In the market of photovoltaics of one trillion, why can we produce ten times and one hundred shares? I analyze the following three aspects:
The future of the photovoltaic industry
PV industry counterparties
Current valuation of the photovoltaic industry
The future of the photovoltaic industry
The future of the photovoltaic industry is, in my opinion, a trillion-level market that is closely related to our ongoing third energy revolution.
In the past, human history has experienced two major energy transformations.
The first time was in the late 18th and 19th centuries. With the invention of steam engines and the large-scale utilization of coal, human beings entered the coal era from the era of fuelwood.
The second occurred in the 1870s and early 20th century. It was marked by the invention and use of generators and internal combustion engines. Oil and natural gas accounted for more than coal in the primary energy consumption structure, becoming the main source of human production and life. energy. During this period, electricity, as a clean and convenient secondary energy source, changed the way human energy is used.
These two energy revolutions have greatly promoted the development of the world economy and the progress of human society. They have also produced many companies with market capitalization of hundreds of billions of dollars, such as Mobil Oil. However, because these two energy transitions are essentially the consumption of fossil energy, the resource reserves will continue to decline. At the same time, mining and consumption have caused damage to the ecological environment, and a large amount of carbon dioxide emissions have also affected the global climate.
And now, we are in the third energy revolution. The arrival of the third energy revolution is that with the advancement of human technology and environmental awareness, human beings are looking for sustainable green energy. In 2015, the new installed capacity of renewable energy power generation in the world also exceeded conventional energy generation installed capacity for the first time, marking the third human energy revolution.
The third energy revolution presents three main characteristics: one is green, low carbon, the other is that there is no risk of resource depletion, and the third is that energy prices can continue to decline, while photovoltaics and wind energy will become the main force of the third energy revolution. .
Then if the third energy revolution really started as soon as I expected, how big is this market?
We review the history of photovoltaics: from 2004 to 2015, photovoltaic power generation increased nearly 100 times from 2.6TWh in 2004 to 253TWh in 2015. At the same time, photovoltaics accounted for 0.01% of the world's electricity generation from 2004. % also increased 100 times to 1.05% in 2015.
Looking at the world, I have seen some developed countries, such as Germany's photovoltaic power generation in 2016 accounted for 6.9% of its total social power generation. For example, California in the United States, photovoltaic power generation in 2016 has accounted for 13% of its annual power generation.
For many developing countries, the use of photovoltaics can directly cross traditional energy sources and directly enter the third energy revolution. For example, in India, as early as January 2014, Indian Prime Minister Modi announced the solar energy revitalization plan: by 2022, India will achieve a total of 175 GW of renewable energy, of which 100 GW is installed.
If the future photovoltaic energy accounts for 10% or more of the global energy supply, this will be a trillion-level market, and there should be hundreds or even hundreds of billions of companies in such a market.
PV industry counterparties
Compared with the bright prospects of the photovoltaic industry, the current trading partners in the photovoltaic industry are very pessimistic.
For this, I think of a sentence that Bill Gates said:
People always overestimate the first five years of a new technology, but underestimate the development of the technology for the next five years.
(First Solar stock price trend)
This speed of making money is indeed crazy, but it has also laid the groundwork for several of the photovoltaic industry in the future. After the 2008 financial crisis, a large number of PV companies closed down. At that time, domestic PV companies chose to go public in the US to expand their international influence, but unfortunately, the domestic PV giants also fell.
In 2013, under the influence of the European and American double-reverse, Wuxi Suntech, the world's leading PV company, declared its collapse, and many European and American solar stocks also caused losses to countless investors.
(SunEdison stock price trend)
All this allows investors to talk about photovoltaic stocks, and let Wall Street, which has the pricing power in the European and American markets, begin to abandon the photovoltaic industry, regardless of the nature of its industry and the broad prospects for the future.
If you still don't believe it, you can ask people who are engaged in investment banking or who have invested in the photovoltaic industry in the market. Are they still concerned about the photovoltaic industry?
The ups and downs of the photovoltaic industry have made PV a completely abandoned industry in the capital market, and it is precisely because of this that it has an extremely undervalued valuation.
Current valuation of the photovoltaic industry
Before talking about the valuation of the photovoltaic industry, let's talk about the changes in the PV industry chain. At the beginning of photovoltaics, the entire industrial chain of photovoltaics, from upstream to downstream, is in the hands of European and American companies. Now, the right to speak of the entire PV industry chain has reached the hands of Chinese companies. This is a pride for us. Things.
At the same time, China's PV entrepreneurs have introduced many PV application scenarios, such as fishing and light complementary, photovoltaic greenhouses and so on.
It is precisely because of the lack of understanding of Chinese PV companies and the abandonment of European and American investors that the valuation of Chinese PV companies listed in the US is extremely low:
It can be said that the current leading valuation of the world's photovoltaic industry is below the net assets, the average PE is 5 times, and the PS is 0.3 times. This valuation is in stark contrast to the crazy valuation in 2007.
Or we can compare horizontally, for example, the Longji shares listed in the A-shares mentioned above (Longji shares: 500,000 entrepreneurs, betting single crystal, the heart of the craftsman, eventually becoming a single champion), the current market value of 30 billion yuan, corresponding to PE 20 times, PS 3 times, maybe you will say that the A-share market is more expensive or the Longji fundamentals are better, but as much as the difference?
In summary, the future development of the entire photovoltaic industry is a certain growth, and due to the past few declines in the photovoltaic industry, many investors have suffered losses, and at the same time, because the entire industry chain from Europe and the United States to China, so that the pricing power Investors in Europe and the United States do not understand China's PV companies, but they have produced very low valuations, and they have generated investment opportunities that are ten times or even 100 times in the future.
If PV can be the main source of human energy and become a trillion-dollar market, why can't these Chinese PV companies with a market value of only a few billion will not give birth to a ten-fold or even a hundred-fold stock?
Finally, I would like to recommend everyone to look at the 2012 dialogue program. Think about the changes in the PV market and the pattern during the past five years, and also praise our PV entrepreneurs in China. After all, it’s their contribution that makes the whole world The industry chain is in our hands!