Potential Takeover Terminated, Downgrade to "Neutral" 潜在收购被终止，下调至“中性”

股

票

研 [Table_Title] Company Report: GCL New Energy (00451 HK) Jun Zhu 朱俊杰

究 (852) 2509 7592 EquityResearch 公司报告：协鑫新能源 (00451 HK) [email protected]

19 December 2019 [Table_Summary] Potential Takeover Terminated, Downgrade to "Neutral" 潜在收购被终止，下调至“中性”

 The potential takeover by China Huaneng Group was officially called off [Table_Rank] 公 in November 2019 and was replaced with a cooperation framework Rating: Neutral Downgraded agreement. We believe that termination of the potential takeover (majority 司 stake acquisition) of GNE and acquiring only certain assets from GNE is to 报评级：中性 (下调) avoid having too much indebtedness transferred from GNE to China 告 Huaneng. As of the moment, we are uncertain in regards to the consideration

of the potential transaction and the scale of the solar assets that China 6[Table_Price-18m TP 目标价] : HK$0.22 CompanyReport Huaneng will acquire from GNE. More details regarding the cooperation Revised from 原目标价: HK$0.45

framework agreement will be needed for further analysis. Share price 股价: HK$0.172

 Newly installed solar capacity in the domestic market is expected to fall

substantially in 2019 as a result of solar tariff subsidy reduction. According to NEA of China, newly installed solar capacity in the first 9 months Stock performance of 2019 reached 15.99 GW, down YoY by 53.7%. In which, concentrated 股价表现 solar projects contributed 7.73 GW of new installations, while distributed solar [Table_QuotePic] 50.0 % of return projects added 8.26 GW during the period. As at the end of 9M2019, 40.0 nationwide cumulative installed solar capacity hit 190.19 GW, up YoY by 30.0

证 15.2%. We expect new solar installations in China to remain low onwards as 20.0 a result of tariff subsidy reduction, which has substantially reduced the 券告 10.0 investment return of new solar projects. 0.0 研报

 We downgrade the investment rating to “Neutral” and cut our TP to (10.0)

究究 HK$0.22. The profitability of the core business of GNE may be further (20.0)

报 weakened following the disposal of solar assets to China Huaneng Group. (30.0) 研

Our new TP corresponds to 4.8x/ 3.9x FY19/ FY20 PER or 0.6x/ 0.5x FY19/ (40.0) 告 (50.0) 券 FY20 PBR.

Dec-18 Mar-19 Jun-19 Sep-19 Dec-19

EquityResearch Report  中国华能集团的潜在收购于 2019 年 11 月被正式取消，取而代之的是一份合作框架协议。 HSI GCL-New Energy 证我们认为终止对协鑫新能源控股股权的潜在收购而只选择收购公司的某些资产是为了避免

[Tab 过多的债务从协鑫新能源转移至中国华能。目前，我们不确定潜在交易的造价以及中国华

Change[Table_PriceChange] in Share Price 1 M 3 M 1 Y

清能将收购的太阳能资产的规模。需待获得更多关于合作框架协议的细节以做进一步分析。 le_I 洁股价变动 1 个月 3 个月 1 年

Solar 由于太阳能电价补贴的减少，国内市场于 2019 年的新增太阳能装机预计将大幅下降。根  Abs. % nfo1 - 能 (21.8) (40.7) (40.7) 据国家能源局的数据，2019 年前 9 个月新增太阳能装机为 15.99 吉瓦，同比下降 53.7%。绝对变动 % 源] 其中，集中式太阳能项目新增装机容量 7.73 吉瓦，分布式太阳能项目新增装机容量 8.26 吉 Rel. % to HS Index (24.4) (45.7) (48.1) 相对恒指变动 % 行瓦。截至 2019 年 9 月末，全国累计太阳能装机容量为 190.19 吉瓦，同比增长 15.2%。由 Avg. Share price(HK$) 0.17 0.23 0.29 业于电价补贴的减少将大幅削弱新太阳能项目的投资回报，我们预计中国的新增太阳能装机平均股价（港元） - 将继续于未来保持在一个较低的水平。 Source: Bloomberg, Guotai Junan International. 太  我们下调投资评级至“中性”，并将目标价下修至 0.22 港元。在把太阳能资产出售给中国阳华能集团之后，协鑫新能源核心业务的盈利能力预计将会进一步被削弱。新目标价相当于能 CleanSector Energy 4.8 倍/ 3.9 倍的 2019 年/ 2020 年市盈率或 0.6 倍/ 0.5 倍的 2019 年/ 2020 年市净率。

