Table of contents
Overview of global/China view and key assumptions/valuation 3
We think cash return is paramount to long-term competitiveness 6
Top stock pick: JA Solar offers a better risk/reward vs. peers 8
Valuation: We use a cash-based (CROCI) methodology 13
JA Solar excels in scenario analysis for Euro/US$ FX rate 16
JA Solar and Yingli excel in scenario analysis for supply/demand 18
Global solar industry – growing using less expensive funds 20
China’s solar market – the home of current capacity but future demand 22
Policy-related and other industry risk factors 26
JA Solar (JASO; Buy, CL): Buy on improving cash returns 29
Trina Solar (TSL; Neutral): Short-term impact from FX rate swing 32
Yingli Green Energy (YGE; Neutral): Low asset turnover drags cash return 35
GCL-Poly (3800.HK; Neutral): Fairly valued upstream player 38
Suntech Power (STP; Sell): Low asset turnover/high earnings risks 41
Appendix I: Supply – as capacity added, ASP should fall 44
Appendix II: Global solar PV module demand forecast 45
Appendix III: Chinese listed solar players’ industry landscape 46
Appendix IV: Chinese and global solar module ASP assumptions 47
Appendix V: EV/GCI historical trading charts 48