For photovoltaics, the securities firm is determined to see more. I give you the core logic
1) From the policy point of view, the marketization of electricity does not hinder the development of new energy; short-term new energy does not need to participate in marketization. As the cost of the industry declines in the medium term, the advantages of photovoltaics over traditional electricity will gradually manifest, and the marketization model is more conducive to photovoltaic replacement;
2) In terms of short-term fundamentals, after the project preparation period in the third quarter, domestic bidding projects in the fourth quarter will enter the construction and construction cycle, supporting the industry's prosperity in 2019Q4-2020Q1;
3) From the perspective of medium-term development trends, the industry's growth logic is clear. There is room for more than expected demand in 2020: component prices have fallen by more than 10% since Q3, which will stimulate overseas demand growth in 2020. Domestic power market reforms may make it possible to rush to install affordable projects in 2020;
4) In terms of valuation, the current valuation of the sector is still at a low level, and the major leading companies correspond to only 15 times the PE in 2020;
5) The low valuation has established a safety margin for the sector. Even if the supply chain impacts the price adjustment in 2020, due to the low valuation + the market has certain expectations, the overall adjustment of the sector is expected to be limited. With reference to 2016Q3, the price of the industry chain fell by about 30%, but the stock price adjustment range was only 10% -15%. If the demand is stable in 2020, the price of the industry chain will be adjusted slightly, and the stock price is expected to be relatively stable. If the demand in 2020 exceeds expectations, the sector It is expected to usher in an investment market similar to the second half of 2017.
In summary, we continue to be optimistic about investment opportunities in the photovoltaic sector. Key targets include Longji, Tongwei, Jingsheng Electrical, Oriental Risheng, and Foster.