Newly installed solar capacity in China in 2019 is estimated to bebetween 35 GW and 45 GW. The notice on bidding result of 2019 solarprojects with state subsidies was announced on 11th July and total installedcapacity included in the subsidy list amounted to 22.79 GW. We estimate thatnewly installed solar capacity in China in 2019 will be between 35 GW and 45GW, which is roughly 15 GW higher than our prior forecasted range. Chinainstalled only 11.65 GW of solar capacity in 1H2019, down 55% YoY.
The list of the 1st batch of wind and solar grid-parity projects in 2019was jointly issued by the NEA and NDRC. The list of the first batch of windand solar power generation grid parity projects, with a total installed capacityof 20.76 GW, was issued in May 2019. The 20.76 GW of wind power andsolar power grid-parity projects are expected to be commissioned between2019 and 2021. Only 4.73 GW of solar projects are set to be installed in 2019.
The potential takeover by China Huaneng Group is expected tosubstantially improve the profitability of GCL New Energy. Thecompletion of the possible transaction will lead to change in control of GCLNew Energy, and we think the possibility of this potential transaction is quitehigh as GCL Group is striving to deleverage itself.
We slightly trim our TP to HK$0.45 but maintain the investment rating of"Buy". Our EPS forecasts from 2019 to 2021 are RMB0.0651/ RMB0.0591/RMB0.0645, respectively. Our new TP corresponds to 6.0x/ 6.7x/ 6.1x FY19to FY21 PER or 1.0x/ 0.9x/ 0.8x FY19 to FY21 PBR.