At a time when photovoltaic stocks are undergoing in-depth adjustment, I have seen a lot of one-sided and even boring defamatory remarks on the Internet. There is a murmur, but there is no sound of nature.

01

Photovoltaic investment needs long-term doctrine

Buy 10 billion shares of Longji at a price around 70 yuan from Hillhouse Capital.(SH:601012)After that, more than three months later, we saw Longji shares around 70 yuan, with a volatility of close to 40%.Many people have moved from "copying homework" to "conspiracy theory", and even feel that Hillhouse is "not good".

For such one-sided and negative emotions, I would like to use a poem by du Fu to express my feelings at this moment:"Ercao's body and fame are wiped out, and the rivers do not flow through the ages.”

For investors in the secondary market, the biggest difficulty is how to confront human nature. When we are troubled by stock price fluctuations in the secondary market, especially after a painful correction, we are unable to face the predicament rationally and are full of negative emotions, which deviate from your judgment and even your worldview. how can we guide our investment decisions?

I believe that the long-term doctrine adhered to by Hillhouse Capital behind Zhang Lei will also shine in the investment of the photovoltaic industry. The long-term concept of investment can help you get rid of human weaknesses, reduce the possibility of being "deliberately misled" by the market, and improve your unprofessional "value investment system".

In the early morning of March 26th, I left this message to investors:

Stick to the long-term path of the bull market.

In the difficult medium-term adjustment of the market, we are willing to share with investors!

Investment in the photovoltaic industry is also useful, and I am almost sure that the best part of the investment in the photovoltaic industry is yet to come. I hope you can be "long-term".

02

Is the best part of the photovoltaic cycle over?

The reason why we can not adhere to the path of long-term doctrine, in addition to the weakness of human nature, our lack of basic understanding and self-confidence in the individual stocks we hold is also an important reason.

At present, many investors can not adhere to the concept of long-term doctrine in the photovoltaic industry because they think that the photovoltaic industry is still a cyclical variety, and in the face of skyrocketing silicon prices, under the disturbance of information such as the shrinking operating rate of components, it is more certain that the beginning of this year is the cyclical peak of the photovoltaic industry. Of course, the cyclical peak that many people think is simply because share prices have fallen sharply.

So, what is happening in the photovoltaic industry? What is the worry about the deep adjustment of the stock price of the photovoltaic industry? I'd like to get this straight for you.

1. Will the price surge of the industry chain destroy the photovoltaic industry chain?

Many investors face the in-depth adjustment of stock prices caused by the price increase of some varieties in the photovoltaic industry chain.(not so)After that, it is considered that the price surge of the photovoltaic industry chain will destroy the prospect of the photovoltaic industry chain.

In fact, the price increase reflects a lot of phenomena and deep-seated reasons, which lies in whether you have a clear understanding of this industrial chain.

The price increase in the photovoltaic industry chain expresses at least the following points:

A, the era of sharp price reduction in the photovoltaic industry chain is over.

B. the essential expression of price increase in each industrial chain is the discourse right of the leading enterprises.(the concentration of each link is increased)And the improvement of the status of photovoltaic industry.(this usually represents prospects and needs)。

C, the direct reason for the price increase in the industrial chain is due to the different production expansion cycles of each link after the outbreak of demand.

To sum up, what I want to tell investors is that the price increase of the photovoltaic industry chain is short-sighted and unsustainable, but at the same time, the era of sharp price reduction in the photovoltaic industry chain has come to an end. Because of the increase of the concentration of the industrial chain and the sudden improvement of the status of the photovoltaic industrial chain, the expansion of the profit elasticity of the whole industry does not indicate the illusion of "extinction" of the industrial chain.

So, we see that on March 26, Longji no longer raised the price of silicon wafers, Poly Xiexin (HK:03800) said to maintain a stable price of silicon, Tongwei shares lowered the price of batteries. Therefore, with the gradual easing of these concerns, photovoltaic stock market will usher in an upward opportunity.

2. Will the temporarily high component prices lead to a cliff drop in photovoltaic demand?

First of all, component prices have risen by less than 20% this year. I think the probability of breaking 1.9 this year is low, so the impact on the IRR of the entire photovoltaic industry chain can be controlled. Second, overseas acceptance of prices is increasing. At present, the price of glass and plastic film in the industrial chain has gone down, and at the end of the year, with part of the silicon production capacity and the industrial chain game, it is possible to improve in the future.

In addition, tendering and bidding may have been affected, but we should not underestimate the "political awareness" of central enterprises this year. The result of my survey is that the overall volume will double, and it is relatively rigid, and the current IRR level can be supported.

So, I think this year's high component prices will dampen some demand, but will not affect the basis of strong growth, so I have always stressed: the best part of the photovoltaic industry chain in recent years is not now, but in 2022.

3. What kind of photovoltaic is it? Cyclical OR growth?

What you see now in the photovoltaic industry chain is the opening of the performance flexibility of the entire industry chain.(from trend reduction to maintenance)What kind of variety do you think it will be with the expectation of continuous improvement in demand? It speaks for itself.

