This guest introduces: Su Chen, Industrial Securities Research Institute, general manager of high-end equipment manufacturing research department, chief analyst of power equipment new energy industry. He won the third place in New Wealth in 2016, the second place in New Fortune in 2017, the second place in Crystal Ball, the first place in Golden Bull Award, and the first in IAMAC. In 2018, the crystal ball power equipment and the new energy industry doubled.
The photovoltaic industry experienced a policy of “stopping†in 2018. As the chief analyst of the new energy industry, what does he think? What is the development trend of the photovoltaic industry in 2019? What adjustments will be made to the subsidy policy? How big is the impact of the policy on the industry? How big is the influence of leading companies on policy subsidies? How does he view the valuation changes in the photovoltaic industry? In this regard, Oriental Fortune Network invited Mr. Su Chen, the general manager of the High-end Equipment Manufacturing Research Department of the Industrial Securities Research Institute, to visit the “Fortune Watch†column to share with you the wonderful views.
In an interview, Su Chen pointed out that for the photovoltaic industry, judging the follow-up subsidy policy will be adjusted in the following directions: 1) unit power subsidies accelerate the decline; 2) the accelerated price era; 3) the introduction of quota system policy. Su Chen believes that the market share of leading companies in the photovoltaic industry will continue to increase under the gradual reduction of costs. With the further integration of the industrial chain and the release of demand next year, leading companies will appear more in terms of business performance and stability. The result of satisfactory people.
The following is an interview record:
Moderator: Hello, everyone, welcome to watch this issue of Fortune Watch, I am the host Peng Tao. There is an industry that can be said to be a favorite of thousands of people, the market is constantly optimistic, hot spots are constantly, it is the new energy industry. Today, we invited a professional person to bring you some opinions about the industry. We first came to know him (VCR) through short films.
Moderator: We welcome Mr. Su Chen's guest, Teacher Su, hello.
Su Chen: Hello.
Moderator: We know that new energy is a big category, including cars, photovoltaics, nuclear power, wind power that we are exposed to. Today our main character is the photovoltaic industry, and it is also your research direction. Can you tell us about it first?
Su Chen: The country has supported domestic PV demand since 2013 and 2014. The development of the whole industry has continued to exceed market expectations, and the industry has shown great tenacity. With the advancement of photovoltaic technology and the decline in cost overtime, from 2016 to 2017, the overall demand for photovoltaics continues to exceed market and government regulatory expectations.
In 2018, everyone is more familiar with the 531 policy. In the process of triumphing in the entire photovoltaic industry, due to subsidies and other reasons, the Energy Bureau issued the so-called photovoltaic industry 531 policy on May 31, and the scale of the entire PV subsidy project was carried out. A more stringent control has led to the relatively large fluctuations in the PV sector this year, both in terms of industrial operations and the fluctuations in the entire secondary market.
After the 531 policy, the leading stocks of the entire photovoltaic sector also experienced a decline of 50% or more. As far as the current situation is concerned, the entire policy will improve next year, and the possibility of continuing to promote the industry is growing. The cost of the industry, including the price of the terminal, also showed a significant decline. The price of the entire industry chain has dropped by 20% to 30% this year, further accelerating the arrival of PV parity. We predict that in the second quarter to the third quarter of next year, some PV affordable Internet projects will be accelerated. The market has greater expectations for the space and growth of the photovoltaic industry in the next few years.
From the perspective of this year's industrial structure, the leading companies in all sectors have further increased their market share and accelerated the integration of the entire industry. Therefore, we have seen the profitability of the leading companies in the photovoltaic industry, as well as the volume of shipments. Under the influence of the 531 policy this year, it still has a more than expected performance. We believe that with the further integration of the industry chain and the release of demand, leading companies will have more satisfactory results in terms of business performance and stability.
Moderator: We first made a tone for the development of the photovoltaic industry in the past, including the overall performance this year. At the same time, you mentioned the dependency subsidy. In fact, the new energy industry, like other emerging industries, has encountered some pains. The PV subsidies we mentioned will also have some policy repetitive. Can this impact be discussed with us?