Y[Table_ear End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE [Tab 年结Profit ] 收入股东净利每股净利每股净利变动市盈率每股净资产市净率每股股息股息率净资产收益率 le_I 12/31 (RMB m) (RMB m) (RMB) (△ %) (x) (RMB) (x) (RMB) (%) (%)

2017A 3,942 841 0.044 528.6 3.3 0.295 0.5 0.000 0.0 16.5 nfo2

2018A 5,632 470 0.025 (43.2) 6.0 0.322 0.5 0.000 0.0 8.0

HK)

中] 2019F 5,152 788 0.041 64.0 3.8 0.358 0.4 0.000 0.0 12.2

协 451 外 2020F 5,188 958 0.050 22.0 3.1 0.413 0.4 0.000 0.0 13.0 鑫 (00 2021F 5,261 987 0.052 4.0 3.0 0.472 0.3 0.000 0.0 11.7 运新 [Table_BaseData]Shares in issue (m) 总股数 (m) 19,073.7 Major shareholder 大股东 GCL Poly Energy 62.3% 能输 Market cap. (HK$ m) 市值 (HK$ m) 3,280.7 Free float (%) 自由流通比率 (%) 27.7 源 3 month average vol. 3 个月平均成交股数 (‘000) 20,562.6 FY19 Net gearing (%) FY19 净负债/股东资金 (%) 376.9 52 Weeks high/low (HK$) 52 周高/低 (HK$) 0.420 / 0.156 FY19 EV/EBITDA (x) FY19 企业值/EBITDA (x) 7.3

Source: the Company, Guotai Junan International. GCL New Energy New GCL

See the last page for disclaimer Page 1 of 6

[Table_PageHeader]GCL New Energy (00451 HK)

The potential takeover by China Huaneng Group was officially called off in November 2019 and was replaced with a

cooperation framework agreement. GCL Poly Energy, the parent of the Company, and] 1 GCLr a NewM t Energyh g i (“R GNE_ ”e orl theb a T [

Company) jointly announced in early June 2019 that a wholly owned subsidiary of GCL Poly Energy had entered into a cooperation intent agreement with China Huaneng Group, one of the largest energy conglomerates in China, in relation to the 9 potential sale of 9.73 billion ordinary shares of GNE, representing approximately 51.0% of the entire issued share capital of 201 GNE. However, after few months of due diligence and discussion, the potential takeover by China Huaneng Group was officially

called off on 18th November 2019. GCL Group (i.e. GCL Poly and GCL New Energy) and China Huaneng Group mutually December

agreed to terminate the cooperation intent agreement signed on 3rd June 2019 due to failure to enter into a formal agreement 19 regarding the potential takeover after several rounds of friendly negotiations. As such, the offer period was officially ended. Immediately after the termination of the cooperation intent agreement, GNE and China Huaneng entered into a cooperation framework agreement on 18th November 2019 regarding GNE's disposal of certain solar power plants in the PRC or certain project companies of GNE that operate power plants to China Huaneng or its subsidiaries. As China Huaneng Group decided to adjust the transaction structure to acquire the PRC assets of GNE, China Huaneng and GNE proceeded to pursue the possible transactions contemplated under the cooperation framework agreement. We believe that terminating the potential takeover (majority stake) of GNEand acquiring only certain assets from GNE is to avoid having too much indebtedness transferred from GNE to China Huaneng. As of the moment, we are uncertain in regards to the consideration of the transaction and the scale of the solar assets that China Huaneng will acquire from GNE. More details regarding the cooperation framework

agreement will be needed for further analysis. All in all, we believe the assets disposal to contribute] 2 r ina M termst h ofg noni R -operating_ e l b a T [

income and deleveraging to GCL Group in 2019, which may somehow mitigate the operating pressure of GCL Group as a result of the plunging solar materials price in both 2018 and 2019. However, on the part of GNE, carving out high quality assets and leaving the indebtedness on the platform may further undermine the Company’s already weak profitability brought by its high gearing and expensive cost of debt. High gearing and high cost of debt are key causes of GNE’s low margins.

