Moderator: Liu Bin Deputy Director of Equity Investment Department and Fund Manager of Xinhua Fund
Wang Yongming Fund Manager of The Equity Investment Department of Xinhua Fund
Cui Guxin Assistant Fund Manager of Xinhua Fund and Analyst of Research Department
Zhang Dajiang, Assistant Fund Manager of Xinhua Fund, Analyst of Research Department
1. Photovoltaic and wind power
Room for growth and investment value
Liu Bin: The realization of carbon neutrality is inseparable from photovoltaics and wind power, where do you think the long-term investment value of the photovoltaic industry is?
Cui Guxin: The photovoltaic industry has long-term investment value
Analyze the long-term investment value of the photovoltaic industry from three directions:
1. The global energy revolution is coming. Because the current module price can already achieve parity in most parts of the country, and even in the vast majority of the world. With the further decline in the cost side, the overall installed capacity demand is expected to achieve rapid growth, and it is expected that by 2022, the overall global demand will reach more than 200 GW.
2. The support of policies is unprecedented. Last year, at the United Nations General Assembly, national leaders proposed that China expects to increase the proportion of non-fossil fuels to 20% during the 14th Five-Year Plan period. This provides a policy guarantee for the long-term development of the national new energy industry.
3. Leading companies. China's leading companies have mastered the global discourse power, in the overall manufacturing end of the photovoltaic industry, domestic enterprises account for more than 70%, in the global supply chain has enough technical advantages and share advantages. The photovoltaic industry is one of the few industries in China that leads in overall technology and manufacturing capabilities in the world.
Liu Bin: The competitiveness of Chinese photovoltaic companies in the world is very prominent, and they have also shown very good growth attributes in the past, how do you think about the future growth space of the photovoltaic industry?
Cui Guxin: The demand growth of the photovoltaic industry in 2022 is very certain
1. The certainty of demand growth in the photovoltaic industry is very strong. The Energy Bureau has previously released the first phase of the 100G watt wind power and photovoltaic project base, the project has recently been partly started in an orderly manner, just a few weeks ago the second phase of the 100G watt large base project also began to complete the declaration before the end of 2021, the two phases of the base have a total of 200G watts installed capacity demand, very effective to ensure the next three years of installed demand.
2. The photovoltaic industry will return to the industry attribute of high growth. 2022 is a year of concentrated release of high-quality supply, and the entire industry is expected to return to the essential attribute of cost performance improvement. In 2021, the photovoltaic industry has experienced tight supply and demand of raw materials, mismatch in industrial chain capacity, and is expected to be alleviated in 2022, the prices of all links are expected to return to the appropriate level, profits will be redistributed, and downstream demand is expected to return to the trend of high growth.
Finally, it is optimistic that profits will be damaged in 2021, but the demand growth in 2022 is very certain. Due to the high price of the entire silicon industry in 2021, the downstream silicon wafers, cells, and module profits have been squeezed, so it is optimistic that the profitability of the two links of the cell and the module link will be repaired in 2022.
Liu Bin: The future development space of the photovoltaic industry is indeed very large, so what is the future growth of the wind power industry?
Cui Guxin: Wind power parity has brought rapid development of the industry
2021 is the wind power industry ushered in a large-scale and subsidy decline after the parity of the key node, superimposed onshore wind turbine rush installation process after the loose supply and demand, the entire single kilowatt bidding price from the highest 3500 yuan fell back to the current near 2000 yuan, the decline in wind turbine prices led to a comprehensive installed cost decline. According to current prices, the average yield of wind power projects can reach more than 8%, and more than 70% of China can obtain cheaper costs than local thermal power.
Cost reduction and efficiency increase is the core logic of the new energy industry, and we expect the global wind power installation opportunity to reach more than 90G watts in 2022. The planning of domestic wind and solar power base projects has supported the planning growth of the industry, and the state has vigorously developed renewable energy, and will accelerate the planning of large-scale wind power photovoltaic base projects in desert, Gobi and desert areas. After solving the problems of UHV and energy storage, the current wind power is a very cost-effective industry.
