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雷达卡
5 November 2008
Renewable Energy Outlook
The four pressure points of the
credit crunch
Alexander Karnick
Research Analyst
(49) 69 910 31945
alexander.karnick@db.com
Hermann Spellmann
Research Analyst
(49) 69 910 31904
hermann.spellmann@db.com
Tim Rokossa
Research Analyst
(49) 69 910 31998
tim.rokossa@db.com
Substantial rating and TP cuts throughout the sector
This report assesses the impact of restrained capital access, higher capital costs,
declining fossil fuel costs, and regulatory headwind. We anticipate oversupply,
falling profits, liquidity issues and industry consolidation. We cut our rating to Sell
for SMA, Q-Cells, Solon and Nordex. We maintain our ratings for Conergy (Sell),
Solarworld (Buy), and Phoenix Solar (Hold). Near-term newsflow could continue to
drive stocks; we recommend selling into strength for Sell-rated stocks.
Deutsche Bank AG/London
All prices are those current at the end of the previous trading session unless otherwise indicated. Prices are sourced from
local exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subject companies.
Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be
aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider
this report as only a single factor in making their investment decision. Independent, third-party research (IR) on certain
companies covered by DBSI's research is available to customers of DBSI in the United States at no cost. Customers can
access IR at http://gm.db.com or by calling 1-877-208-6300. DISCLOSURES AND ANALYST CERTIFICATIONS ARE
LOCATED IN APPENDIX 1.
Forecast change
Top picks
Solarworld AG (SWVG.DE),EUR21.01 Buy
Companies featured
Solarworld AG (SWVG.DE),EUR21.01 Buy
2007A 2008E 2009E
DB EPS (EUR) 0.99 1.49 1.91
P/E (x) 34.7 14.1 11.0
EV/EBITA (x) 18.5 8.0 7.8
Phoenix Solar AG (PS4G.DE),EUR23.99 Hold
2007A 2008E 2009E
DB EPS (EUR) 2.37 3.09 2.72
P/E (x) 9.3 7.8 8.8
EV/EBITA (x) 5.4 5.3 6.0
Q-cells (QCEG.DE),EUR35.18 Sell
2007A 2008E 2009E
DB EPS (EUR) 1.36 1.98 1.94
P/E (x) 46.3 17.8 18.1
EV/EBITA (x) 27.9 10.9 14.4
SMA (S92G.DE),EUR37.50 Sell
2007A 2008E 2009E
DB EPS (EUR) 1.34 3.13 2.84
P/E (x) – 12.0 13.2
EV/EBITA (x) – 7.9 8.5
SOLON AG (SOOG.DE),EUR26.29 Sell
2007A 2008E 2009E
DB EPS (EUR) 2.98 2.96 2.44
P/E (x) 17.3 8.9 10.8
EV/EBITA (x) 17.6 5.8 7.0
Conergy AG (CGYG.F),EUR5.91 Sell
2006A 2007E 2008E
DB EPS (EUR) 0.06 -1.75 -1.00
P/E (x) 698.0 – –
EV/EBITA (x) 875.6 – –
Nordex (NDXGk.DE),EUR10.88 Sell
2007A 2008E 2009E
DB EPS (EUR) 0.72 0.72 0.75
P/E (x) 39.6 15.2 14.5
EV/EBITA (x) 40.9 9.0 8.1
Global Markets Research Company
Deteriorated macro picture leads to 4 “pressure points” for renewables
The macro environment deteriorated substantially and we expect the full blown
credit crunch to lead to a major recession. We assess the impact on renewables
and discuss four pressure points: 1) demand slowdown by restrictive financing,
higher capital costs and scaled back investments, 2) ASP pressure due to higher
capital costs, 3) risks for company targets due to restrained capital; and 4)
declining fossil fuel costs impairing grid-parity projections and economic viability.
For solar, we see additional headwinds from adverse regulatory changes (Spain).
The world’s largest wind operators (FPL, IBR) already indicated CAPEX cuts for
turbines, while REC and Oerlikon stated cautiousness for CAPEX and orders.
