Photovoltaic industry: Polysilicon faces greater pressure

Event Highlights:

On November 16, the China Securities News published the news. According to an authoritative source, the target of domestic solar power generation installed by the “Twelfth Five-Year Plan” for renewable energy development by the end of 2015 has been determined to increase the previously disclosed 10 million kilowatts to 15 million kilowatts. Among them, large-scale ground-based photovoltaic power generation 10 million kilowatts, rooftop and off-grid power generation 4 million kilowatts, thermal power generation 1 million kilowatts. The renewable energy price surcharge previously attracted by the industry is also expected to increase from 4 pct/kWh to 8 pct/kWh in the near future. According to the previously published “Polysilicon Industry Access Requirements”, the Ministry of Industry and Information Technology will soon launch the first list of polysilicon companies that have passed the industry access review, and the first batch of companies entering the list are expected to become the main players in this industry consolidation.

Event Comments:

1. The economy becomes a turning point for the start of the market

Relying on the weakness of the global PV market and the intensified competition caused by the expansion of components, the continuous decline in costs has become the core driving factor for the start-up of China's market. The current package price is approximately US$1.8. Even at a conservative discount rate of 8%, the natural power generation cost for 1300 hours is approximately RMB 0.80, making the benchmark price of 1.15 yuan (including tax) competitive.

2. The domestic market has unexpected expectations

In our series of reports, we pointed out that according to the experience of wind power, the target of photovoltaic 10G planned during the “Twelfth Five-Year Plan” period is also expected to be realized earlier than expected. The news of today’s China Securities Journal more accurately validates our judgment. The upcoming “Twelfth Five-Year Plan for Renewable Energy Development” is expected to increase the installed capacity of solar power during the 12th Five-Year Plan period to 15 million kilowatts, of which The target for photovoltaic power generation is 14 million kilowatts. According to comparable data, photovoltaic power generation has increased by more than 50% from the original 9 million kilowatts. In addition, the increase in the renewable energy price from 4 PCT/kWh to 8 PCT/kWh is also conducive to improving the enthusiasm of developers and increasing the industry's unexpected weight.

According to our tracking data, the new capacity in 2011 is basically set at about 1.5GW, and the conservative estimate is about 3GW in 2012, an increase of more than 100%. According to the "12th Five-Year Plan" 14 million kilowatts, the total capacity for 2013 to 2015 is 9.5 GW. Our grassroots research data, 14 million kilowatts is still expected to exceed, the industry is expected to continue exceeding expectations.

3. Limited impact on component related industry segments

As the global market for solar energy, at present, the core driving force still comes from Europe, of which Germany contributed more than 40% to the industry in 2010. As for the overall judgment of the industry, it should still be viewed from a global perspective, and the impact of China’s strategy on the world should not be overstated.

We believe that the slowdown in growth in Europe, represented by Germany and Italy, will become an inevitable trend. At the same time, the rise of new countries such as the United States, India, Japan and China will become a new driving force for industry growth. However, in the short term, it is difficult for the Chinese market to completely compensate for the weakness of overseas markets. The final product market for components, polycrystalline kiln, etc. is still global, and therefore, the degree of benefit is relatively small.

4, polysilicon face greater pressure

As a scarce resource, polysilicon currently faces both internal and external pressures. Internally, the scale and cost advantages of GCL-Poly will completely undermine the competitiveness of domestic companies. Externally, the capacity expansion of international companies such as Korea OIC, Germany WACKER, and Japan's Tokuyama will aggravate the competitive pressures of Chinese companies.

According to the previously published “Polysilicon Industry Access Requirements”, the Ministry of Industry and Information Technology will soon launch the first list of polysilicon companies that have passed the industry access review, and the first batch of companies entering the list are expected to become the main players in this industry consolidation. We believe that industry consolidation will increase the overall competitiveness of domestic companies, but it is difficult to fully change competitive pressures.

5, photovoltaic reverse becomes the biggest beneficiary

In our newly published research report "Sunshine Power Supply (300274) - Underestimated Photovoltaic Inverter", we analyzed in detail the industry environment facing photovoltaic inverters. Among them, the characteristics of the domestic market determines that PV inverters are the biggest beneficiaries. We mainly recommend solar power sources with international technology and domestic prices.

6, investment strategy

(1) Focus on the trading opportunities of the component industry chain. Although the domestic market is still difficult to fully compensate for the decline in overseas markets, it still has the trading opportunities brought about by the stimulating effect. Including Haitong Group (600537), Chaori Sun (002506), Oriental Sunrise (300118), Sunflower (300111) and other module companies. At the same time, the ingot casting furnaces such as Beijing Yuntong (601908), Jinggong Technology (002006) and Tianlong Optoelectronics (300029), as well as consumables companies such as Yamadon (002623), Xindaxinxin (300080), and CSG are also worthy of attention. .

(2) Actively configure solar power. The domestic market characteristics of photovoltaic inverters determine the industry's greatest degree of benefit, and it is recommended to actively deploy solar power.

(3) A prudent approach to polysilicon. We believe that GCL-Poly's international advantages in scale and cost will lead to a decline in global polysilicon prices, and other domestic companies will not have a sustainable competitive advantage.

