Table of contents
Our investment ideas: Buy JA Solar (CL), GCL-Poly; Sell Suntech Power 3
2010-11E: The years of continuing growth for tier-one Chinese players 4
Outsourcing solar – Low-cost alternatives to China 10
Polysilicon supply and demand outlook 13
Earnings adjustments and key model metrics 15
Valuation – Cash-based (CROCI) methodology cross-checked with P/B vs. ROE 20
Drivers for the domestic market still unclear in the near term 26
Risks to our assumptions 27
Company write-ups 28
JA Solar (JASO): Reiterate Buy (CL) on improving customer profile and cash return 29
GCL-Poly (3800.HK; Buy): Upgrade to Buy on larger capacity and lower cost 33
Yingli Green Energy (YGE; Neutral): Needs its poly plant to deliver 37
Trina Solar (TSL; Neutral): A solid executor but near-term upside appears limited 41
Suntech Power (STP; Sell): Reiterate Sell on higher cost structure and lower cash returns 45
Appendix I: 1H/2H 2010E and 2011E estimated new added wafer capacity (MW) in China 49
Appendix II: 1H/2H 2010E and 2011E estimated new added cell/module capacity (MW) in China 50