Table of Contents
Executive summary ........................................................................... 3
Outlook ....................................................................................................................................3
Valuation ..................................................................................................................................3
Risks ........................................................................................................................................4
Clouds still abound............................................................................ 5
Demand picks up after dismal 1Q, but not as fast as the company has guided .......................5
Overcapacity to continue to haunt solar industry into 2010......................................................5
ASP decline faster than expected in 1H09, and still falling across supply chain .......................6
New subsidy programmes should make 2010 a better year to look forward to; but not
enough to turn the overcapacity tide ........................................................................................7
China to defy gravity? ....................................................................... 9
Potential subsidy programmes in China have boosted share prices, but the Street is too
optimistic about the upside.......................................................................................................9
Three different potential subsidy programmes in the works ....................................................9
Supply discipline nowhere to be seen in China and may depress China market profitability
further ....................................................................................................................................14
Investment focus ............................................................................. 15
Solar industry value chain overview ........................................................................................15
Integrated players likely to capture more value near term ......................................................15
Valuation of Chinese solar companies ....................................................................................16
ReneSola (SOL.N, Hold) .................................................................. 19
Suntech Power Holdings (STP.N, Sell) .......................................... 26
Trina Solar (TSL.N, Hold) ................................................................ 32
Yingli Green Energy (YGE.N, Hold) ................................................ 38
Appendix A....................................................................................... 44
How photovoltaic (PV) solar cell technology works ................................................................44
Solar value chain overview......................................................................................................45
Polysilicon ...............................................................................................................................46
Ingot/wafer.............................................................................................................................47
Cell .........................................................................................................................................48
Module...................................................................................................................................49
System...................................................................................................................................50
Thin film solar cells..................................................................................................................50
Appendix B....................................................................................... 52
Glossary of solar technology...................................................................................................52
Appendix C....................................................................................... 55
Solar incentive programmes by country ………………………………………….…………….…55