Credit analysis report of China PV industry

Polaris solar PV net news: three, industry analysis on financing environment

PV high capital intensity, greater dependence on external financing. Banks and other financial institutions more cautious credit policy implementation of the photovoltaic industry, improve the financing of PV industry threshold, financing costs continued to increase. Overall, financing environment of the photovoltaic industry.

(A) the high capital intensity of the photovoltaic industry, the overall high debt leverage and greater dependence on external financing.

Relatively high capital intensity of the photovoltaic industry, vulnerable to influence credit and financing channels. Larger initial investments as well as daily working capital needs of the industry, PV business to credit funds to support a greater dependence. Other than very small and difficult to obtain bank loans for small businesses, as well as a handful of equity finance of listed companies, PV enterprises in the growth phase often requires continued to increase credit support. Therefore, changes in the financing environment for PV companies profit levels have a greater impact and business expansion.

High debt leverage PV industry in China, financing costs are likely to continue to increase. 2012-2014, overall industry-wide assets and liabilities remain high, did not have a clear downward trend. PV equipment and manufacturing industry debt ratio, and 66.33% and 66.85%, respectively. Photovoltaic power plant and raw materials industry’s debt ratio is higher than 70%.

2012-2014, financial costs of PV industry in China is growing rapidly, increasing significantly, mainly because of the rising cost of financing and cause an increase in financial expenses, photovoltaic equipment and component manufacturing industry nearly three years of financial growth for 2.31%, 1.41%, 16.73%, financial cost of solar power generation industry respectively, and 345.33%, and 95.24%.

(B) banks and other financial institutions on the PV industry to take a more cautious lending policy, increasing the financing of PV industry difficulties, financing costs continued to increase.

Overseas trade dispute intensifies industry crisis, once the photovoltaic industry giants “Suntech” bankruptcy reorganization, as well as “11 Super debt”, “Granville MTN2 11 days” and “10 Yingli MTN1” after successive breaches, exposures of the photovoltaic industry is undoubtedly. Most domestic financial institutions more cautious credit policy for the PV industry and photovoltaic threshold of financing and financing more difficult. Power station business financing needs and raw materials higher, although the subsidy policy to ensure a stable cash flow, but with the new PV installed capacity growth, renewable energy development fund gap, optoelectronic delayed payment of subsidies, downstream power station operators of the receivables growth, credit quality has slipped, financing also continues to rise.

Under pressure from the higher debt leverage, high financing cost of the photovoltaic industry. China’s moderately loose monetary policy, despite the people’s Bank of China on November 22 after a lapse of more than two years to restart the asymmetric cut, one-year deposit and lending interest rate reduced by 25 and 40 basis points, respectively, and the expansion of deposit interest rate floating ceiling, a move designed to more effectively reduce the cost of financing to boost the economy. But after the funds mainly to the virtual economy, can bring about a market boom, while entities failed to get money into the economy, instead of funding more scarce, real interest rates to rise. Also due to the economic downturn, rising default rates, reduce their appetite for risk, banks from lending, making it difficult for enterprises ‘ financing costs reduced.

In terms of bad loan rate, commercial banks ‘ bad loan ratio overall decreasing trend, fell from 8.61% in 2003 to 0.95% 2012 year, rebounded slightly after 2012, 2014 nonperforming loan ratio was 1.29%. Appear increasingly risky loans by financial institutions in China is small, has reached a relatively low level. Bad loan ratio in the manufacturing sector in China is slightly higher than the overall bad loan ratio of commercial banks, also showed a declining trend. 2013 manufacturing its bad loan ratio is 1.79%. As a PV manufacturing industry, its industry rate is to a large extent will follow the trend of the manufacturing industry. But it does not exclude local debt crisis risks.

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Latest credit analysis report of the photovoltaic industry in China (ⅰ)

Four analysis, policy, regulatory and legal environment

National policy support for the PV industry, but performance boost. Future policy orientations to guide the development of industry norms.

(A) the authority for the energy Bureau of national development and Reform Commission of the photovoltaic industry. National support for the PV industry, expansion of PV installed capacity and price subsidies with precision, helping the domestic photovoltaic industry bottomed out in the short term.

National development and Reform Committee is China Government is responsible for accepted and the approved clean development project of competent institutions, its duties for: is responsible for drafting electric price management of related legal regulations or regulations, and electric price adjustment policy, developed electric price adjustment of national plans or determine national major power project of electric price; is responsible for developed clean energy development planning; promoted clean energy, high-tech industry development, implementation technology progress and industry modern of macro guide; Guide introduced of major technology and major sets equipment of Digest innovation work.