Newly installed solar capacity in the domestic market is expected to fall substantially in 2019 as a result of solar tariff subsidy reduction. According to NEA of China, newly installed solar capacity in the first 9 months of 2019 reached 15.99 GW, down YoY by 53.7%. In which, concentrated solar projects contributed 7.73 GW of new installations, while distributed solar

projects added 8.26 GW during the period. As at the end of 9M2019, nationwide cumulative installed solar capacity hit 190.19 (00451 HK)

GW, up YoY by 15.2%. Concentrated solar projects and distributed solar projects made up 131.49 GW and 58.7 GW, respectively, of total installed solar capacity by the end of September 2019. Given that only less than 20 GW of new solar capacity was added in the first 3 quarters of 2019, we estimate the total new solar installations in 2019 to be between 20 GW and 30 GW, with the latter being our best case scenario projection. Despite a sharp decline in new installations in the China 协鑫新能源 market in 2019, we expect global new solar installations in 2019 to reach approximately 120 GW, implying YoY growth of 18%, as a result of stronger-than-expected overseas market solar installations. We expect the overseas market to contribute approximately 90 GW of new solar capacity in 2019, up YoY by 55.2% from 58 GW installed in 2018. Our aggressive overseas

market new solar installation projection was based on solar module export figures. It is important to note that China exported an GCL New Energy aggregate of 57.3GW of solar modules to overseas markets in the first 10 months of 2019, up YoY by 53.2%. Solar materials demand from overseas markets may continue to surprise as a result of rising popularity and overall competitiveness of solar energy among different power sources. Rising module efficiency and rapidly falling solar materials price are key reasons behind the surging solar energy investment internationally. Domestically, we expect new solar installations in China to remain low onwards as a result of tariff subsidy reduction, which has substantially reduced the investment return of new solar projects.

We downgrade the investment rating to “Neutral” and cut our TP to HK$0.22. The takeover deal was officially terminated in November 2019 and was replaced with a cooperation framework agreement signed between China Huaneng and GNE, with the former seeking to acquire an unknown amount of solar assets from GNE. Since the details of the contemplated assets acquisition were not disclosed, we are uncertain how the transaction will impact the Company in 2019 as well as in the years to be followed. However, we are certain that a deal must be done to help mitigate the operating pressure of GCL Group amid the sharp fall in the solar materials prices over the last 24-month period. On the part of GNE, carving out high quality assets and

leaving much of the borrowings inside the Company may increase the the operating risks of the Company. The profitability of the core business of GNE may be further weakened following the disposal of solar assets to China Huaneng. Although selling a

large chunk of assets may be at the expense of the investors of GNE but doing so would be the only effective way to save GCL Report

Poly Energy, the parent of GNE, from suffering significant operating loss in 2019 not seen in many years. The assets of GNE

are of very good quality and we have good confidence that a deal with China Huaneng is highly likely to be reached before

2019 ends. Overall, we downgrade the investment rating to "Neutral" and cut our TP to HK$0.22, which translates to 4.8x/ 3.9x Company

FY19/ FY20 PER or 0.6x/ 0.5x FY19/ FY20 PBR. See the last page for disclaimer Page 2 of 6 [Table_PageHeader]GCL New Energy (00451 HK)

Figure-1: Historical Cumulative Solar Capacity in PRC Figure-2: Structure of Newly Added Solar Capacity in PRC

] 1 r a M t h g i R _ e l b a T [

300 Concentrated Solar Farm Distributed Solar System

250.0 60 9

250 53.0 201

50 44.3 200 190.2 174.5 19.4 40

34.5 December

150 21.0 GW 130.3 4.2 19

30 GW

100 77.4 20 15.1 16.0 12.9 33.6 10.7 1.4 30.3 0.8 50 35.8 23.3 8.26 28.1 10 2.1 19.4 12.1 13.7 3.3 6.5 8.6 7.73 3.5 0 0 2011 2012 2013 2014 2015 2016 2017 2018 9M2019 2020E 2012 2013 2014 2015 2016 2017 2018 9M2019

Source: NEA, Guotai Junan International. Source: NEA, Guotai Junan International.

