Chinese Solar Market Puts on Shades: Deutsche Bank Upgrades Trina Solar and Yingli Green Energy

In a report published Thursday, Deutsche Bank analyst Vishal Shah analyzed the Chinese solar market and upgraded Trina Solar Ltd. TSL and Yingli Green Energy Holding Co. Ltd. ADS YGE from Hold to Buy and raising PT to $18 and $8 respectively. Shah noted that demand for solar energy in China in growing fast after new incentives were announced earlier this year. “Our detailed analysis of the various central and provincial government policies suggests that growth rate of the Chinese solar market is set to accelerate from 2H13 as various projects reach the end of the development phase.” Deutsche Bank reported demand will exceed expectations due to attractive project economics, additional companies entering the solar sector, government incentives, and local FiT and tax incentives. The analyst believes 40% of solar demand in 2014 will be accounted for by China and Japan. Shah wrote, “Companies with scale, international brand recognition and deep rooted China relationships stand to emerge as long term winners.” TSL and YGE are therefore favorable for long- term trades. Deutsche Bank raised 2014 estimates of Trina from $0.69 to $1.10, and from -$(0.29) to $0.50 for Yingli. The analyst noted that he is above consensus for both companies and expects numbers to continue to increase. TSL closed at $12.84 and YGE closed at $6.10 on Thursday.