Su Chen: The PV industry is actually the same as most emerging industries. At the very beginning, it was driven by the state's subsidies, driving the initial development of the industry. Therefore, most of the new energy industries, including photovoltaics, have one of the most important disturbance factors and drivers. This year, due to the 531 policy, everyone’s attention to the subsidy gap in the photovoltaic industry is becoming more and more important. At present, the subsidies obtained by the entire PV industry chain come from renewable energy funds. Now there is a gap of 100 billion yuan in funds every year, and the subsidy characteristic of photovoltaics is for 20 years. In this case, the pressure on the whole subsidy is relatively large. .
Therefore, we will judge the follow-up subsidy policy in several directions. First, the acceleration of unit subsidies for electricity subsided. Because the cost of photovoltaics is still falling faster, the subsidy will continue to decline in the process of cost reduction and efficient product launch. We expect that according to the guidelines given by the state, it should probably be withdrawn after 2020.
Second, support some projects that are cheaper to access the Internet. In fact, in the middle of the year, the Energy Bureau repeatedly emphasized this matter. We expect that in the second quarter to the third quarter of next year, in some parts of the eastern region, a number of pilot projects with affordable Internet access will be released. In some non-technical costs, some concessions will be made, such as local land costs and related taxes and fees. If this piece can make some improvements, PV parity will be faster.
In the follow-up, including the quota system policy, we believe that it will be introduced in the near future. This will play a very good role in the integration of the entire photovoltaic and wind power. Therefore, if it is followed, the grid connection of the State Grid can guarantee the improvement of the grid connection rate, which is a good phenomenon for the entire downstream power station operators and the entire industry chain.
Therefore, we generally judge that after 531 to the end of this year, this period of time is a relatively sudden suppression period of the policy, but from next year, whether it is PV indicators or PV subsidies, and related policies, it will be beneficial to the industry. The signs of relaxation, we also think that the promotion of affordable Internet projects next year will bring the industry's unexpected development.
Moderator: One of our basic judgments is that we may withdraw from subsidies in 2020.
Su Chen : 2022.
Moderator: But everyone is also worried about a problem. Are there any pressures on the difficulties you have mentioned?
Su Chen: In order to absorb this problem, it has always restricted the cyclical development of the industry. In some parts of the western and northern regions, many areas have no longer had many new projects in the past two years due to the problem of consumption. Most of the new PV projects are mainly in the eastern region. This area can be absorbed locally in the eastern region. Because the local industry and commerce use relatively sufficient electricity, it can be consumed locally. Therefore, the problem of power limitation can be solved to a certain extent. In the follow-up, the State Grid will also closely monitor the acceptance of new energy in various power areas, and achieve a balance between the entire new installed capacity and acceptance.
Therefore, we judge that after 2020, the whole phenomenon of wind curtailment will continue to improve, and the focus of new installations will be on the economically developed regions of the east and the south.
Moderator: In addition, we mentioned that new energy is more dependent on subsidies, and there will be a process of gradually subsidizing the decline. But at this point, we have to ask what impact it has on different companies. For leading enterprises, will they have a greater status because of the rise in concentration, or will it affect it, and what will happen to SMEs? Can you talk to us in detail?
Su Chen: The photovoltaic industry chain is actually relatively simple. From the upstream silicon material to the midstream silicon wafers, batteries and components to the downstream power stations, the entire industrial chain will initially form an industry similar to perfect competition, but with With the acceleration of the industry and the intensification of industrial competition, there are a number of excellent companies. In terms of cost leadership and technology leadership, companies that have done well are gradually emerging. For example, upstream silicon materials, such as Tongwei, special change, Daquan, including GCL-Poly, many wafers in the middle reaches, including batteries, have begun to slowly come out.
The concentrated effect of the leader has intensified in recent years, and we judge that the entire industry is followed by leading companies. Small and medium companies, including new entrants, most are new technologies, new direction cut into the technical model and the popularity of our products continues to closely observe.
However, from the overall perspective, the market share of leading enterprises will continue to rise under the circumstance that its cost is gradually lower. We are also constantly striving to find such companies with low cost advantages and cost-effective products as the main direction of the future.
Moderator: It is cost plus technology. There will be a group of companies going out in the middle and lower reaches. In the future, it may still be led by leading companies. At the same time, some companies that have entered the technology, or companies that have entered new technologies and innovations, have to Take a look at how the development follows. In addition, in fact, everyone wants to know more about the question. Is there any area in the photovoltaic industry that is in an internationally leading position, and does it have such a condition that it does not have a large amount of exports?