Liu Bin: The future development prospects of the wind power industry are very huge, what segments are you optimistic about?
Cui Guxin: Optimistic about investment opportunities in offshore wind power in 2022
1. Close to the energy load center, easy to consume in situ. Compared with onshore wind power, the installed location of offshore wind power will generally be located in the economically developed coastal provinces, closer to the load center of the energy, which is convenient for local consumption. At the same time, from the perspective of utilization hours, the number of power generation hours of offshore wind power has reached more than 3500 hours, and the average number of hours on land is only 2000 hours, which is 75% higher than that onshore, whether it is from the absolute power generation at sea or the stability of power generation, it has a stronger advantage than onshore.
2. The price of offshore wind turbines has declined, and the progress of parity has been greatly advanced. In 2021, the price of offshore wind turbines has dropped significantly, the progress of parity has been greatly advanced, and since the middle of the year, the price of wind turbine bidding for offshore wind power projects has continued to decline. Since the entire implementation period of the project is about one year, it is expected that by 2022, the offshore wind power project that wins the bid at parity will enter the substantive installation and grid connection stage. According to the previous market consensus forecast, it may take five years for offshore wind parity to be completed, but recent tender prices have shown that the progress of offshore wind power parity will be completed at least 2-3 years earlier.
3. Support of state policies and subsidies. In the 14th Five-Year Plan for Energy Development, the state has incorporated offshore wind power construction in coastal provinces into the overall planning goals, and several coastal provinces and cities (Guangdong, Fujian, Zhejiang, Jiangsu, Shandong) have successively issued offshore wind power plans and corresponding subsidy policies. Under the promotion of national and local development policies, the growth of offshore wind power during the 14th Five-Year Plan period has a very strong guarantee, and it is expected that the installed capacity of offshore wind power in China may reach more than 7G watts in 2022.
Finally, we are optimistic about the supply chain links involving offshore wind power installations, including the large-scale construction of offshore wind turbines, submarine cables, and some investment opportunities brought about by the construction of offshore wind power.
Second, the new energy storage market segment discussion
Liu Bin: I believe that photovoltaic wind power will have a good performance in 2022. Recently, the market is actually paying attention to energy storage is also very high, what do you think of Yongming?
Wang Yongming: I am very optimistic about the development prospects of energy storage
Energy storage is a market segment that is several times faster than the growth rate of new energy power generation. The recent increase in market attention to energy storage is mainly related to the recently introduced stimulus policies related to renewable energy supporting energy storage.
In the future, with the development of new power energy sources such as photovoltaic and wind power, it is expected that the demand for energy storage will continue to erupt, because new energy power generation is affected by external factors such as weather, and it is impossible to control and flexibly adjust as accurately as traditional thermal power, which means that the supply of electricity and the demand of users will have obvious mismatch and imbalance. The higher the proportion of new energy installed capacity, the sharper the contradiction between the power generation end and the demand side mismatch, and the stronger the demand for energy storage regulation.
At present, the energy storage penetration rate of new energy projects is only 10%, while the United States has now reached more than 30%, and even some regions have reached 60%-70%. In the next few years, the installed capacity of energy storage will not only grow synchronously with wind power and photovoltaics, but also have the logic of increasing penetration, which will eventually be the multiplicative efficiency of the two, so I am very confident in the growth prospects of energy storage.
Liu Bin: How do you assess the market space and growth rate of the energy storage industry?
Wang Yongming: The energy storage industry is expected to maintain rapid growth
In the next few years or at least until 2025, the energy storage industry is expected to maintain a compound growth rate of more than 70%, the ceiling of the energy storage market will continue to be opened, and there will be hundreds of billions of market space in the future.
Assuming that the installed capacity of new energy storage will reach 50% in 2025, coupled with the compound growth of 30% and 18% of the installed capacity of photovoltaic and wind power per year。 In this way, the compound annual growth rate of energy storage will remain above 70%, which is twice that of photovoltaics and four times that of wind power.
Liu Bin: In 2021, the upstream materials of batteries have risen relatively largely, and there is generally some pressure on the profitability of battery companies, but the stock prices of most listed companies have performed well, how do you think about this phenomenon?
