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wrote a column · Jun 30, 2022 19:34 ·

Photovoltaic industry research: The energy revolution brings strong demand, and industry competition focuses on cost control.

Key points:

1. The growth space of the global renewable energy industry comes from energy substitution: From the perspective of proportion, wind and solar energy only accounted for 10.3% in 2021, and it is expected to reach 40% by 2030.
2. China's energy structure is still dominated by thermal power, but the newly added installed capacity is mainly renewable energy: In 2021, thermal power accounted for 55% of the total installed capacity, while the newly added installed capacity of renewable energy accounted for 76.1%, with photovoltaics accounting for 30% of the new installed capacity.
3. According to the calculation of the increase in the proportion of photovoltaic power generation, the global demand for photovoltaic modules is expected to maintain a compound growth rate of around 20%-30%, but there will be cyclical fluctuations. With high energy prices stimulating this year's photovoltaic installations, next year's growth rate may drop.
4. The core driving logic of the development of the photovoltaic industry is the economy of cost. Large-scale investment spreads costs. Components are the core of the photovoltaic industry chain, with upstream silicon materials, silicon wafers, photovoltaic glass, and downstream power plant operation.
5. Chinese companies have relatively strong competitiveness, with 8 out of the top ten global photovoltaic component shipping companies being Chinese. From the perspective of the component market structure, the cost control ability brought by economies of scale is the core competitiveness of photovoltaic companies, such as LONGi Solar.
6. After the previous oversold rebound, the overall valuation of the photovoltaic sector has reached 37 times, which is at a relatively median level. Overall, the photovoltaic industry has a large growth space, but the industry competition is intense, leading photovoltaic companies to focus on horizontal expansion to increase scale and reduce costs. Vertically extending the layout of the industry chain. Leading companies control costs through economies of scale (not high technological barriers), have relatively strong bargaining power with upstream and downstream, but due to the expected downturn in photovoltaics next year + high silicon prices, it is recommended that investors pay appropriate attention to the photovoltaic industry, wait for next year's market to adjust expectations for photovoltaic growth, and opportunistically deploy positions such as GCL Tech (3800.HK), JinkoSolar (JKS.N), and other leading photovoltaic companies.

Risk reminder:

1Photovoltaic installation demand fell short of expectations.The lower-than-expected demand for photovoltaic installations may result in a significant decline in the stock prices of photovoltaic companies. Currently, traditional energy prices are at high levels, and if prices of commodities such as oil experience a downturn in the future, it will affect the process of replacing old energy sources with new energy sources like photovoltaics.
2、Risk of energy storage construction falling short of expectations:Due to the insufficient stability of new energy generation, energy storage devices are needed for peak shaving. If the construction of large-scale energy storage devices falls short of expectations in the future, it will impact the construction of photovoltaic projects.
3、Global trade policy risks:If countries tighten their trade policies on the photovoltaic industry, such as increasing import tariffs and conducting anti-dumping investigations, it will impact the overseas sales of domestic photovoltaic companies.
4、Silicon material production capacity construction falling short of expectations:Insufficient construction of silicon material production capacity will affect the overall raw material supply of the photovoltaic industry, thus affecting the overall industry's installed capacity. Meanwhile, silicon material prices have been at high levels, impacting the profitability of downstream photovoltaic module manufacturers.
Key points: 1. The global renewable energy industry growth space comes from energy replacement: In terms of proportion, in 2021, wind and solar energy only accounted for 10.3%, and it is expected to reach 40% by 2030. 2. China's energy structure still relies mainly on thermal power, but new installations focus on renewable energy: In 2021, thermal power accounted for 55% of total installed capacity, while the share of new installations for renewable energy was 76.1%, with photovoltaic installations accounting for 30%. Based on the calculation of the increase in the proportion of photovoltaic power generation, the global demand for photovoltaic modules is expected to maintain a compound growth rate of around 20%-30%. However, there will be cyclical fluctuations, with high energy prices stimulating this year's photovoltaic installations, and next year's growth rate may decline. The core driving logic of the development of the photovoltaic industry is that costs are economically feasible, with large-scale investments spreading costs. Components are the core of the photovoltaic industry chain, with upstream silicon materials, silicon wafers, and photovoltaic glass, and downstream station operations. Chinese enterprises have relatively strong competitiveness, with 8 out of the top ten global photovoltaic component shipping companies being Chinese. From the perspective of the market structure of components, the cost control ability brought by economies of scale is the core competitiveness of photovoltaic companies, such as LONGi Green Energy Technology. After the previous oversold rebound, the overall valuation of the photovoltaic sector has reached 37 times, at a relatively median level. Overall, the photovoltaic industry has considerable room for growth, but the industry competition is intense, leading photovoltaic companies to focus on horizontal expansion to increase scale and reduce costs, and vertically extend their layout in the industry chain. Top companies expand their market shares through...
Key points: 1. The global renewable energy industry growth space comes from energy replacement: In terms of proportion, in 2021, wind and solar energy only accounted for 10.3%, and it is expected to reach 40% by 2030. 2. China's energy structure still relies mainly on thermal power, but new installations focus on renewable energy: In 2021, thermal power accounted for 55% of total installed capacity, while the share of new installations for renewable energy was 76.1%, with photovoltaic installations accounting for 30%. Based on the calculation of the increase in the proportion of photovoltaic power generation, the global demand for photovoltaic modules is expected to maintain a compound growth rate of around 20%-30%. However, there will be cyclical fluctuations, with high energy prices stimulating this year's photovoltaic installations, and next year's growth rate may decline. The core driving logic of the development of the photovoltaic industry is that costs are economically feasible, with large-scale investments spreading costs. Components are the core of the photovoltaic industry chain, with upstream silicon materials, silicon wafers, and photovoltaic glass, and downstream station operations. Chinese enterprises have relatively strong competitiveness, with 8 out of the top ten global photovoltaic component shipping companies being Chinese. From the perspective of the market structure of components, the cost control ability brought by economies of scale is the core competitiveness of photovoltaic companies, such as LONGi Green Energy Technology. After the previous oversold rebound, the overall valuation of the photovoltaic sector has reached 37 times, at a relatively median level. Overall, the photovoltaic industry has considerable room for growth, but the industry competition is intense, leading photovoltaic companies to focus on horizontal expansion to increase scale and reduce costs, and vertically extend their layout in the industry chain. Top companies expand their market shares through...
Key points: 1. The global renewable energy industry growth space comes from energy replacement: In terms of proportion, in 2021, wind and solar energy only accounted for 10.3%, and it is expected to reach 40% by 2030. 2. China's energy structure still relies mainly on thermal power, but new installations focus on renewable energy: In 2021, thermal power accounted for 55% of total installed capacity, while the share of new installations for renewable energy was 76.1%, with photovoltaic installations accounting for 30%. Based on the calculation of the increase in the proportion of photovoltaic power generation, the global demand for photovoltaic modules is expected to maintain a compound growth rate of around 20%-30%. However, there will be cyclical fluctuations, with high energy prices stimulating this year's photovoltaic installations, and next year's growth rate may decline. The core driving logic of the development of the photovoltaic industry is that costs are economically feasible, with large-scale investments spreading costs. Components are the core of the photovoltaic industry chain, with upstream silicon materials, silicon wafers, and photovoltaic glass, and downstream station operations. Chinese enterprises have relatively strong competitiveness, with 8 out of the top ten global photovoltaic component shipping companies being Chinese. From the perspective of the market structure of components, the cost control ability brought by economies of scale is the core competitiveness of photovoltaic companies, such as LONGi Green Energy Technology. After the previous oversold rebound, the overall valuation of the photovoltaic sector has reached 37 times, at a relatively median level. Overall, the photovoltaic industry has considerable room for growth, but the industry competition is intense, leading photovoltaic companies to focus on horizontal expansion to increase scale and reduce costs, and vertically extend their layout in the industry chain. Top companies expand their market shares through...
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$GCL TECH (03800.HK)$$JinkoSolar (JKS.US)$
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Photovoltaic industry research: Energy revolution brings strong demand, industry competition focuses on cost control - 20220630 - Futu Securities.pdf1.2M
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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