Photovoltaic industry: Europe's debt is overshadowed and expectations are clear

The first three quarters of the photovoltaic sector showed an overall decline and partial rebound. As of October 17, 2011, the CSI 300's P/E ratio (TTM, holistic method) was 12.96 times, the SME board's P/E ratio was 28.57 times, the GEM's P/E ratio was 48.45 times, and the PV sector's P/E ratio was 31.73 times. In comparison, the overall price-earnings ratio of the entire photovoltaic sector is between the SME Board and the Growth Enterprise Market. The overall P/E ratio of the photovoltaic sector is still high, and the downside risk in the fourth quarter remains.

European debt disrupted industry demand growth In the first quarter, the PV index rebounded with the bottoming out of the market. At the same time, optimistic expectations such as the emerging PV market made the photovoltaic sector rebound more than the market index. After entering the second quarter, the market showed a trend of overall correction, and the photovoltaic industry will be adjusted back. At the same time, due to the poor demand for the installed capacity of the European market in the second quarter, and the potential for over-capacity, the prices of products in the photovoltaic industry declined rapidly. Slowing down, the second quarter saw a larger reduction in the photovoltaic sector.

By the end of the second quarter, in mid-June, the PV industry experienced a rapid decline in the prices of its pre-products. The yield of photovoltaic projects has increased significantly. At the same time, there are also many favorable policies. The market is generally expected that the second half of the PV market will usher in a wave. Demand rebounded. At the same time, the A-share market was significantly reduced in the early stage and entered a new round of “small rebound” prices. As a result, the photovoltaic sector rebounded again in the first quarter of the third quarter.

Since then, due to the external market was dragged by the debt crisis, Europe and the United States stock market fell sharply, coupled with the domestic economic environment is also showing concern, A shares market has subsequently entered a downward path, the photovoltaic sector also with the tone. Although there was a slight rebound in the short-term after the launch of China's on-grid electricity price policy, the overall prosperity of the global photovoltaic industry was not good, and the overall A-share photovoltaic sector in the entire third quarter was significantly reduced. The European debt crisis has seriously affected overseas PV demand, causing European PV demand to be lower than previous expectations.

The industrial boom is at a low level. The dual role of excess capacity and lower than expected demand has directly led to a rapid decline in the prices of all aspects of the photovoltaic industry chain. The fourth quarter is the low season for photovoltaic installations. It is expected that the downward trend in product prices in the fourth quarter will not improve. Before the price of silicon material was adjusted, the photovoltaic industry could hardly reach the bottom.

This round of the photovoltaic industry cycle started in the second half of 2009. In 2010, the global photovoltaic industry ushered in the highest point of the phase. Newly installed capacity increased by 139% year-on-year, which directly prompted manufacturers in all aspects of the industry chain to expand production capacity on a large scale. Photovoltaic equipment has a consistently high order shipping ratio. In 2011, the PV industry showed a situation of oversupply, and production capacity has been oversupply. From the first quarter of 2011, the ratio of equipment orders to shipments was 1.01. In the second quarter, this indicator has further declined and has fallen below 1. About 0.9, it is expected that this indicator will decline further in the third and fourth quarters, and the business climate will remain low. If the relevant photovoltaic favorable policies are introduced in the fourth quarter, or there are more certainty expectations for the future favorable policies, then the photovoltaic sector may still be able to get out of a wave of small rally market with the help of the market index. In addition, if the European debt crisis is eased, it will be good for the photovoltaic industry.

Looking forward to the policy of "sunshine" heating the fourth quarter photovoltaic plate with the probability of greater market volatility, if the broader market, and domestic and foreign photovoltaic related favorable policies introduced, then the fourth quarter photovoltaic plate still have an opportunity, some stocks will show a wave of small rebound Quotes.

At the policy level, we focus on the evolution of the European debt crisis, the launch of photovoltaic markets in Greece and other countries, and the introduction of new favorable policies for emerging PV markets such as China, the US and Japan. In terms of individual stocks, we prefer polysilicon cold hydrogen method listed company Dongfang Electric, Dongfang Electric heat as the only company listed on the cold hydrogen electric heater, the performance of high certainty, affected by this round of low photovoltaic valley.

Secondly, we think that consumables companies are also good investment targets when the sector rebounds. The barriers in this field are higher than the downstream of the photovoltaic industry chain, which is affected by the excessive production capacity of the photovoltaic main industrial chain, and it also has the advantage of import substitution. Investors can focus on companies such as Dongcai Technology, Stellar Technology, Shindasei Materials, Fangda Carbon and Nanyang Technology.