On a post-earnings call, Canadian Solar Inc Chief Financial Officer Michael Potter revealed the company's plans of a potential spin-off of its power plant unit. Potter said his company intended to reduce its cost of capital and maximize equity returns.
Potter explained, "As an operating company, (with) the cost of capital we have, it doesn't make the greatest sense to hold and operate projects within the current Canadian Solar structure."
The Guelph, Ontario-based company would create a unit in order to put all power plants under its supervision after construction. The Chief financial officer of Canadian Solar disclosed that the company might take the power plant unit public.
Canadian Solar has had a good year this 2013. On Wednesday, its 12% share price increase might have reflected investor sentiment over its best-performing quarterly results. Canadian Solar Chief Executive Shawn Qu dubbed the latest quarterly profits as the base of the company's first full profitable year after three years. Reuters also said the stock of the Canadian Solar was deemed the best performer in its industry, rising eightfold this 2013.
Qu said in a statement, "The industry is emerging from a very challenging period, with improved pricing power and growing demand."
This, as Reuters noted, was Canadian Solar's comeback from a combined USD316 in successive losses in the last eight quarters, loss of subsidies in Europe and excess capacity of its assets in China.
Canadian Solar revealed that its businesses, including operations of power plants, had contributed a whopping 41% of the total revenue of the company for the third quarter. This was a significant increase from 21.5% it recorded the same period a year ago.
Northland Capital Markets analyst Colin Rusch said, "They are going to continue to grow this portion of their business and, as they improve their cost of capital, there is a healthy profit driver here."
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