The new notice issued by the state confirms the status of solar and wind energy as the main force of clean energy power generation. On January 9, 2019, the National Development and Reform Commission and the National Energy Administration issued a notice on actively promoting wind power and photovoltaic power generation to access the Internet at unsubsidized and parity prices. In order to promote the high-quality development of domestic renewable energy and continue to enhance its competitiveness, the circular lists a total of 12 requirements and support policies aimed at promoting the development of unsubsidized and inexpensive wind power and photovoltaic power generation projects nationwide. The main points in the notice include: 1) the construction of wind and solar power parity projects and low-price pilot projects will be carried out nationwide. In addition, the provincial energy authorities can organize and implement low-price and low-price power grid projects in the region, which are not limited by the annual construction scale (wind power generation projects can be vigorously developed if various conditions permit). 2) optimize the investment environment of low-price and low-price online projects. Local government departments support land use and land-related charges for low-price and low-price Internet projects and coordinate the implementation of project construction and electricity delivery and consumption conditions. Local government energy departments may, together with other relevant departments, issue subsidy policies for a certain period of time, and projects that only enjoy local subsidies are still regarded as affordable Internet access projects. 3) guarantee priority for power generation and full indemnificatory acquisitions. Power grid enterprises should ensure that all the electricity generated by the low-cost grid projects of wind power and photovoltaic power generation projects are fully connected to the Internet, and indemnificatory acquisitions are made. 4) encourage low-price and low-price online projects to obtain reasonable income compensation through green card transactions. 5) encourage industrial enterprises, data centers and distribution network enterprises to carry out medium-and long-term power transactions with wind power and photovoltaic power generation enterprises, so as to achieve market-oriented development of relevant wind power and photovoltaic power generation projects without state subsidies. 6) promote the construction of local affordable Internet access projects and low-cost Internet access projects. Provincial power grid enterprises shall undertake the responsibility of purchasing electricity for low-price and low-price power grid projects, and sign long-term fixed electricity purchase and sale contracts (not less than 20 years) with wind power and photovoltaic project units according to the local coal-fired benchmark electricity price set by the state on time for project approval. And 7) innovative finance to support. National financial institutions shall, in accordance with the national development plan for new energy power generation and the implementation plan for parity access to the Internet of new energy power generation in relevant areas, reasonably arrange credit, innovate financial services, and develop financial products suitable for the characteristics of the project, actively support new energy power generation to achieve affordable access to the Internet, and so on. The circular establishes China's determination to continue to develop renewable energy, and power generation projects will not be bound by the construction targets during the year on the premise of achieving affordable access to the Internet.

At present, we are optimistic about solar power operators and recommend Xiexin New Energy (00451 HK). Xiexin New Energy is the largest solar power operator in China. At the end of the first half of 2018, the company's total installed photovoltaic power generation capacity and total photovoltaic grid-connected capacity reached 7.14GW and 6.1GW respectively, up 40.6% and 46.4% respectively compared with the same period last year. Its income and shareholder net profit rose 49.2% and 28.2% respectively in the first half of 2018 compared with the same period last year, and the net profit for the period was 345 million yuan. The core reasons for the decline in profits include the rise in financing costs and foreign exchange losses caused by the devaluation of the RMB. Gross profit margin for the period fell 2.0 percentage points year-on-year to 68.7%, mainly due to the lower feed-in tariff of new projects. We expect the company's total installed photovoltaic capacity to rise to 7.7GW / 8.6GW / 9.4GW respectively from 2018 to 2020. At the same time, we predict that the average utilization hour of the company's solar power station during the three-year period will be 1., The annual installed capacity of solar energy will be 1.7GW / 880MW / 800MW from 2018 to 2020. the average photovoltaic price from 2018 to 2020 is 0.76 / 0.72 kilowatt-hour, respectively, and the average annual lending rate during the forecast period will not exceed 6.3%. We believe that the company will significantly reduce its debt levels in the future, refinance high-cost debt to replace it with cheaper and longer-term stable debt, gradually optimize its debt structure to improve its profitability, and work with state-owned energy groups to further expand its solar power plant business. Deleveraging and refinancing will be the key to increasing the company's profitability between 2018 and 2020. We are optimistic about the future of Xiexin New Energy, especially considering the scale of its solar power plant and its aggressive expansion strategy. The company has accounts receivable of more than 4 billion yuan, which basically comes from the accounts receivable subsidized by electricity price. Xiexin New Energy's solar projects listed in the seventh batch of renewable energy subsidies have reached 1.2 gigawatts, but there are still more than 4 gigawatts of solar power projects to be included in the eighth batch of subsidies. It is rumored that the eighth batch of renewable energy subsidy catalogue will start to declare in the first half of 2019, which will usher in great benefits for renewable energy power generation operators and become an important catalyst for stock prices to rise. We currently have a "buy" investment rating on the company.