Wang Yongming: Price increases reflect the pattern of supply and demand
First, the current situation of upstream price increases is not sustainable, and price reductions are a major trend in the long run.
Second, the upstream price increase reflects the strong downstream demand, from the perspective of terminal demand, this year's domestic new energy passenger car wholesale sales of 3.20-3.3 million, compared with 1.17 million last year, an increase of nearly 200%.
Third, from the perspective of supply and demand pattern, the position of battery factories in the upstream and downstream industrial chains next year will be more favorable.
Liu Bin: 2022 is relatively favorable for battery companies, can you talk about your views on the market in 2022?
Wang Yongming: Still optimistic about the battery link market
I am still very optimistic about the battery, the main reasons are three points:
1. Downstream demand in 2022 is still very strong. Domestic new energy vehicle sales will maintain a growth rate of more than 50%, and the US market may be a new flashpoint due to the impact of support policies.
2. High profitability in 2021 stimulates upstream expansion. The expansion of the main upstream listed companies such as positive electrode, negative electrode, diaphragm and electrolyte is very aggressive, and many production capacity growth rates are more than 100%, and even some traditional chemical companies have joined in, and it is a large investment.
3. The pattern of short supply and demand continues. Batteries have barriers, differences, and involve driving experience, driving safety, so the automakers are willing to pay for this difference, high-quality first-line battery factories are still in short supply, premium capabilities are stronger.
Therefore, in 2022, mainstream battery companies will face a favorable pattern of cost reduction and double rise in quantity and profit, so continue to be optimistic about the battery link.
Third, the material increase in the upstream of new energy is explored
Liu Bin: In 2021, the materials in the upstream of new energy will rise greatly, especially the lithium industry has seen many ten-fold stocks in the past two years, what do you think is the main reason for such a big increase?
Zhang Dajiang: Under the background of double carbon, the demand for lithium industry is promising
The main reason is that the demand is too good, the supply of Australia and South America can not keep up, even if it rises so much, the supply and demand of lithium salt and its price interaction is still in a relatively healthy state. At the bottom in 2020, the price of lithium carbonate is less than 40,000 yuan / ton, the price of lithium concentrate is less than 400 US dollars / ton, and now the price of lithium carbonate and lithium concentrate is more than five times that of the bottom, and there are many companies that want to buy but cannot buy.
In the context of carbon peaking and carbon neutrality, the global energy pattern is now transforming from an oil economy to an electricity economy, and an energy security factor is superimposed in China. Lithium is widely used in power batteries, wind and solar energy storage, 5G base stations and other fields, in 2020 these industries have achieved an outbreak of demand, the most important is new energy vehicles.
After the epidemic in 2020, the growth of new energy vehicles in Europe and China has achieved resonance, and the new energy vehicle market in the United States has also entered a state of rapid growth in 2021, achieving resonance in the demand for new energy vehicles in major economies around the world.
Therefore, I take 2021 as the first year of global new energy vehicles, when the demand is growing rapidly, continues to exceed expectations, the current output is insufficient, coupled with the rapid consumption of inventory, when the inventory is very low, it will lose the ability to adjust the price, and the elasticity of the price at this time, including the elasticity of individual stocks in the lithium industry, will be quickly released.
Liu Bin: Do you think lithium prices can continue to rise in 2022?
Zhang Dajiang: Lithium prices are expected to rise for the third consecutive year
Whether lithium prices can continue to rise in 2022 mainly depends on the relationship between supply and demand, from the perspective of supply and demand balance, I think it can rise for the third consecutive year. The demand side mainly looks at new energy vehicles, and the supply side depends on whether Australia's spodumene, South America's salt lakes, and China's various lithium resources can be released quickly.
We estimate that the growth rate of lithium consumption in 2021 is expected to be 51%, while the compound growth rate of lithium consumption in 2021-2025 is about 31%. Therefore, at least in 2022, the shortage should not be significantly alleviated.