Su Chen: In fact, in the photovoltaic industry, China used to be a component export. Before 2012, it was called “two heads outâ€. Today, China has become the world’s leader in all aspects of photovoltaics. In the production and sales of components and batteries, China accounts for the vast majority of the world. China's PV exports are relatively strong now.
However, there were some problems in the middle of the export, which had a certain inhibitory effect on this piece of China. However, China's PV industry chain has a cost advantage compared to international competitors, this advantage is too obvious. Therefore, we expect global demand growth in the next two years will greatly promote the birth of this chain of China. Because the components are mainly in China, and the subsequent battery-like field, the battery factory on the mainland now has gradually replaced Taiwan's position in the world, and the global market share has accelerated. Then a silicon wafer and the silicon material that, as technology advances the process, in particular a silicon material which, as we further enhance the purity, high cost of the silicon material for overseas Alternatively, in an accelerated process also.
We judge whether it is this year or in the future, China's position in the global PV industry chain boss should be hard to shake.
Moderator: Another mention China's business card, we think of two industries, a high-speed rail, the other one is the PV. How do listed companies view the opportunity of this big cake, is there any advantage of the emergence of companies?
Su Chen: This is a listed company. In fact, most of the leading listed companies have made rapid progress in the entire industrial layout and internationalization process. Most of the leading companies are now in the process of accelerating expansion with industry trends, continuously expanding production and reducing costs, and then increasing market share. Therefore, we maintain very close attention to the leading companies in all aspects of the industry chain. In the follow-up, big opportunities often appear in these head companies.
Moderator: If you return to the secondary market, PV industry is very optimistic, including the rise of listed companies in the first two years. However, in 2018, due to the subsidies and other problems, the market performance was repeated. For example, some stock prices, first down 70%, may rebound sharply later. For this type of company, where is the current valuation center, is there any room for further space?
Su Chen: Now the leading company in the middle reaches of PV, corresponding to the performance of next year, the general valuation center is between 15 and 20 times. In fact, PV's valuation of the entire industry chain in the past two years is still relatively low. Basically, everyone has given a valuation level of traditional manufacturing.
Our interpretation of the changes in the entire valuation system is mainly the following.
First, starting from the second quarter to the third quarter of next year, a number of affordable Internet projects will come out, which indicates that the era of parity will accelerate. After 2020, we expect that the entire parity project will have an accelerated breakthrough, so the market expectation is not particularly sufficient for the growth of the industry.
Second, regarding the cycle problem in the growth industry, because PV and many other emerging industries have a characteristic, the medium and long-term center must continue to go up, and some slopes are still very high. However, in the short-term industrial policy, or between supply and demand, there will be periodic fluctuations, which will often offset the mid- to long-term rising center. Therefore, we judge that after 2020, as the industry gradually gets rid of the disturbances and related policies, the growth of the industry will bring the upward shift of the valuation center.
Third, the issue of permeability. Everyone is always entangled in the final market size of the photovoltaic industry. In fact, the current penetration rate of photovoltaic plus wind power is less than 10%, the penetration rate of power generation is less than 10%, and the permeability of photovoltaic is still a very low state. Since the conversion efficiency of photovoltaic utilization hours is relatively low, each increase is 1% of photovoltaic power generation ratio, often brings increased flexibility of photovoltaic installation 4% or even 5%. In this case, for the photovoltaic industry chain, after the low-cost Internet access, the potential space of photovoltaics is very large, which is probably larger than what we imagined on the market today. We judge that from 2019 to 2020, as the industry's growth gradually reflects, the entire valuation center will move up instead of moving down. Starting next year, it is the initial outbreak of industry growth, and the entire valuation will enter an upward channel in the secondary market.
Moderator: Indeed, like many industries that are optimistic about the future, there will always be a problem, that is, cyclical fluctuations in the short and medium term, which will lead to such a rhythm of the medium and long-term hubs. This is also what we must A problem faced.
Su Chen: Right.
Moderator: I am very grateful to Mr. Su for his comprehensive review of the industry. Thank you, Teacher Su, for the next show.
Su Chen: Ok, thank you.
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