Renewable Energy Law Implementing Rules to Be Issued, 12 Potential Stocks Worth Watching
Renewable Energy Law Implementing Rules to Be Issued; Purchases of Renewable Energy Power to Receive Subsidies
According to Ren Dongming, deputy director of the Renewable Energy Development Center of the Energy Research Institute of the National Development and Reform Commission, the amendment to the Renewable Energy Law has significant changes compared with the previous law, and the related supporting rules urgently need to be issued. The main supporting rules are the Measures for the Administration of the Renewable Energy Quota System and the Measures for the Administration of the Renewable Energy Development Fund. Ren Dongming disclosed the above information at the Green Competitiveness Marketing Lecture held by Sohu Green.
The revised law formally took effect last month, stipulating that the state implements a full guaranteed purchase system for renewable energy power generation. Ren Dongming said that this guaranteed purchase is the quota system used abroad, that is, requiring power companies to purchase a certain amount of electricity from renewable energy, or requiring power generation enterprises to generate a certain proportion of their electricity from renewable energy. Relevant departments are currently studying and formulating administrative measures for this quota system.
The Medium- and Long-Term Development Plan for Renewable Energy once had quota system provisions, requiring that investors with total equity power generation installed capacity exceeding 5 million kilowatts should have non-hydro renewable energy equity power generation installed capacity reaching more than 3% and 8% of their total equity power generation installed capacity by 2010 and 2020 respectively.
But according to Ren Dongming, because there was no specific legal requirement, it was not achieved during implementation. In the administrative measures now being drafted, there will be clear proportional requirements, especially for grid enterprises, to solve the problem that grid companies are unwilling to purchase renewable energy power during the large-scale grid connection of wind power and solar power.
Ren Dongming also said that this is not forcing the grid to purchase renewable energy power. The Ministry of Finance has now completed drafting the administrative measures for collecting the “Renewable Energy Fund”, which may be issued soon. The fund will apportion the costs of the grid purchasing renewable energy power, giving the grid an incentive to complete the purchases. The fund's sources of funds include special funds arranged in the state fiscal year and renewable energy electricity price surcharge revenue collected according to law, etc.
According to Ren Dongming, the government hopes to use this fund to support including smart grids, off-grid power generation in remote areas, and research and development of various new technologies. (China Securities Journal, Li Yangdan
China's renewable energy share is expected to reach by the end of this year
Xie Zhenhua, deputy director of the National Development and Reform Commission, said on the 8th at the International Cooperation Conference on Green Economy and Climate Change that by the end of this year China is expected to achieve the goal of reducing energy consumption per unit of GDP by 20% based on 2005 and reaching a 10% share of renewable energy. While maintaining economic development, this is equivalent to reducing carbon dioxide emissions by more than 1.5 billion tons, which is China's tangible and major contribution to the global response to climate change.
Xie Zhenhua pointed out that for a considerable period in the future, China's energy demand will still grow reasonably, but it will absolutely not repeat the traditional development path of developed countries, nor will it rely on unrestricted greenhouse gas emissions to achieve economic development. It will incorporate climate change response as a major national strategy into the medium- and long-term plans for national economic and social development, and vigorously develop a green economy characterized by low-carbon emissions and circular utilization.
