Yesterday's earnings release by Solarfun Power (NASDAQ:SOLF) had me seeing double -- and I'm not even talking about the solar cell and module maker's doubling of analyst earnings estimates. Something just seemed strangely familiar about the reported numbers.

I finally figured it out. Take a look at this side-by-side comparison with the first-quarter report of Canadian Solar (NASDAQ:CSIQ):


Solarfun Power

Canadian Solar


$171 million

$171.2 million


40.3 megawatts

41.8 megawatts

Gross Margin



Operating Margin



European Revenue



All data from company filings.

Right now, these two Chinese solar players appear to be nearly identical. Mr. Market sees it this way as well and assigns the companies roughly matching enterprise values.

So is there any reason to favor one company over the other? Are they really interchangeable?

A glance at full-year guidance reveals that the companies aren't gunning to grow at exactly the same speed. Solarfun raised its 2008 shipment guidance to the 160- to 180-megawatt range, while Canadian Solar maintained guidance of 200-220 MW. The latter projection excludes production of low-cost "e-Modules," which I've recently eyed with interest.

This is no commentary on the longer-term growth trajectory of the two companies. Solarfun, which has signed agreements with both LDK Solar (NYSE:LDK) and Hoku Scientific (NASDAQ:HOKU) for future raw-material supply, may very well leapfrog Canadian Solar in the future, provided that it can secure large enough customer commitments to justify accelerating its manufacturing expansion.

For me, Canadian Solar's push into upgraded metallurgical silicon is enough of a differentiator to make me favor the company over Solarfun. Investors appear to be giving the former company little credit for this potentially margin-mutating move.

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