Is there still a chance for photovoltaic investment?

For photovoltaics, securities firms are firmly bullish, and I will share the core logic with everyone

1) From a policy perspective, the marketization of electricity does not hinder the development of new energy; Short term new energy does not need to participate in marketization. In the medium term, as industry costs decrease, the cost advantage of photovoltaics over traditional electricity will gradually be reflected, and market-oriented models are more conducive to photovoltaic substitution;

2) From a short-term fundamental perspective, after the project preparation period in the third quarter, domestic bidding projects in the fourth quarter will enter the construction period, supporting the sustained upward trend of the industry from Q4 2019 to Q1 2020;

3) From the perspective of mid-term development trends, the growth logic of the industry is clear, and there is room for demand to exceed expectations in 2020: since Q3, component prices have fallen by more than 10%, stimulating overseas demand growth in 2020. The market-oriented reform of domestic electricity may lead to a rush to install more affordable projects in 2020;

4) In terms of valuation, the current sector valuation is still at a relatively low level, with major leading companies corresponding to only about 15 times their 2020 PE;

5) The low valuation has established the safety margin of the sector. Even if the industry chain prices are adjusted in 2020 due to supply shocks, the overall adjustment of the sector is expected to be limited due to the low valuation and market expectations. Referring to Q3 2016, the price of the industrial chain fell by about 30%, but the adjustment of the stock price was only 10% -15%; If the demand remains stable in 2020 and there is a slight adjustment in industry chain prices, it is expected that the stock price will also remain relatively stable. However, if the demand exceeds expectations in 2020, the sector is expected to usher in an investment market similar to the second half of 2017.

In summary, we continue to have a positive outlook on investment opportunities in the photovoltaic sector, with key targets including leading companies such as LONGi, Tongwei, Jingsheng Electromechanical, Dongfang Risheng, and Foster.