What’snew。
WehostedmeetingswithsolarcompaniesacrossthevaluechainatSNECPVPowerExpolastweekinShanghai,China,whilealsomeetingseparatelywithinvestorsinHongKong.Ourkeytakeawaysfollow.Investorfocusonsolarremainshigh,sentimentsomewhatmixedWemetwithover40investorsinAsia,whereitappearssolarstockshaverecapturedinvestorattentionowingtobetterfundamentalsandevolvingbusinessmodels.Feedbacksuggestssentiment–whilenotpositive–hasimprovedwiththegroup’srecentpullbackviewedaspotentialopportunity.
Keyquestions/areasofinvestorpushback。
(1)RisktoChinagrowth.AdominantthemefocusedonChina’s2014GWtargets,whichwebelieveconsensusviewisalreadybelowandisthusatlessrisk,especiallygivenutilityscalebacklogthatappearssizable.
(2)NextmoveinpolyASPs.Weseepolyremaininginthe$21/kgrangein2H14,givennewsupply,withbullsarguingmid-$20sonbetterChinademand.
(3)PolicychangeintheUS.Weseelimited,tonorisk,onthe30%ITCnearterm,whilenetmeteringisapotentialheadwindinselectstates(e.g.AZ).
Keystockinfocus–SolarCity(SCTY)
InvestorswemetwithlargelyfocusedontherooftopmarketintheUS,givenitsimplicationsforSolarCityandalsopotentialread-acrossfortheemergingopportunityinChina.Concernsaroundtheimpactofchangingpolicy(e.g.ITC,netmetering)andthecompetitivelandscapewereoffsetbyoptimismaroundgrowthandthelong-termmarketpotential,inourview.
SNECDay2Takeaways–MorefocusonChinagrowth,ASPs。
(1)PotentialfornewpolicyonremunerationforpowerfromdistributedgenerationinChinaremainsakeyfocus,althoughtimingisuncertain.
(2)Givenseasonalityandanexpecteddemandspikein3Qdomestically,ChinesemodulemakersappeartobepositionedforaslightlyrisingASPenvironmentheadinginto2H14,withsomesignsoffirmingevenin2Q.