The National Energy Board and local government departments in charge of PV power projects for approval. The National Energy Board’s main responsibilities include: research for the energy development strategies, policies, research and development program, proposed energy reform proposals, promote the energy sources implementation of the sustainable development strategy, organizational development and utilization of renewable energy and new energy, guide the work of energy saving and comprehensive utilization of energy and environmental protection.

On October 12, 2013, the industry and information technology Ministry issued specification announcement of interim measures for the administration of the PV manufacturing industry, ordered according to the PV manufacturing industry norms set by the conditions of market access standards, Declaration and recommend their respective areas in accordance with standard conditions of business. Enterprises and projects does not comply with this specification, which may not enjoy export tax rebates, domestic support policy support. With the PV manufacturing industry barriers to improvement, upstream manufacturing enterprise in the presence of numerous acquisitions and merger case, excess capacity in the upper reaches a certain degree of integration.

End of August 2013 on play, development and Reform Commission issued notification of price leverage to promote the healthy development of the photovoltaic industry, photovoltaic power generation and raw materials businesses can get a subsidy. In addition, on January 17, 2014, issued by the Department of energy issued the Declaration on 2014 annual notification of new construction of photovoltaic power generation, notification includes: “2014 construction of photovoltaic 14 million-kilowatt new record total for the year, which distributed 8 million-kilowatt, PV 6 million-kilowatt. “Subsidies and capacity goals of dual stimulation, PV 2014 new installed capacity in China to around 10.6GW, boosting domestic demand for solar products, 2012 upstream in the most losses in 2014, most companies achieve profitability, the domestic photovoltaic industry bottomed out in the short term.

(B) of the current focus on distributed power generation market expansion, policy effect and the market response remains to be seen.

Play in 2013 issued by the national development and Reform Commission on notification of price leverage to promote the healthy development of the photovoltaic industry, clearly distributed PV projects will receive 0.42 Yuan/kWh electricity subsidies. And 2014 for the further implementation of distributed photovoltaic-related policies of distributed PV projects extends to the waste land, mountains and agricultural greenhouses, distributed PV projects may also choose to perform a new pricing policy. Under the influence of distributed PV installed capacity goal for 2014 is not yet complete, current policy efforts to promote distributed generation projects.

But currently facing the network distributed PV power plant project in China, subsidies granted delay, expected benefits are difficult to protect and project financing loans, and so on. Extension of the current floor policy remains the market to digest.

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(C) policy implementation space, electricity price subsidy cuts irreversible trend, policy orientations to guide the healthy development in the future.

Department of energy and the national development and Reform Commission released for downstream support policies, but centralized PV project in Northwest limited light and abandoning issues; photovoltaic subsidy funding gap, delay also increases the burden on enterprise cash flow to pay. PV support policy implementation in China there is still room.

2014-2015 PV installed capacity objective of sustained growth driven by rapid growth downstream of the PV power plant project in China, but renewable energy development fund a financing gap for downstream companies to receive subsidies in a timely manner. Under the expected target for new installed capacity continues to increase in the future, trends in photovoltaic subsidy cuts has become inevitable. From the economic aspect, in the face of increasing capacity, our limited funds to continue massive subsidies for renewable energy development fund. Policy guidance, by lowering the photovoltaic subsidy, forcing PV enterprises in preparation technology, reduce production costs, improve efficiency, and guide the PV industry entered the era of parity.

Policy direction or at the lower station of the future utilization of upstream technologies lead the industry healthy and develop normally. First, in the downstream PV efficiency, cost competitiveness and limited transportation impact has not yet formed a, is currently limited to light up the light phenomena in Northwest China. Future policy or will increase the region’s export capacity and punitive measures to limit light up light phenomena. Second, upstream technology, Ministry of industry and information technology have been integrated for the excess capacity out relevant technical indicators have not reached the standard of enterprise. Policies may further enhance the technical indicators, improve the overall level of upstream, reducing the cost of photovoltaic products and enhance competitiveness.

Five, the credit Outlook

Photovoltaic industry will still face a good policy environment, industry as a whole will keep growing, credit quality will remain stable. Investment growth will exacerbate overcapacity, demand in overseas markets, or will slow, highly debt leveraged increased risk exposure, tendency to increase at each end of the industry chain. Expected in the context of technology upgrades, PV product selling prices and costs down, industry concentration will be further promoted.

