Are current photovoltaic modules a good business?

Every time the stock adjusts, everyone is calmer. Some old stalks such as constant output value of components for ten years, accelerated depreciation of technological iterations, rise and fall of leading companies, overcapacity, etc. have been lingering impressions and even shadows. In the final analysis, I think photovoltaics are not a good business.

I have been thinking about this issue this weekend, and I have some thoughts to share.

1. Is this a good year for photovoltaic modules?

Generally speaking, this year is not a good year. The reasons are: 1. The new crown in the first half of the year was a blow to export-oriented enterprises; 2. There was a flood in the middle of the year, and some industrial chains were shut down, plus unexpected safety accidents. The price of the chain has risen sharply, the price of glass is close to the historical high, and the price of silicon has risen sharply; 4. The price of modules is still in a downward trend throughout the year; 5. The global installed capacity growth rate is zero or negative, which is also rare in the history of photovoltaics.

Regardless of the analysis of industry growth or market capacity, and the addition of unexpected events, this year is not a good year compared to previous years.

But there is another contradiction: component stocks are likely to create the best performance this year.

1. Analyzing the U.S. stock market, Jinko’s 15-19 net profit was 860 million, 1.827 billion, 142 million, 406 million, and 924 million respectively. The semi-annual report was 641 million.

Canadian Solar’s net profit for 15-19 years was 1.207 billion, 455 million, 694 million, 1.689 billion, and 1.106 billion. The semi-annual report was 917 million.

2. Looking at the big A shares, JA Solar’s half-year report is 700 million, and the third quarter is 1.2-13.3 billion

The semi-annual report of Tianhe is 4.93, and the third quarter is 7.55-836 million;

The semi-annual data of Longji’s sub-revenue component is controversial, and the data will not be written for the time being, and the results will not be affected.

Judging from the current data and trends, it is very likely that JA Solar has created the best net profit data in history, LONGi Components is determined to be the best data in history, and Jinko may be close to the best data in history.

why? Everyone can think about it.

2. What kind of model will it look like if photovoltaics are still dominated by Europe and the United States? Will it be better than now?

This is actually an interesting assumption.

Take a realistic example, tracking the stent. The tracking bracket is currently a module dominated by Europe and the United States, and there are also some representative ones. Take a look at it in detail:

Market: Tracking brackets occupy 70% of the market in the United States, followed by Europe and Australia.

Price ratio: The tracking bracket accounts for 15%-20% of the cost in the U.S. kWh city, and may create a gain of more than 20%. Tracking the downward trend of stent prices is slower.

Production and sales model: 80% parts and components foundry, factory manufacturing and assembly of some parts. Overseas expansion depends on OEM or joint venture OEM production + development of overseas large middlemen sales + direct sales.

Profit: gross profit above 20%.

Competition in the same industry: patent wars + channel wars, with relatively few price wars.

If photovoltaics are still dominated by Europe and the United States, it is very likely that photovoltaics are still an aristocratic energy source. The reasons are: 1. The cost of electricity in Europe and the United States is high, and Europe and the United States do not have such a strong incentive to reduce costs; 2. European and American business strategies dictate.

From an investment perspective, it is possible that the European and American asset-heavy operation methods are more in line with the standards of growth stocks.

From the perspective of the development trend of the photovoltaic industry, it is possible that my country’s current photovoltaic development method has more advantages.

There are a few questions. Should investment be in line with industry trends? Is my country’s photovoltaic development model worth the investment? At what stage of the development of photovoltaics can investment be made relatively large?

3. My answer

The answer to the first question is not a good year this year, but a turning point.

Reasons for excellent profits this year:

1. The leading companies have gathered and the market capacity has not increased, but the shipments of leading companies have increased significantly. Component stocks have entered an oligopoly pattern;

2. The seesaw of component price decline and component cost leveled off, and gross profit is at a relatively high position in history;

3. The realization of EPC power stations has accelerated, and downstream profits have begun to increase;

Profits will be even greater in the next 2-3 years. Reasons:

1. As the leading companies gather and accelerate, their market share will gradually increase;

2. The market capacity has increased steadily, with a compound growth rate of over 15%;

3. After the oligopoly of component factories, the right to speak in the industry chain will increase, and there will be more component tentacles extending to the industry chain, whether through holdings, acquisitions or self-construction;

4. Improved cash flow, improved financing, and increased net interest rate;

5. Downstream power stations, distributed power stations will develop rapidly, and contribute relatively large profits;

6. The technical route is steadily advancing, P-type and N-type coexistence, the market tends to be more fragmented, and no big black swan appears.

The answer to the second question:

Regardless of the European and American model or the current model in my country, as long as the industry develops healthily, it is a good model, and there is no difference between good and bad.

Opportunities for my country’s model victory: photovoltaic parity and solar storage parity.

my country’s model is essentially a race between photovoltaic prices and costs. As long as innovation + scale, a substantial increase in profits can be achieved.

4. My opinion on controversy

1. The so-called ten-year output value remains unchanged

The data that can be found in 2008 was 7 GW of global module shipments and 2.6 GW in China. According to 20 yuan per watt, the output value of modules was 14 billion and domestic 5.2 billion. Because the silicon material + market is outside, the net profit is even thinner.

I believe I don’t need to enumerate the data for 2020.

The so-called 10 years of constant change only saw some appearances, but did not see all aspects of the benefits including the structure of the industrial chain, profits, and social employment.

2. The rise and fall of the so-called leader

Suntech’s defeat in the industrial chain is due to the fact that the dominant power of the industrial chain is not in China.

Yingli’s failure to reverse the situation is ultimately due to the dominant influence of the European and American markets.

There are many reasons for GCL’s failure, such as odd-to-many disputes and business strategy errors. GCL may be mediocre, but it may not necessarily die.

The main reason for the common leader’s demise is the issue of industrial dominance rather than technological iteration.

In the past 5 years, the dominant power has been in China. Therefore, there has not been much industry change in the last 5 years.

3. The so-called technological iteration

In the component industry chain, the industry chain technology of silicon materials and wafers is relatively mature, because the probability of large-scale crises is very small. The component industry chain is actually asset-light and pays back quickly. The real risk of iteration is the battery.

However, the N-type battery may be the future trend. Judging from the current reserves of leading enterprises, the N-type will advance steadily. P-type and N-type are likely to coexist for a long time.

4 Industry growth

There is no need to be either black or white, either by substantial growth or by stagnation and rapid peaking.

There is also no need to hit the industry’s growth rate expectations so full. Maintaining two or more growth component stocks can have a good report card.

Four, conclusion

Are photovoltaic modules a good business?

I think it is

From a national perspective, the country has added a new energy reserve and added a leading domestic field

From the perspective of the photovoltaic industry, photovoltaics are rapidly reducing costs, flying into thousands of households and flying to all over the world

From the perspective of photovoltaic module companies, a unique path has been taken, occupying the leading power of the industry, and obtaining corresponding profits.

As for investment income, when the industry and enterprises develop well, natural investors can Changhong.

Special reminder: The long-term trend of the industry does not represent the short-term trend of stock prices, investment needs to be cautious