We believe the supply of PV systems
will exceed demand in 09; shortage of
polysilicon still a bottleneck
􀀗 Big players with broad customer bases
and low cost raw material supplies will
expand gross margin
􀀗 Prefer Suntech to Motech and Yingli due
to gross margin potential in 2H08
Technological advances, government subsidies and
increasing global demand for renewable energy are all
driving growth in solar power. HSBC forecasts a promising
45% global 2008-12 CAGR for the photovoltaic (PV)
industry that makes PV cells for solar panels.
However, in contrast to consensus, we think supply will
exceed end-user demand in 2009 for the first time since 2005,
as governments in Spain and Germany reassess their subsidy
policies. At the same time, we believe the current shortage of
polysilicon – a key raw material for making PV cells – will
continue for another 18 months, creating bottlenecks.
To succeed in this market, companies will need:
a) diversified customer bases to offset likely lower demand
in Spain and Germany; b) leading technology to help lift
gross margin; c) a secure supply of low cost raw materials
through vertical integration or long term contracts.
We initiate coverage on three companies:
Suntech (OW (V), TP: USD46): Exposure to Spain should
drop to 25-30% in 2H08 (vs 58% in 1H); has secured 80% of
raw materials in 09, more than Motech and Yingli.
Motech (Neutral (V), TP: TWD255): More exposure to
expensive spot wafers in 2H08 and might not meet original
capacity expansion plans this year.
Yingli (Neutral (V), TP: USD17): Still highly exposed to
Spain (50% in 2H vs. 58% in 2007). Lack of differentiation
on technology poses further risk to gross margin in 2H.

目录

Headwind in 2009 10
Global view 10
Shifting demand 10
What to expect from 2009? 11
Reduction of government subsidies 13
Transition period 14
Upstream vs. downstream 15
Investment strategies 15
Risks to our investment view 17
Vertical integration 18
Vertical integration 18
Downstream integration 20
Be selective 22
Valuation comparison 22
We initiate coverage on Suntech, Motech, and Yingli 23
Company profiles 27
Suntech (STP US) 28
Motech (6244 TT) 33
Yingli Green Energy (YGE) 39
Appendix I – Why solar? 45
Appendix II – What are c-Si
PV cells? 46
What are c-Si PV cells? 46
Manufacturing process 46
Appendix III – Polysilicon
manufacturing process 49
Appendix IV – Types of thin
film PV cells 52
Appendix V – Government
subsidies 53
Disclosure appendix 55
Disclaimer 58