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Bank Of America Offers Solar Picks: Downgrades Trina, Yingli, Initiates Xinyi And Singyes

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Bank of America issued a research note on solar companies in China on Wednesday and was bullish on both “global solar demand and China’s solar capex wave.”

Analysts led by Vitus Leung expected 15 percent/14 percent growth in solar demand year-over-year in 2015/2016.

“China is the world’s fastest growing solar market as it targets solar installed PV capacity of 100GW by 2020, up from 28GW in 2014 (257 percent growth). For 2015-20, we see potential new capacity of more than 72GW (over 12GW per year), implying capex exceeding RMB500bn on solar farms,” according to the analysts.

Leung favored upstream/solar farms over Engineering, Procurement & Construction (EPC) stocks. China-based solar farms that showed strong earnings deserved premium P/B valuations, according to the analyst note.

Xinyi Solar Holdings Ltd (HKG: 0968) was initiated with a Buy rating and price target of HK$3.5.

The company was “the largest solar glass maker and can leverage its know-how to ensure module quality as it expands into solar farm,” Leung noted.

China Singyes Solar Technologs Hldgs Ltd (HKG: 0750) was initiated with a Neutral rating.

Singyes was “a well-known solar EPC company with a strong track record in solar installation” and was expected to “benefit from a rebound in solar installation, while its foray into the solar farm will help boost margins,” the analysts wrote.

Trina Solar Limited (ADR) (NYSE: TSL) and Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE: YGE) were downgraded to Neutral.

The downgrades were made due to China being “the largest end-market with low prices” and the expectation that solar system ASPs will fall, creating a margin headwind.

Amid the initiation of coverage, Xinyi Solar closed at HK$2.69 Wednesday, up 10.25 percent.

China Singyes Solar closed at HK$12.44, up 9.31 percent.

Latest Ratings for TSL

DateFirmActionFromTo
Nov 2016Axiom CapitalDowngradesBuySell
Oct 2016Axiom CapialUpgradesSellBuy
Aug 2016Credit SuisseMaintainsNeutral

View More Analyst Ratings for TSL
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Posted-In: Bank of America Vitus LeungAnalyst Color Price Target Initiation Analyst Ratings

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