
Sentiment: Strong Buy
Shares locked up until Dec. 23rd. Where can I find this info...Thanks..
Canadian Solar Remains The Most Undervalued Stock In The Chinese Solar Portfolio
Sep. 25, 2014 4:55 PM ET | 10 comments | About: Canadian Solar Inc. (CSIQ)
Disclosure: The author is long CSIQ. (More...)
Exciting potential for earnings per share.
Return potential up to $65 in a conservative view.
Remains undiscovered by retail investors.
Canadian Solar (NASDAQ:CSIQ) was incorporated in Canada, and it is not an American depository receipt-ADR like the rest of the U.S.-listed Chinese solar companies. Certainly, most of the company's manufacturing is done in China, but a good chunk of it is located in Canada, along with its headquarters.
Is Canadian Solar a Chinese company? The CEO, Shawn Qu, argues no by virtue of the incorporation, headquarters and taxpaying domicile. He points out, "lots of companies do manufacturing in China. So what? Look at Apple. Where do they make their cellphones?" I tend to agree. I do not think of SunPower (NASDAQ:SPWR) as Filipino nor expect First Solar (NASDAQ:FSLR) to be referred to as Malaysian, though most of the manufacturing is done in those countries. This semantically based difference, hypothetically speaking, could be responsible for the huge opportunity where price-to-earnings ratio is concerned and the greatest disadvantage to the company's evaluation today.
However, the real cause of an undervalued condition is the completely missed potential of earnings-per-share during the second half of this year. The combination of revenue and GM offered by the company is a clinical way to plot beyond the commonly used operational dynamic of third-party sales and average selling prices. In this form, this is another differentiator from the peer group, and certainly an advantage to any investor. The detail offered during conference calls, particularly the description of construction in-stages for each plant, as well as CFO Michael Potter providing a concise and clear message on behalf of the corporation, is an added strength when compared to peers.
What is so exciting about the second half of the year?
The company guided around $2.9B in 2014 as the revenue. In H1, that number was $1.08B, which leaves around $1.82B left for H2. Third-quarter guidance forecasts revenue at $810M, and the remaining $1.01B for the fourth quarter is a natural consequence of the year-to-date math. If the 21% gross margin is delivered during the third quarter, CSIQ will be able to produce $170M in Q3, $58M more than in Q2. If we lowered the Q4 result to about 19% gross margin, just to cover for growth in third-party sales to China, this number would become $190M. Assuming operating expenses (OPEX) to be in the vicinity of $120M for H2, we are looking at operational profit of $240M. For the financing section, assuming the avoidance of any surprises, like Forex or derivative loss, by using only net interest expense at $10M per quarter, we see about $20M in expenses to arrive at $220M now. Taxes could be around $20M, leaving us now with net income of $200M. Using 60M shares, this becomes $3.33 for H2, versus $1.02 in H1.
We do not even consider energy sales for EPS. Those run on 60% in gross margin and net income at levels of 30%. Since it is premature to assess how big the company's plant ownership in Japan and China will be, we can only suspect the recent investment fund with Sichuan's SOE will have at least a 300MW share as the base of the energy revenue producing assets. Then, of course, is the yieldco objective to de-leverage CSIQ. The decision is coming in 2015, and it is certainly going to help Canadian to grow.
How immense is the potential for the future? Assuming that 600MW could be sold per year as a solar plant and 3GW as third-party sales, we are looking at $4B in revenues per year. The solar project pipeline has around 4.3GW. If delivered in full, this is seven years of Canadian not adding a single project. Clearly not what Canadian manifested to date.
We have triple growth in net income and total yearly income potential at $4.35. At price-to-earnings ratio of 15, Canadian Solar is worth about $65.00 per share. It appears that nobody is paying attention to this, as PE for the trailing twelve months is about 19. Adding confusion are three financial networks, Yahoo, Google and SA, quoting three different TTM (trailing twelve months), Yahoo being the closest now with $1.91, Google quoting $0.70 and SA showing $0.18. The TTM stands at $1.96, as per Yahoo's Analysts Estimates and Earnings History Table.
CSIQ Earnings History -Yahoo Finance
We could assume that the price of $37.50 sees the future as undervalued, and argue that 19 PE for TTM is not a real measurement. Considering that, in the past, most of the Chinese solar stocks were evaluated on how they did in the reporting quarter, instead of how they will do in the next quarter, one can be left wondering. Only upon realization of 2014 EPS, CSIQ could be at around $82 per share if TTM is concerned, but this is too wild of a guess. In both scenarios, the high PE of TTM and low PE of the future, the stock offers the best returns among its own peers. Analysts' estimates are for the future, as they should be, and they see Canadian as the best of the group. They are, unfortunately, downplaying both EPS and PE. Despite being downplayed, stock is trading at the discount to those as well. Canaccord Genuity has given CSIQ $48 recently and FBR Capital Markets increased its price per share from $40 to $45.
What to expect from the market?
It is rather more possible to see 20% gains, as we have witnessed in Q2, than gradual growth. Why? It is the nature of the industry, which surprises to the good, but has a tendency to remain undervalued due to boutique coverage and shifting conditions from quarter to quarter during time in between quarters. This last dynamic may be another breakaway opportunity available to Canadian, and certainly will become another surprise, when the company connects the stability of plant sales to prospects in the southern hemisphere. Those plans are drawn and include in the long term Mexico, Peru and Chile and in the mid-term Australia, India and South Africa.
Sentiment: Strong Buy