He introduced that as of the end of 2009, China's installed hydropower capacity was 197 million kilowatts, the scale of nuclear power under construction was 24.5 million kilowatts, and solar water heating reached 145 million sq m, all ranking first in the world. Installed wind power capacity was more than 22 million kilowatts, ranking third in the world. Rural biogas users reached more than 36.5 million households. Projects for natural forest protection and returning farmland to forest were implemented, with artificial afforestation area of more than 22 million hectares, ranking first in the world, and energy savings of about 450 million tons of standard coal. By the end of 2009, renewable energy accounted for 9% of primary energy, and forest coverage reached 20.36%. Xie Zhenhua also stated his position regarding the United Nations Climate Change Conference to be held in Cancun, Mexico, at the end of this year. He said that the core task of the conference is to continue, in accordance with the requirements of the Paris roadmap, to strengthen the full, effective and sustained implementation of the Kyoto Protocol. All countries should strengthen mutual trust on the basis of advancing the convention, deepen cooperation, and strive to achieve a win-win outcome of developing the economy and addressing climate change. (China Securities Journal, Ding Bing
Bohai Securities: May Investment Recommendations and Individual Stock Picks for the Renewable Energy Sector
Photovoltaic Demand Greatly Revised Upward, Volume Rises and Prices Remain Stable for a Bumper Year
In April, authoritative research institution iSuppli sharply raised its forecast for newly added photovoltaic installed capacity in 2010 to 13.6GW, an increase of 92.9% from the original forecast of 8.3GW. The rush installation wave before Germany cut subsidies and the possibility that other countries will cut FIT early next year are the main reasons for the large upward revision in expected photovoltaic demand. We believe that the better-than-expected photovoltaic installation demand will put photovoltaic cell manufacturers in a good market environment of rising volume and stable prices, and this year will be a bumper year. In addition, under relatively tight market demand, polysilicon prices are expected to remain stable, with full-year prices still fluctuating between 50-60 US dollars, and domestic polysilicon manufacturers still mostly hovering around the break-even point.
Stimulated by Strong Demand, Photovoltaic Manufacturers Have Expanded Production One After Another
After the financial crisis, the loosening of the credit environment, the improvement of economic fundamentals, and more countries joining the ranks of encouraging photovoltaic development prompted the photovoltaic industry to re-enter the fast lane. The strong recovery in demand has led major manufacturers to expand production one after another. It is expected that production capacity will be released intensively in 2011-2012. If no new large-scale market is launched by then, the pressure on supply and demand will be relatively large.
Offshore Wind Power Projects About to Be Tendered, A New Round of Wind Power Land Grab Begins
At present, the conditions for offshore wind power construction are already in place, and offshore wind power projects are about to begin tendering in May. Compared with onshore wind power, offshore wind power is technically more difficult, but this does not hinder wind power equipment manufacturers from entering offshore wind power, and a new round of wind power land grabbing has begun.
Investment Recommendations and Company Picks
In view of our judgment that photovoltaic demand will be strong throughout the year and photovoltaic enterprises will face a market environment of rising volume and stable prices, we give the photovoltaic industry a “Buy” rating and recommend that investors pay attention to Haitong Group (600537) (600537), Tianlong Photoelectric (300029) (300029), and Tianwei Baobian (600550) (600550); for the wind power industry, we believe that the offshore tender in May may bring event-driven trading opportunities, and recommend paying attention to industry leader Goldwind Science & Technology (002202) (002202) and Xiangtan Electric Manufacturing (600416) (600416), which has certain advantages in offshore wind power. (Bohai Securities
12 Renewable Energy Concept Stocks to Benefit
Solar Energy
Jinjing Technology
The company is currently a major domestic supplier of ultra-clear float glass used in thin-film solar cells. It currently has 4 high-quality float glass production lines, with an annual float glass production capacity of 20 million weight boxes/year, and is the only domestic enterprise capable of large-scale production of ultra-clear glass. Solar flat ultra-clear glass, with its high light transmittance, is widely used in the production of solar photovoltaic cells, photovoltaic curtain walls, and other new energy fields. At present, the company's solar ultra-clear glass has been put into mass production and has passed the relevant testing of Swiss Oerlikon, a major global thin-film cell equipment provider, and its market position is stable.
The third-quarter report showed that main business revenue increased by 35% year on year. Ten funds took all of the top ten tradable shareholders, holding a total of 108 million shares, accounting for as much as 30% of the tradable shares, and among them the ChinaAMC funds held more than 50 million shares. In the third quarter, average shares held per household increased sharply by 63.17% quarter on quarter, and the chips are very concentrated. Yesterday, the stock was suspended for planning a non-public issuance of shares, combining multiple concepts in one.
