Alan Lau
What I am Known For
- Utilities
– Comprehensive coverage of the A-share solar value chain among Intl brokers with 22 stocks under coverage. - Industrials
– Comprehensive coverage of the A-share solar value chain among Intl brokers with 22 stocks under coverage.
How I am Different
Utilities
Price cut unleashes pent-up demand. Demand for Distributed PV remained strong, contributing 58% of FY22 installations in China while utility-scale installations were delayed with high prices along the value chain. We see strong growth potential in 2023. As Poly capacities ramp up, and with prices falling in 2H22, we expect the module price to drop to RMB1.6-1.7/W. Massive utility-scale projects planned at this price level since 2021 are due to be reactivated, and we expect global PV installation to grow 36%+ to 300GW, benefiting integrated module producers, utility-scale inverter players and tracker suppliers.
Wafer GPM to decline with oversupply. Tight supply of high-purity quartz sand may constrain Wafer production and slightly defer a price war. We believe a Wafer downcycle is likely, given aggressive capacity expansion by new players and oversupply in Wafer capacity, reaching 850GW in FY23e. Cell capacities will remain tight. As companies reach a crossroads in selecting next-generation cell technology, PERC capacity expansion has been suspended and most players are building new capacity with new technologies (TOPCon, HJT, HPBC) that may deliver higher conversion efficiency. We expect GPM of large-size PERC cells will remain high in FY23; TOPCon cells are expected to sell at a premium of c.USD1-1.5cents/W vs PERC cells
ESS. We expect the strong ESS momentum to sustain in 2023 along with the fall in raw material costs. We prefer industrial and commercial ESS > centralized ESS > residential ESS.
Stock picks: Buys on Kehua Data, Envicool, Kstar
Industrials
The down-cycle in the construction machinery sector might not be as bad as expected. History suggests that 2021 was the start of a five-year downcycle, but we are less bearish, as we see demand hovering at historically high levels to be supported by 1) emission standard upgrade, 2) labor shortage and 3) overseas expansion. A cyclical rebound also appears imminent, which should drive accelerating FAI and support the sector demand growth pickup from 1H22.
IA: We provide comprehensive monthly channel checks across industrial automation value chain. We also conduct monthly channel checks with IA experts to provide sector insights efficiently. We hold a cautious view on 1Q23 demand given the relatively high base as well as fierce competition among NEVs in 1Q23.
Power tools: We are the only broker to provide high frequency consumer credit card data on power tools, highlighting the weakness in US consumer spending. We also took 20+ investors to visit TTI’s Ryobi and Hart HQ in Greenville, US.