Demand growth and TPs lowered >50%; ratings cut throughout sector
We lowered 2009e growth forecast by 50%: we now expect 20% yoy in solar and
13% for wind. We estimate market sizes of 5.4GWp (solar) and 28.5GWp (wind) in
2009e. In contrast, we expect strong supply growth (solar: c80%). We anticipate
oversupply, falling ASPs, production cuts, liquidity issues and industry
consolidation. We calculate the solar industry could lose 40% operating profit in
2009e. We cut our sector EPS by c35% and reduced our TPs by >50%.
“What is priced in?” or “high multiples tough to argue”
Stocks trade at mid-double digit P/E09e. We believe the primary issue driving this
is that many of these companies need to raise capital. If capital cannot be raised,
expansion plans slow or stop, and liquidity could become an issue. The market
hence could begin to discount the elimination of some companies. We believe the
present credit crisis will simply accelerate when such a shake-out may begin and
argue that “historical” high double digit multiples do not apply in current markets.
Rally unwarranted but may continue short term, driven by positive newsflow
We believe the recent c45% rally is unwarranted amid the sector outlook. We
have yet to see negative sector newsflow, but believe it is a question of time and
foresee share price risk. Yet, the rally could continue short term, driven by positive
newsflow such as an election win by Sen. Obama. His renewable targets could be
seen as positive, but it would take time for effects to become visible. We expect
Q308 results to be on average healthy. We recommend selling into strength.
Valuation on DCF and peer multiples; rapidly changing market a risk
We base sector valuation on DCF and peer multiples (see pp. 5-7). Industry risks:
1) earlier-than-expected alleviation of current credit crunch, 2) rapidly changing
market conditions, 2) unfavorable changes in incentive structures and regulations,
3) new competing technologies, 4) supply constraints, 5) cash flow drains from
strong capex and working capital requirements.
Table of Contents
Investment thesis .............................................................................. 3
Outlook – the four pressure points for renewables...................................................................3
Valuation ..................................................................................................................................4
Risks ........................................................................................................................................5
Sector ratings and TP changes......................................................... 6
Summary: Rating and EPS changes..........................................................................................6
Solar.........................................................................................................................................6
Wind ........................................................................................................................................7
Renewable sector valuation tables.................................................. 8
Solar sector above E1bn market cap ........................................................................................8
Solar sector below E1bn market cap ........................................................................................9
Solar equipment......................................................................................................................10
Wind sector............................................................................................................................10
Macro picture deteriorating rapidly............................................... 11
Sub-prime crisis triggers macro-downgrades .........................................................................11
Renewable energy sector should not be left unaffected ........................................................12
Four renewable pressure points .................................................... 13
Multilayer impact of macro-environment on renewable sector...............................................13
Tightening access to capital is a threat to demand.................................................................14
Indications of near-term demand difficulties...........................................................................15
Retail investor demand should also slow................................................................................16
Recession concerns may impair residential demand..............................................................17
The rising cost of capital could exert price pressure… ...........................................................19
… and may cause difficulties for company financing..............................................................19
Declining fossil fuel prices question renewable economics ...................................................21
Regulatory changes mean additional difficulties for the solar sector......................................22
Regulatory environment is easier for wind..............................................................................23
Industry implications ...................................................................... 24
Solar: demand growth cut to 20% for 2009e (prev. 40%) ......................................................24
Solar price pressure scenario stepped-up to 18% for 2009....................................................24
Risk of oversupply scenario increased substantially amid slowing demand...........................26
Implication for the solar value chain........................................................................................26
Wind: 2009e growth forecast cut in half.................................................................................27
Oversupply is a key risk for 2009e ..........................................................................................28
Company section ............................................................................. 30
Q-Cells (Sell, TP E29) –Investment thesis...................................... 31
Solarworld (Buy, TP E28) – Investment thesis .............................. 34
SMA (Sell, TP E33) –Investment thesis.......................................... 37
Solon (Sell, TP E22) –Investment thesis ........................................ 40
Phoenix Solar (Hold, TP E25) –Investment Thesis ........................ 43
Conergy (Sell, TP E3) –Investment thesis...................................... 46
Nordex (Sell, TP E11) –Investment thesis...................................... 49
Appendix A – Regulatory status-quo............................................. 52
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