Tianwei Baobian
The company is one of the largest domestic production bases for power equipment transformers and is also a leading domestic solar energy enterprise. It has a complete industrial chain in new energy and smart grids and has now formed a full industrial layout of solar raw materials and battery modules. Tianwei Thin Film's first 46.5MW amorphous silicon thin-film production line was successfully debugged, and output has gradually increased. Recently, Tianwei Sichuan Silicon's 3,000-ton polysilicon project successively began trial production with feeding, and the new energy companies under it have also successively obtained orders. With the successive introduction and implementation of policies such as the domestic new energy revitalization plan and the release of production capacity from the company's commissioned projects, the overall recovery of prosperity in emerging industries in the future will bring more focus to the company.
Affected by the industry-wide trough in photovoltaics, the company's single-quarter operating revenue in the third quarter increased by 13.3% year on year, while the growth rates in the first and second quarters were 60.63% and 53.97%, indicating that the expectation of thicker performance must await the recovery of the entire emerging industry. As of the third quarter, among the stock's top ten tradable shareholders, institutions occupied 7 seats, including 1 social security fund, 1 insurance capital, and 5 fund companies, and the vast majority were newly entered or increased funds. Average shares held per household increased by 11.20% quarter on quarter, and the chips are further concentrated.
Furi Co., Ltd.
The company began production of crystalline silicon and CIGSSe thin-film solar cell modules in 2008. Among them, CIGS thin-film solar cell modules are the most promising variety among second-generation thin-film solar cells, and the technology and manufacturing equipment are relatively mature. The company's partner Aleo gained Bosch's entry by virtue of its R&D advantages in the crystalline silicon field. It is reported that Bosch's broad future development prospects for CIGS technology were also the main reason for this acquisition. With Bosch's entry, the company's competitive position relative to other photovoltaic companies in terms of capital and marketing channels is expected to improve significantly. Based on the relationship between Bosch and the company moving toward deeper cooperation, the company's future development potential can be expected. At the same time, products from Johanna, the photovoltaic technology provider of Furi, have obtained TUV certification, and its thin-film solar cell technology has formed preliminary commercial competitiveness in China.
The third-quarter report showed that the company received high attention from institutional funds. Among the top ten tradable shareholders, there were 6 institutions, all of which were newly entered or increased funds, holding a total of 16.088 million shares, indicating that the stock's future development space has been recognized by institutional funds.
Wind Power
Goldwind Science & Technology
The company is one of the largest domestic manufacturers of complete wind turbine generator systems. In 2008, the company's products accounted for 18% of China's newly added wind power installed capacity. After acquiring 70% equity of Germany's VENSYS Energy AG, the company became the first domestic wind turbine complete machine manufacturer with completely independent R&D and design capabilities and complete independent intellectual property rights. As China's wind power market maintains rapid growth, by the end of the third quarter the company held a total of 1,908,800 kilowatts of pending orders, and a total of 1,735,500 kilowatts of projects for which it had won bids but not yet signed formal contracts, totaling 3,644,000 kilowatts. Sufficient orders and the successive introduction of industry policies will ensure that the company's sales volume can continue to grow in 2010.
Judging from the third-quarter report, among the stock's top ten tradable shareholders, 6 are investment institutions. The overall holding amount decreased by half compared with the interim report, but average tradable shares held per household increased by 3.86% quarter on quarter, showing an obvious trend of concentrated chips. Judging from this year's trend, after climbing in the first half of the year, the stock has been consolidating sideways to build a platform for nearly half a year, and its poised formation makes it likely to stage a rights-filling rally.
Tianqi Co., Ltd.
As a rising star in wind power blades, the company's bamboo blade manufacturing technology is an international first. In the first half of this year, it achieved a net profit of 3.93 million yuan. After signing a strategic cooperation agreement with Shanghai Electric (601727) (601727) one year ago, the company obtained an order from Zhejiang Windey this year, which means that the company's bamboo blades have finally gained market recognition. After building a complete product line of bamboo and fiberglass wind power blades and heavy wind power castings, the company will rely on the original LM technical team and the strong technical capabilities of “Wuxi FAW Foundry” to complete the integration of the wind power components platform. It positions its strategic development as becoming a core supporting supplier for high-end wind turbine complete machine manufacturers such as Shanghai Electric (601727) and Dongfang Electric (600875) (600875). At present, the gross profit margin of the company's main product, fan blades, is 20%-35%, and it is expected to create surprises for performance amid the growth and renewal of the wind power market.
