CSIQ Modules for Turkish Project

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Canadian Solar Inc. (CSIQ) has been chosen to supply solar modules for Turkey's first and largest governmental solar PV project.

Canadian Solar will supply these products to Gehrlicher Merk Solar Enerji A.S. The company is an equally owned JV between German photovoltaics company, Gehrlicher Solar AG and Turkish Akfel Group. Gehrlicher Merk Solar Enerji A.S. with headquarters in Istanbul, will serve photovoltaic markets in Turkey and its neighboring countries.

The two companies have won the public tendering for the Gursu municipality of Bursa in Turkey. The milestone PV project has a total capacity of 96 kW and is supported directly by the Turkish Prime Minister's office. Canadian Solar was selected from 13 different module manufacturers for this project.

For the PV project in Gursu, Gehrlicher Merk Solar will use Canadian Solar's CS6P-P modules. The module type CS6P-P is a high-performance module featuring among other things positive power tolerance, a robust frame, anti-reflective with self-cleaning surface, outstanding performance at low irradiance, high energy yield, a 10-year product warranty on materials and workmanship and a 25-year linear power output warranty. The module once again recently delivered the highest PV U.S. (:PTC) ratings - a universally recognized indicator of a solar system's real performance and power output.

Turkey is regarded as one of the big future emerging markets for solar energy worldwide, as the insolation rates and temperature conditions are very favorable and in accordance with the government's decision earlier this year to place greater emphasis on fostering solar and simplifying the licensing process for power plant projects.

Canadian Solar caters to a geographically diverse customer base spread across its key markets in Germany, Spain and the U.S., as well as emerging market opportunities in France, the Czech Republic, Italy, South Korea, Canada, Japan and China.

However, in the near term, fortunes will be impacted by the industry-wide oversupply, leading to sharply falling Average Selling Prices, tepid module demand in Europe and rising competition in the market. Given the industry wide high inventory level, we do not foresee any short-term improvement in margins of the company.

Moreover, Canadian Solar reported higher quantum of losses for the second quarter of 2012. In the reported quarter, the company with a loss per share of 59 cents missed the Zacks Consensus Estimate of a loss of 30 cents per share. Results were also much lower when compared to earnings of 16 cents in the year-ago period.

Canadian Solar presently retains a short-term Zacks #4 Rank (Sell). We have a long-term Neutral recommendation on the stock. The company mainly competes with JA Solar Holdings Co. Ltd. (JASO) and JinkoSolar Holding Co. Ltd. (JKS).

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