On January 2, Sunpower announced that Buffett's MidAmerican Energy had acquired two of its power plants in California. Buffett, as a value investor, believes that investing in Sunpower power plants can achieve stable returns. We believe that Buffett's acquisition of Sunpower power station is an affirmation of the high conversion efficiency photovoltaic route (N-type).

The N-market is mainly in the United States and Japan. The Sunpower power station uses self-produced N-type batteries, and the conversion efficiency can reach 24%, which is much higher than that of ordinary polysilicon batteries (16,17%). At present, the market scope of N-type battery is limited to the United States and Japan, and it does not have the economic and technical level of large-scale promotion in China. The manufacturers of N-type batteries include Sunpower of the United States, Sanyo and Panasonic of Japan, etc., with a total capacity of 2~2.5GW, of which the conversion efficiency of Sunpower battery is the highest (24%). Camdanke is a forerunner in the field of N-type silicon wafers in China. The barrier to entry in the field of ordinary single crystal silicon wafer manufacturing is already very high, and most manufacturers start with the semiconductor industry. The threshold of N-type single crystal silicon wafers is higher, because downstream N-type battery customers have very strict certification of their suppliers. Camdanke completed the certification of American customers and began to supply in 2012, while the certification of Japanese customers is also under way. The company is already the first company in China to mass-produce N-type silicon wafers, leading domestic potential competitors Central shares and Longji shares for at least 6-12 months.

The company adopts the strategy of embracing customers. As the main production capacity of downstream customers is located in Southeast Asia (Malaysia, Philippines, etc.), the company plans to invest in the construction of a new plant in Sarawak, Malaysia in 2013. The local electricity price is about 0.3 yuan per kilowatt-hour, and the labor cost is about 300 US dollars per person. The new capacity in Malaysia can avoid the "double reverse" of polysilicon in China, reduce the cost of wafers more quickly and connect seamlessly with downstream customers. The company's new production capacity in 2013 may be 200~400MW, and the capital expenditure on the new capacity is expected to be 2500-50 million yuan.

Valuation and rating

Taking into account the DCF and Pamp B valuation methods, we use their arithmetic average of HK $1.94 as the company's target price for 6-12 months, which is equivalent to 1.17X2012P/B (1.12X2013P/B), which is 15% higher than yesterday's closing price of HK $1.69, and upgraded to "better than the market".