The third-quarter report showed that among the stock's top ten tradable shareholders, apart from three individual investors, all the rest were investment funds, including 1 QFII and 1 insurance capital, which is rare for a small-cap stock with a tradable float of only 153 million yuan. Average tradable shares held per household increased sharply by 12.29% quarter on quarter, and the chips are very concentrated.
Hydropower
Minjiang Hydropower
The company's main business belongs to the hydropower industry. It is located in Aba Prefecture, Sichuan Province, an area with developed river systems and broad hydropower prospects, and is a leader in western hydropower. It is reported that about 70% of China's hydropower resources are concentrated in the southwestern region, and as traditional energy becomes increasingly tight, hydropower, as a renewable energy, has extremely broad development prospects. Therefore, the company's main business will also achieve thicker performance with the improvement of the macroeconomy and the reconstruction after the Wenchuan earthquake. At the same time, the company also actively develops third-generation solar water heaters through its equity participation in Tibet Huaguan Technology. Huaguan Technology was jointly established by the company, Tianwei Group, and the Tibet Autonomous Region Solar Energy Research and Demonstration Center. It is the largest high-tech enterprise in China's solar renewable energy industry and is located in Tibet, China, the region where solar new energy applications are most widespread. Therefore, from the perspective of the solar energy field, the company also has considerable imaginative space in the future.
Judging from the company's third-quarter report, the stock is not a heavily held fund stock; only one fund, China International Fund Management, bought 3.1 million shares. But judging from the stock's recent trend, the continuous adjustment of the broader market has not obviously affected the stock. This kind of stock, with relatively small earlier gains, strong resistance to decline, and strong defensiveness, can be regarded as a steady variety with both offensive and defensive qualities for some time in the future.
Guiguan Electric Power
The company's main business is the production and sale of hydropower electricity, mainly the cascade development of the Hongshui River in Guangxi. Recently, the case of the company's major shareholder Datang Group injecting Yantan hydropower assets into the company has been approved by the State-owned Assets Supervision and Administration Commission. It is reported that the installed capacity of the first phase of the Yantan hydropower station project is 1.21 million kilowatts, and the second phase is 600,000 kilowatts. After injection into Guiguan Electric Power (600236), the company's power generation in the Hongshui River basin in Guangxi will more than double. It is worth noting that according to Datang Group's commitment during the share reform, in the future the company will take over from its major shareholder the Longtan hydropower station with a total installed capacity of 6.3 million kilowatts, creating strong expectations for asset injection. Longtan hydropower station is a landmark project of China's “West-East Electricity Transmission” and is currently the second-largest single hydropower station in China, with an average annual power generation of 18.7 billion kWh. At the same time, the company also has the wind power concept. The 2,550-kilowatt units under construction of the previously acquired Yantai Dongyuan Wind Power were put into operation this month, and the wind power units in service reached 89,000 kilowatts.
This stock has always been a place where funds gather. The third-quarter report showed that among its top ten tradable shareholders, investment institutions already occupied 7 seats, among which the Social Security Fund Portfolio 102 ranked second with 3.48% of tradable shares. Judging from the stock's increase during the year, strong demand for catch-up gains is also one of its selling points.
Clean Energy
Guanghui Energy
As China's largest natural gas liquefaction facility, the company's liquefied natural gas and related revenue last year exceeded 1 billion yuan, with a net profit of 294 million yuan, accounting for 60% of total profit. The company's LNG plant with an investment and construction scale of 500 million cubic meters/year in Jeminay County has also started construction. Its LNG products are positioned as services and supplements to “West-East Gas Pipeline” and “offshore gas landing”, adopting a differentiated competition approach with large domestic oil and gas enterprises, effectively reducing market competition risk. At the same time, this year it indirectly obtained 49% rights in a subsoil resource use license in Kazakhstan. After the newly built plant is put into operation, actual output will increase from about 300 million cubic meters to 800 million-1.1 billion cubic meters. There is a preliminary plan for a non-public issuance of 100 million-300 million shares at no less than 11.47 yuan, raising no more than 2.5 billion yuan. Guanghui Group promised that all 363 million unrestricted shares would be voluntarily locked up for another 3 years, and after maturity would not be reduced below 30 yuan.