So, this year's disturbance is not so much a periodic product as a rise and a pullback, and some varieties do have high valuations that need to be resolved. So this kind of fluctuation is an opportunity for you to continue to get on the bus, and it is also a good preparation for next year's market.

So, to sum up, some of the issues that investors are concerned about this year, the short-sighted logic that plagues stock price performance actually reflects the signs of "bright prospects". However, too many investors focus on the fluctuation between short-sighted demand and performance and pursue "short-term". Therefore, I think based on the above obvious logic, long-term doctrine is needed by photovoltaic investors.

03

Trends in the industrial chain and future investment opportunities

In the past, I wrote some articles about the internal cooperation of the photovoltaic industry chain, which roughly showed my thinking. But this year, you can see that many enterprises have opportunities, some even new entrants. It is because some giants are "too eye-catching, too strong" and the result of common resistance by some other alliances that some second-and third-tier enterprises have repeatedly signed big orders.

I think the fierce confrontation between photovoltaic leaders in the future is still inevitable, which will further test the strategic ability of the management of the company. And some of the loose alliances formed against the industry giants are unreliable, because for some reason, it is not convenient for me to say so, so let's just take a look.

Silicon companies have also pulled back a lot recently. I was not optimistic about it before, but now, because the price of silicon will remain high for a long time, and if the price of the industrial chain is reduced in the future, it will stimulate the demand for production expansion, so the business cycle will continue and there will be no cliff pullback.

At present, the price of silicon is a little high, but it is more reliable to keep it at the 90-100 front line for a long time in the future. For silicon faucets with a cost of less than 40%, Tongwei(SH:600438)In terms of speaking, it is indeed a very good opportunity. But in the future, I hope Tongwei will do some more in-depth thinking in the industrial chain, such as doing some extension of the industrial chain with some inverter enterprises which are not bad but whose market capitalization is not reflected. To always maintain the leading edge in cost and technology in the battery field, and in no hurry to expand into silicon wafers, consider extending to components.(but this is easy to be eaten back by customers, so it is necessary to weigh the pros and cons.)。

I think it is worth looking forward to the expected improvement in the profits of component enterprises in the second half of this year. In fact, the profit coverage of component price increases at the beginning of this year has exceeded the rise in costs, and some auxiliary materials are declining. Judging from Ates' annual report and the outlook for the first quarter, I verified my previous point. Therefore, we can gradually increase the profit improvement expectations of tracking components.

Longie, I think there will be some impact on the silicon chip in the future, but the basic disk is still relatively stable. From the perspective of 210, it is mainly the Eastern Sunrise and Tianhe, and the impact is not obvious. Secondly, 166 is more enthusiastic overseas.(distributed household). But I think the component link Longji's profit improvement is more flexible, and with the release of more than 24% of the battery capacity at the end of the year and the in-depth development of integration, I think this piece of elasticity is not small, which is worth paying attention to.

I am more optimistic about the inverter. The domestic aspect of energy storage has been implemented. To be honest, Sunshine's market capitalization of 160 billion really needs to be digested for a long time, because it is not just the inverter business, but the valuation given by the power station business and operation and maintenance business can not be too high. On the contrary, other inverter companies underestimate it. But on the whole, the inverter link to energy storage expansion is more beneficial, light asset operation, so I am more optimistic about this link, it is easier to give a higher valuation. In this area, I think we should not just look at the sunlight power supply, but should dig deeper and more carefully.

In the future, I will pay more attention to the strategic vision and decision-making of listed companies in the photovoltaic industry chain, which is our important tracking indicator. The company's overall view of the photovoltaic industry chain, layout strategy and integrated strategy, so that we can better see the future and even difficulties of this enterprise. We have also given some suggestions to some listed companies to be adopted, and as an investor, I also have such a responsibility.

04

The leading valuation is entering a reasonable range

The moderate trend of silicon material, silicon wafer and battery prices may be the inflection point, marking the end of the most exciting part of the phased price rise in the middle and upper reaches of the photovoltaic industry chain, and the speculation about suppressing the photovoltaic valuation and cooling the demand of the industrial chain has gradually alleviated, which is conducive to the V-shaped reversal of photovoltaic stocks.

In addition, in terms of valuation, several leading photovoltaic valuations have entered a more reasonable range, and some components are even very cheap. Given some time, future performance improvement expectations and demand will be better than the market consensus, so the photovoltaic industry chain in the second half of the year is likely to trigger a double-click of Davis, whose demand exceeds expectations, until the global market blowout at the end of next year.

Finally, some industrial chain supply starts at the end of the year, and as more efficient battery modules enter the market, seemingly high industrial chain prices return to "cheap" due to a great increase in efficiency, stimulating further demand.

Therefore, from the valuation of growth stocks, photovoltaic faucets, whether in the traditional sense of the three giants, or some components and inverter faucets, I think are reasonable. However, I would still like to remind you that you should be cautious about new entrants. The photovoltaic industry is not an industry that you can do with money, and its threshold is far higher than you can imagine, so don't underestimate the moat of the photovoltaic leader by linear thinking, and instead invest in some cats and dogs, you may not make money in the context of a booming industrial chain.