] 2 r a M t h g i R _ e l b a T [

Figure-3: Historical & Forecast PV Installation in PRC Figure-4: Historical Global PV Installations by Region

(00451 HK)

协鑫新能源

Source: CPIA, Guotai Junan International. Source: Solar Power Europe, Guotai Junan International.

Figure-5: Historical and Forecast Global PV Installations GCL New Energy

Report

Source: Solar Power Europe, Guotai Junan International.

Company

See the last page for disclaimer Page 3 of 6 [Table_PageHeader]GCL New Energy (00451 HK)

Figure-6: Forward PER of GCL New Energy Figure-7: Forward PBR of GCL New Energy

] 1 r a M t h g i R _ e l b a T [

Min: 3.4x Historical PER Average Min: 0.4x

Average: 5.4x Average: 0.7x Historical PBR Average Max: 9.0x Max: 1.8x 9

10 2 201 9 8

December

6 19 5 1 4 3 2 1 0 0 04-17 08-17 12-17 04-18 08-18 12-18 04-19 08-19 12-19 04-17 08-17 12-17 04-18 08-18 12-18 04-19 08-19 12-19 Source: Bloomberg, Guotai Junan International. Source: Bloomberg, Guotai Junan International.

Table-1: Peers Comparison

] 2 r a M t h g i R _ e l b a T [

Company Stock Code Currency Last price PER PBR ROE (%) EV/EBITDA(x) Market Cap (in local $) 18A 19F 20F 21F 18A 19F 20F 21F 19F 19F HKD mn Poly-silicon & Wafer Comtec Solar Systems Group 00712 HK HKD 0.13 n.a. n.a. n.a. n.a. 1.1 n.a. n.a. n.a. n.a. n.a. 80 Daqo New Energy Corp-Adr DQ US USD 48.57 15.9 24.7 6.5 5.8 1.2 1.2 1.0 0.8 5.1 10.5 5,026 Gcl-Poly Energy Holdings Ltd 03800 HK HKD 0.31 n.a. n.a. 9.4 7.9 0.2 0.3 0.2 0.2 (1.6) 7.6 6,151 Oci Co Ltd 010060 KS KRW 63,000.00 14.5 n.a. 23.8 11.3 0.4 0.5 0.5 0.4 (4.1) 12.1 10,050

Rec Silicon Asa REC NO NOK 3.29 n.a. n.a. n.a. n.a. 0.9 4.5 9.5 (7.7) (107.2) n.a. 800

TBEA Co Ltd 600089 CH CNY 6.61 13.5 11.8 10.1 9.7 0.8 0.7 0.7 0.7 6.3 7.1 27,295 Wacker Chemie Ag WCH GR EUR 67.32 13.6 45.9 24.2 15.9 1.1 1.3 1.3 1.3 2.9 5.8 30,448 Xinte Energy 1799 HK HKD 5.10 4.1 9.7 5.1 3.8 0.5 0.5 0.5 0.4 5.6 n.a. 5,330 Xian Longi Silicon Materia-A 601012 CH CNY 24.80 33.0 19.0 15.2 12.7 5.2 3.8 3.1 2.5 21.1 13.5 103,999

(00451 HK)

Simple Average 15.7 22.2 13.5 9.6 1.3 1.6 2.1 (0.2) (9.0) 9.5 Weighted Average 24.5 22.5 15.7 12.1 3.2 2.5 2.1 1.7 12.6 10.9

Cell & Module 协鑫新能源 Canadian Solar Inc CSIQ US USD 20.60 5.1 11.5 7.0 8.9 1.0 0.9 0.8 0.7 9.3 8.3 9,540 Jinkosolar Holding Co-Adr JKS US USD 21.54 13.5 8.0 5.1 8.9 0.7 0.7 0.6 0.5 9.5 6.0 7,435 Renesola Ltd-Adr SOL US USD 1.44 n.a. 22.2 12.0 n.a. 6.0 n.a. n.a. n.a. 2.2 n.a. 540 Simple Average 9.3 13.9 8.1 8.9 2.6 0.8 0.7 0.6 7.0 7.1 Weighted Average 8.8 10.3 6.4 8.9 1.0 0.8 0.7 0.6 9.2 7.3