The third-quarter report showed that all of the top ten tradable shareholders are funds and legal persons, with per-capita holdings already exceeding 10,000 shares and average tradable shares held per household rising sharply by 20.81% quarter on quarter. The chips are highly concentrated, and the main force's accumulation area is between 16 yuan-20 yuan.
Fengyuan Biochemical
The company is China's largest fuel ethanol producer. Its current fuel alcohol production capacity has reached 440,000 tons/year, and ethanol gasoline has achieved stable supply of fuel alcohol to the entire Anhui Province, 7 prefecture-level cities in Shandong Province, 5 prefecture-level cities in Jiangsu Province, and 2 prefecture-level cities in Hebei Province.
Since COFCO Group took a stake in the company three years ago, the company's profitability has improved significantly. According to COFCO Group's plan, in the future it will gradually invest corresponding funds according to the company's business development needs to support the company in making its core businesses such as biomass energy and biochemical industry stronger and larger. In the third quarter of this year, the company's net profit was 65.39 million yuan, up 117.16% year on year, showing a good development trend. Previously, the company invested nearly 200 million yuan in technical transformation funds and completed 33 technical transformation projects, including the transformation of fuel ethanol DDGS and corn oil projects, citric acid extraction technology, and resumption of lysine production, continuously improving the production indicators and product quality of leading products such as fuel ethanol, citric acid, lysine, and ethylene oxide.
The third-quarter report showed that among the stock's top ten tradable shareholders, institutions occupied 6 seats, among which three social security funds, 007, 005, and 006, made large entries. The holdings of investment funds surged by 147.53% quarter on quarter, and average tradable shares held per household increased by 5.05 quarter on quarter, with chips still tending to concentrate.
New Materials
Tiantong Co., Ltd.
The company's main business is soft ferrite and electronic surface mount products. It ranks among the top three in the global soft magnetic industry. Soft magnetic materials are widely used in green lighting, inductors and coils of electronic products, the solar photovoltaic industry, communication components, LCD displays, and other fields. Although it is currently in a loss-making state, industry insiders say that with the rapid development of the energy-saving and environmental protection industry, the company's future development prospects are still very broad. In addition, the company has a genuine venture capital theme, namely holding 55% of Bochuang Technology, which plans to list on the ChiNext board. The stock's speculation is mainly operated by hot money, and the stock price fluctuates relatively strongly.
Antai Technology
The company's future highlight remains in amorphous ribbon. At present, the daily output of the 10,000-ton production line is stable at 20 tons-26 tons, and the subsequent 30,000-ton production line is expected to end hot testing by the end of the year. State Grid is expected to invest special funds to subsidize the price difference of amorphous transformers, which will greatly strengthen the promotion of amorphous transformers. New energy and new materials will become the core competitiveness of China's future industrial transformation. The company has obvious first-mover advantages in multiple fields, among which its equity participation in Hongfuyuan Technology is one of China's largest suppliers of hydrogen storage alloy powder, a nickel-metal hydride battery material. This stock is a heavily held social security stock, and social security continued to increase its position in the third quarter. United Securities expects that from 2009-2011, the company can achieve EPS of 0.39, 0.70, and 0.99 yuan, maintaining an “Overweight” rating.
Zhongke Yinghua
The company is the birthplace of heat-shrinkable material R&D and production in China. At the same time, as a domestic provider of high-grade electrolytic copper foil, the company's electrolytic copper foil for lithium batteries has ranked first in the domestic market share for consecutive years. The company is a national-level high-tech enterprise recognized by the Ministry of Science and Technology of China. As a listed company with a background in the Chinese Academy of Sciences, the company has strong science and technology and venture capital themes. Yingda Securities analyst Ye Zhigang said that after the company's targeted additional issuance plan was announced, the stock price maintained a slow upward push, and the market outlook should mainly consist of repeated climbing, so he recommended continuing to hold.