(A) the PV installed capacity will still be a fairly rapid growth, distributed power plant policy support will significantly increase. United States, European Union, Japan’s growth or a slowdown in overseas markets. Strong in a weak market will continue. The industry as a whole is expected to keep growing, the credit quality remained stable.

The National Energy Board in “Thirteen-Five energy planning” 2020 PV installed capacity from 100 million-kilowatt up to 150 million kilowatts, while accelerating the distributed solar power generation project in the eastern region. This means that PV capacity in China in the next 5 years will still maintain a rapid growth, and distributed policy support will increase. Although recently the NDRC plans to cut PV on-grid price subsidies, but cuts in the market within an acceptable range, and reduced the benchmark price to obtain a higher return on investment.

Although India PV subsidy policy in emerging markets remained strong, but traditional Japanese PV market subsidies in Europe and will continue to cut, or face a slowdown in overseas markets. According to the data of the European Photovoltaic Industry Association, European Photovoltaic capacity continues to decline, 2012-2014 new PV installed capacity worldwide than are 59.07%, 28.62% and 17.32%. By the end of 2014, PV capacity in China accounted for 26.5% in the world, more than Europe. Future PV market appears “weak strong” situation. Industry boom will still be maintained, credit quality will remain stable.

(B) new round of investment growth boosted capacity may exacerbate overcapacity in industry. Tendency to increase at each end of the industry chain, high debt-leveraged operation increases the risk exposure.

With the 2014 PV industry pick up and cuts in subsidies, upstream in the PV manufacturing is scheduled to expand production capacity, improved technology, downstream power station operator will cut in subsidies for round before installing. But PV subsidies cuts was released on December 24, 2015, before January 1, 2016 filing and grid-connected power station prior to June 30, 2016, will perform original price, leaving power station Enterprise short and raw materials. In addition, for terrestrial photovoltaic power plants tend to be concentrated in areas with good light conditions in the Northwest, but such a harsh winter climate conditions or affecting the progress of engineering and quality.

If installing in the lower reaches upstream in the weaker-than-expected upstream expansion plan or lead to overcapacity, highly leveraged operations upstream of enterprise’s credit risk further increases in risk. While the downstream business impact of subsidy cuts, but as long as the control of investment cost, issued a timely and price subsidies, relatively little credit risk downstream power station operators.

(C) in the context of technology upgrades and Internet technology, expects sales of photovoltaic products prices and costs down, industry concentration will be further improved, technology companies and financial strength will continue to consolidate its position.

PV industry downturn in the industry through merger integration of industry concentration increased, middle and lower reaches of the top 10 enterprises in the current highlight per cent market share in their respective segments in the industry. Future with upstream more crystal silicon preparation technology further upgrade, Middle PV component conversion efficiency of further improve, downstream power station application Internet technology for intelligent shipped peacekeeping storage can technology of upgrade, promoted power efficiency improve, is expected to PV products and power station operation of cost will continued down, has technology advantage and funds strength strong of industry chain leading enterprise is expected to continues to keep competition advantage, “strong constant strong” of market pattern will more obviously.

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Latest credit analysis report of the photovoltaic industry in China (ⅰ)

Appendix 1: after 2014 ‘s PV industry policies


Credit analysis report of China PV industry (ⅱ)

Source: rating in the new century based on publicly available data

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Latest credit analysis report of the photovoltaic industry in China (ⅰ)

Appendix 2:2014 main mergers and reorganizations of the photovoltaic industry in China


Credit analysis report of China PV industry (ⅱ)

Credit analysis report of China PV industry (ⅱ)

Data source: Association of China PV industry

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Latest credit analysis report of the photovoltaic industry in China (ⅰ)

Appendix 3:2014 ranking top ten polysilicon production in our country


Credit analysis report of China PV industry (ⅱ)

Source: based on publicly available information in the new century drawing

Appendix 4: ten production before 2014 rankings


Credit analysis report of China PV industry (ⅱ)

Source: based on publicly available information in the new century drawing

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Latest credit analysis report of the photovoltaic industry in China (ⅰ)

Appendix 5:2014 ten years ago production ranking


Credit analysis report of China PV industry (ⅱ)

Source: Wind information

Annex 6: relevant policies in the global PV industry in recent years


Credit analysis report of China PV industry (ⅱ)

Credit analysis report of China PV industry (ⅱ)

Source: rating in the new century based on publicly available data

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Latest credit analysis report of the photovoltaic industry in China (ⅰ)

Original title: credit analysis report of China PV industry (ⅱ)

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