Original report:

The China Securities Journal reporter was informed that the upcoming "Twelfth Five-Year Plan for Renewable Energy Development" is expected to increase the installed capacity of solar power during the 12th Five-Year Plan period to 15 million kilowatts, of which the target for photovoltaic power generation is 14 million kilowatts. In addition, the price of renewable energy, which has previously attracted the attention of the industry, is also expected to increase to 8 PCT/kWh in the near future. A series of policy trends have played a strong tone for the domestic photovoltaic market to be launched on a large scale.

At the same time, the Ministry of Industry and Information Technology will take the opportunity of strengthening access to the polysilicon industry as an opportunity to promote the integration of domestic polysilicon companies. Ding Wenwu, director of the Electronic Information Department of the Ministry of Industry and Information Technology, said recently that the government will encourage photovoltaic companies and power companies to strengthen cooperation. This is further considered as a policy signal to the downstream integration of the photovoltaic industry beyond polysilicon.

The analysis pointed out that the proposed five-year 15 million-kilowatt new installed target indicates that the domestic solar power generation (especially photovoltaic) market cake in the next five years will probably exceed the market expectation. This is due to the current poor demand in foreign markets. The distressed domestic photovoltaic industry chain is a great boost. The integration of the entire photovoltaic industry also indicates that the domestic PV industry structure will change significantly during the “12th Five-Year Plan” period. Leading companies, especially the national prefix companies, will get out of the industry downturn and become bigger and stronger in advance. This will become a clear trend.

Domestic market overweight

The installed target of photovoltaic power generation has been raised from the previous 9 million kilowatts to 14 million kilowatts, showing that the government’s determination for the development of the domestic photovoltaic industry during the “Twelfth Five-Year Plan” period has been demonstrated. It should be noted that in 2010, the installed capacity of domestic photovoltaic power generation was only nearly 900,000 kilowatts. In addition, the additional increase in the price of renewable energy electricity, and the introduction of detailed rules for the on-grid PV power price, indicates that the large-scale expansion of the domestic photovoltaic market is in full swing.

In an interview with a reporter from the China Securities Journal, the relevant person stated that in the next five years, the domestic renewable energy and new energy industries, especially the solar power market, will be fully activated, implying that the demand for electricity price subsidies for supporting renewable energy generation will follow suit. expand. According to preliminary calculations, by the end of 2011, the funding gap for electricity price subsidies will reach 20 billion yuan. According to the current 4 PCT/kWh standard, the additional electricity subsidies received each year is only 10 billion yuan. Therefore, it is imminent to adjust the price of electricity.

He pointed out that the new electricity generation price for renewable energy has already formed a plan, and the future will be based on changes in CPI. According to the plan, the price increase is expected to increase to 8 PCT/kWh and double the current 4%/kWh standard.

In August of this year, the National Development and Reform Commission issued the domestic fixed tariff policy for photovoltaic power on the Internet, attracting a large number of companies to invest in the construction of domestic photovoltaic power plants, and even once triggered the “rush-install” wave of photovoltaic power plants in the western region. Ding Wenwu, director of the Electronic Information Department of the Ministry of Industry and Information Technology, recently stated that in the future, the relevant departments will also issue detailed rules for the implementation of domestic on-grid tariffs for photovoltaic power to further attract companies to open up the domestic market.

A person in charge of investing in power plants in the west told reporters at the China Securities Journal that according to the current fixed-grid electricity price level, when the cost of the photovoltaic power plant system is 16 yuan per watt, the investment rate of return can reach 8.2%, and the payback period is 8 years. The return on investment is expected to be substantial. Moreover, as the current component costs continue to decrease, the rate of return will become more and more attractive to investors.

Polysilicon first integrated

Although the spring of the domestic market is approaching, the domestic PV modules and polysilicon manufacturers, which have been hit by the decline in international market demand so far this year, are currently experiencing a bitter "winter" period. Since the beginning of this year, the domestic spot price of polysilicon has continued to fall. According to the latest statistics of the China Nonferrous Metals Industry Association’s Silicon Branch, as of November 9th, the domestic polysilicon mainstream quotation is 20-23 million yuan/ton, compared with the beginning of the year (February 15). The price of 68-74 yuan/t fell 2/3. The Silicon Industry Branch expects that by the end of November, 90% of the domestic polysilicon companies will be shut down. The price of battery modules also fell sharply within a year.

In this context, promoting the integration of the polysilicon industry has become the focus of policy considerations. Recently, some media reported that the Ministry of Industry and Information Technology has made substantive progress in advancing access to the polysilicon industry in recent years, and the first list of polysilicon access companies will be announced, while four companies, including LeTai Tianwei and Shin Kong Silicon, have reached the national access standards.

Relevant sources told the China Securities Journal that under the backdrop that the domestic polysilicon industry was in a downturn, the Ministry of Industry and Information Technology intends to use the opportunity for the first access list to promote the integration of the domestic polysilicon industry. It is understood that the finalist companies are in line with the "admission requirements" requirements of "solar grade polysilicon project each phase is greater than 3,000 tons / year, solar grade polysilicon reduction power consumption is less than 80 kwh / kg" and other standard requirements, these criteria Or will become the qualification requirements of the integration of the main body.

Huahai United Securities analyst Wang Haisheng believes that the advancement of industry consolidation is accompanied by the support of dominant companies and the elimination of outdated enterprises. Therefore, companies such as Shin Kong Silicon, Tianwei Change (600550), and GCL-Poly have already reached the standard, and will be in the next five years. Can take the opportunity to accelerate the expansion of production scale, occupy a favorable position before the full start of the domestic market.