Photovoltaic industry: The results of the second domestic PV project bidding

Investment Highlights:

The industry's high degree of prosperity continues. In the second quarter of this year, global PV demand was 3.82GW, an increase of 54% year-on-year. It is expected that the annual new installed capacity of photovoltaics will reach 15GW. The supply of polysilicon, silicon wafers and battery modules will be tight. Orders of major companies in the industry will have been filled up in the first half of next year, and individual companies will even order their orders to 2012.

The price of polysilicon and modules maintains a rising trend. The average price of PV modules is close to 1.4 EUR/W, which is the highest level in the next year. It is expected that the fourth quarter of this year will return to the decline. Polysilicon prices rose for six months in a row. Some spot prices have already exceeded US$90/Kg. We believe that polysilicon prices are difficult to sustain at high levels for a long time, and that the main market for long-term contract prices may remain between US$50-60/kg.

The results of the second domestic PV project bidding were released. "Low-cost" and "State-owned enterprises" became the key words. The bid price is lower than 1 yuan/kWh, indicating that the company has confidence in reducing the cost of photovoltaic power generation. State-owned enterprises enter the market with high profile, and the photovoltaic industry will intensify competition in the future. In the future, the promotion of domestic photovoltaic power generation will continue in the form of project bidding, and it is still difficult to introduce a unified on-grid tariff policy in the short term. The starting conditions in the domestic market are not yet mature.

Although we are still optimistic about the rapid growth of the photovoltaic industry's market demand, the photovoltaic industry is still facing risks such as policy subsidies, market competition, and product prices. At present, the valuation of related stocks of the photovoltaic industry in the A-share market is relatively high, and most of them have already reflected or overdrawn future market expectations for the photovoltaic industry. Therefore, we have lowered our overall rating on photovoltaic panels to “neutral”.