In 2022, all the lithium mines in the world, including salt lakes, spodumene, including China's lithium mica, etc., can be implemented by the supply of about 640,000 tons of lithium carbonate, the increase is about 150,000 tons, 160,000 tons, but the increase in consumption we conservatively look at more than 160,000 tons. Therefore, this price will continue to rise in the first half of 2022.
The supply and demand balance of the lithium industry needs to have a significant easing until 2023, and even until 2024, there will be a stage of oversupply. Therefore, I think that the third consecutive year of rise should be a high probability thing for lithium stocks and lithium prices.
Liu Bin: In 2021, rare earth magnetic materials also rose a lot, the market's attention is very high, and the stock price was once stronger than lithium in the middle. In the past, the competitive landscape of this sector was actually not very good, has anything changed now?
Zhang Dajiang: The supply side and demand side of the rare earth industry have undergone great changes
The rare earth industry, whether on the supply side or the demand side, has undergone a very huge, healthy and positive change in the past few years.
From the supply side, with the imminent landing of the "Rare Earth Management Regulations", this positive change will be solidified for a long time. Rare earths for China is a dominant resource, is a strategic resource, from the data point of view, China's rare earth reserves accounted for about 37% of the world's total, production accounted for nearly 60% of the world's total. However, with its own resources and technological advantages, China occupies nearly 90% of the global share in the smelting and separation of rare earths and the downstream production of magnetic materials. Relying on such a strong position, the rare earth magnetic material industry occupies a strong position in the world.
But in the past few years, the development of this industry has not been too healthy, and the industrial structure is not too good. In the past few years, the state has completely cleaned up the black rare earth through many strong rectifications, established six state-owned rare earth groups in the industrial pattern, and integrated the upstream and downstream of the six rare earth groups, that is to say, the upstream resource mining and downstream smelting separation have been vertically integrated. In this case, state-owned enterprises and the state have absolute right to speak, and the pattern of this industry has completely changed.
On the demand side, rare earths are widely used in new energy vehicles as well as wind power and other fields such as energy-saving home appliances and industrial motors, which gives it the properties of new energy metals. Now the big policy background is the dual carbon and energy consumption of energy, which requires energy consumption efficiency to be improved, consumption intensity needs to be reduced, which highlights the rare earth as an energy metal energy saving, and give the national energy security guarantee attributes. In 2021, there has been a significant increase in electricity prices, which is a great impetus for the application of industrial motors - rare earth permanent magnet motors in the industrial field. Recently, the state has also introduced relevant policies to promote the continuous replacement of rare earth permanent magnet motors in the industrial field.
In the future, although new energy vehicles are the most important growth point of rare earth permanent magnet consumption, if the application of consumption in the field of industrial motors can also be smoothly promoted, the growth rate of consumption will exceed expectations. We judge that the consumption growth rate of rare earths will remain at about 15% in the next few years, but it may also be because new energy vehicles continue to exceed expectations, or the application of industrial motors exceeds expectations, and the consumption growth rate will be adjusted upwards.
Liu Bin: The material of rare earth permanent magnets has risen a lot in 2021, how do you see the future investment opportunities in this industry?
Zhang Dajiang: The upward trend of rare earths will continue in 2022
From the price point of view, the price increase of rare earths and magnetic materials has not ended, and the market of rare earth magnetic materials has not ended. The growth rate of rare earth consumption in 2022 is more than 15%, and the long-term pattern is as promising as lithium.
At present, the price of praseodymium oxide, which is the most important variety of light rare earths, has reached more than 800,000, and the price of dysprosium oxide and terbium oxide, which are representative of heavy rare earths, is close to 3 million and more than 11 million, respectively. In this case, some foreign rare earth production enterprises also have the idea of expanding production or continuing to extend downstream, but their gaps in technology and personnel are very large, and they will not pose a threat to China's dominance in this industry in a short period of time. Therefore, after the price of rare earths continues to rise, this trend will continue in 2022.
In addition, the more important logic is the penetration rate of rare earth permanent magnets in manufacturing and industry. If it is applied in more industries, and its use intensity increases in a single industry, then its cyclical properties will weaken, and its growth will be more prominent.
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