Growth outlook remains robust
Expect high growth in wind farm capacity in China
After recording an 81% CAGR in 2003-08E, we expect the installed wind farm
capacity in China to maintain its resilient growth momentum. Our annual installation
estimates are 6GW in 2009 and 7GW in 2010 (representing growth rates of 54% and
41%, respectively). We think this growth will be driven by strong government
support through favourable policies and mandatory portfolio standards.
Impact from economic slowdown should be limited
We expect larger state-owned power producers to accelerate wind farm capacity
additions to meet the government’s mandatory portfolio target. In addition, the capex
on wind farms is small, relative to the large power producers’ total planned
investment. There could also be upside from recent government measures to
stimulate the economy. We believe this should more than offset a possible slowdown
in capex by smaller private developers.
Leading wind power equipment producers should benefit
The rapid growth of China’s wind farm capacity has positive implications,
particularly for leading turbine/component producers with better product quality,
which have sufficient orders on hand to avoid a sales slowdown. Meanwhile, the
product quality of domestic producers is yet to be tested through long-term operation.
Vestas remains our top pick (Buy), Nordex (Sell) our least preferred
Our top pick among the wind power turbine makers under UBS coverage is Vestas
Wind Systems (Vestas), which has an 11% market share in China. We prefer Vestas
because of its best-in-class profitability, resilient order intake trend and significant
US exposure, where we expect a strong increase in government support for wind
power. Nordex remains our least preferred stock in this sector due to its structural
size disadvantages.
China’s wind farm capacity growth still robust 3
— Minimal impact from economic slowdown.............................................................3
— Challenges ahead yet to be resolved ...................................................................4
— Key beneficiaries: leading equipment makers.......................................................4
— Top pick Vestas; least preferred Nordex...............................................................8
Company pages 9
— Vestas Wind Systems ........................................................................................10
— Suzlon Energy....................................................................................................13
— Hansen Transmissions.......................................................................................16
— Nordex AG .........................................................................................................19
Appendix: Non-covered companies 23
— Goldwind Science and Technology ....................................................................24
— China High Speed Transmission ........................................................................27
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