20131225-招商证券_香港_-Alternative_Energy_Sector_2014_Outlook_28页_1mb

Alternative Energy Sector 2014 Outlook Summary

Core Content Overview

This document provides an outlook for the Alternative Energy Sector in 2014, focusing on the Solar and Wind industries. It includes sector reviews, policy updates, market trends, and stock recommendations, with a detailed analysis of key companies and their financial performance.

Key Points

• Wind Power Upstream Industries: Earnings recovery and valuation expansion are expected.
• Wind Power Downstream Industries: Grid curtailment is improving, and the focus is on incentive policies.
• Solar Upstream Industries: Total demand is recovering, prices are stable, and cost reductions and new techniques are driving growth.
• Solar Downstream Industries: The golden period for solar farm development is approaching, with new business models emerging.
• Investment Suggestions: Preference is given to solar downstream and wind upstream industries.
• Stock Picks:
  • Goldwind (2208 HK) – Buy, with a target price of HK$10.04.
  • Goldpoly (686 HK) – Not Rated.
  • Guodian T&E (1296 HK) – Not Rated.

Chapter 1: Solar Sector Review and Outlook

Solar Industry Research Framework

The solar industry value chain includes:

• Poly-silicon: Price, cost, import, anti-dumping, and key players like GCL-Poly (3800 HK), DQ, and TBEA.
• Mono wafer: High conversion efficiency, with major players in the US, Japan, and China such as Comtec (712 HK), Longi (601012 CH), and Zhonghuan (002129 CH).
• Cell & Module: Gross margin, debt ratio, price, cost, and overseas demand.
• EPC & Operation: Key players include Goldpoly (686 HK), Zhongli (002309 CH), and GCL (3800 HK).

2013 Review

• Solar Trade War: The EU anti-dumping case resulted in a price guarantee of €0.56 per Watt for Chinese panels, with a 20% increase in import prices. Chinese panel makers lost about 30% of their original EU market share.
• Poly-silicon Anti-dumping: China imposed anti-dumping tariffs on solar-grade poly-silicon from the US and South Korea, but not from the EU. Poly imports increased in Q3, with lower-than-expected ASP due to processing trade and tax-free zones.
• Policy Changes: Multiple policy updates were made, including FIT policy changes and new guidelines for solar project management and operation.
• Earnings Recovery: The solar industry confirmed its earnings turning point in 1H2013, with improved profit margins due to rising cell and module prices and expansion into solar farms.

2014 Outlook

• Macro View: Government continues strong support for the solar industry.
• Meso View:
  • Distributive generation is the future trend, while concentrated projects offer higher IRRs in the short term.
  • EPC gross margins may face downside risks, and financing challenges for private companies.
  • Opportunities include new techniques to improve conversion efficiency, cost reduction, and M&A.
• Micro View:
  • Goldwind (2208 HK): Strong market position, improving grid curtailment, and stable price premium.
  • Goldpoly (686 HK): New business model with strategic co-operation and exclusive rights to solar resources.
  • GCL-Poly (3800 HK): Captive power plant and FBR techniques, with expansion into solar farm business.
  • Comtec (712 HK): Expectation of margin improvement and expanded customer base.
  • Singyes (750 HK): Strong EPC gross margin and new orders.

Chapter 2: Wind Sector Review and Outlook

Wind Industry Research Framework

The wind industry value chain includes:

• Components: Gearbox, electronic control system, generator, blade, tower, etc.
• Wind Turbine: Direct drive and double fed, with Goldwind (2208 HK) as a key player.
• Wind Farm Operation: Power generation groups like Longyuan (916 HK).

2013 Review

• Wind Turbine Market: Total tender reached 12.8 GW in the first three quarters, expected to reach 15 GW in 2013.
• Market Share: Increased concentration in the top 10 players (88% in 1H2013), with Goldwind and Mingyang gaining market share.
• Grid Curtailment: Improved due to UHV line construction and increased new capacity plans.
• Tender Prices: Remained stable, with industry leaders enjoying price premiums.
• Gross Margins: Improved significantly, but transport costs in southern provinces may be a concern.

2014 Outlook

• Macro View: Continued government support for renewable energy.
• Meso View:
  • Industry recovery is expected, with preference for wind turbine and components stocks.
  • Incentive policies such as the Renewable Portfolio Standard and Opinions on promoting healthy development are key.
• Micro View:
  • Goldwind (2208 HK): Strong industry recovery, improved earnings, and more concentrated market.
  • Longyuan (916 HK): Strong wind turbine business and favorable market environment.

Chapter 3: Valuation and Stock Picks

Sector Performance and Valuation

• HK Renewable Energy Index: Indicates market performance and valuation trends.
• S&P Global Clean Energy Index: Shows global clean energy market dynamics.
• Valuation Expansion: The HSI Index P/E and P/B are higher than those of the solar and wind sectors, suggesting potential for valuation expansion.

Stock Picks

• Goldwind (2208 HK):
  • Strong leading position with 23% domestic market share in 1H2013.
  • Earnings recovery and valuation expansion expected.
• Goldpoly (686 HK):
  • Innovative business model with strategic co-operation.
  • Exclusive rights to solar resources from China Merchants Group.
• Guodian T&E (1296 HK):
  • Strong solar EPC business with a breakeven point at 600 MW.
  • Wind turbine business is recovering, with significant demand and rising prices.
  • Environmental protection and energy saving business is a potential growth area.

Disclaimer

• This document is prepared by China Merchants Securities (HK) Co., Limited (CMS HK).
• It is for informational purposes only and should not be construed as investment advice.
• CMS HK does not guarantee the accuracy or completeness of the information provided.
• The document may not be reproduced, distributed, or published without prior consent.