GCL New Energy Solar System Operator

Gcl New Energy Holdings Ltd 00451 HK HKD 0.17 5.9 3.7 3.9 3.8 0.4 0.4 0.3 0.3 9.8 6.7 3,281 Jiangsu Akcome Science & T-A 002610 CH CNY 1.64 58.6 n.a. n.a. n.a. 1.3 n.a. n.a. n.a. n.a. n.a. 8,185 Kong Sun Holdings 00295 HK HKD 0.08 65.8 n.a. n.a. n.a. 0.2 n.a. n.a. n.a. n.a. n.a. 1,167 Shunfeng International Clean 01165 HK HKD 0.13 n.a. n.a. n.a. n.a. 0.2 n.a. n.a. n.a. n.a. n.a. 633 Panda Green Energy 00686 HK HKD 0.17 n.a. n.a. n.a. n.a. 0.3 n.a. n.a. n.a. n.a. n.a. 2,516 Xinyi Energy Holdings 03868 HK HKD 1.91 n.a. 13.8 12.6 12.1 n.a. 1.3 1.3 1.3 10.4 9.9 12,897 Simple Average 43.4 8.8 8.2 8.0 0.5 0.8 0.8 0.8 10.1 8.3 Weighted Average 45.6 11.8 10.8 10.4 0.8 1.1 1.1 1.1 10.3 9.3

Clean Energy IPP Operator

China Datang Corp Renewabl-H 1798 HK HKD 0.79 4.4 4.6 3.8 3.4 0.4 0.4 0.4 0.3 9.0 7.7 5,746 China Longyuan Power Group-H 916 HK HKD 1.10 6.8 5.8 5.7 4.7 0.7 0.6 0.5 0.5 11.9 8.2 4,720 Cgn New Energy Holdings Co L 1811 HK HKD 2.08 9.2 9.3 8.8 8.5 1.2 1.1 1.0 0.9 12.2 13.2 184,586 Cgn Power Co Ltd-H 1816 HK HKD 1.36 4.3 4.7 4.3 3.9 0.5 0.4 0.4 0.4 9.8 5.7 11,213 Beijing Jingneng Clean Ene-H 579 HK HKD 1.55 5.5 4.8 4.2 3.6 0.5 0.4 0.4 0.4 9.0 8.1 13,032

Huadian Fuxin Energy Corp -H 816 HK HKD 4.87 8.4 8.3 7.3 6.5 0.8 0.7 0.6 0.6 8.5 7.1 39,137

Huaneng Renewables Corp-H 958 HK HKD 3.03 8.7 7.4 6.7 6.1 1.0 0.9 0.8 0.7 13.4 7.3 32,017 Report

Simple Average 6.8 6.4 5.8 5.2 0.7 0.6 0.6 0.6 10.5 8.2 Weighted Average 8.5 8.4 7.8 7.4 1.0 0.9 0.9 0.8 11.5 11.0 Source: Bloomberg, Guotai Junan International . Prices are as of 19th December 2019.

Company

See the last page for disclaimer Page 4 of 6 [Table_PageHeader]GCL New Energy (00451 HK)

Financial Statements and Ratios

[Table_IncomeStatement] [Table_BalanceSheet] ] 1 r a M t h g i R _ e l b a T [ Income Statement Balance Sheet

Year end 31 Dec (RMB) FY17A FY18A FY19F FY20F FY21F Year end 31 Dec (RMB) FY17A FY18A FY19F FY20F FY21F 9

Total Revenue 3,942 5,632 5,152 5,188 5,261 PPE 38,104 42,970 30,104 29,075 28,105 201

COGS (1,289) (1,890) (1,621) (1,648) (1,729) Prepaid expense 113 112 118 124 130

Gross profit 2,653 3,743 3,531 3,540 3,532 Interest in JV 64 103 145 206 295

Share based payment expense (34) (13) (39) (29) (27) Amount due to related parties

152 45 47 50 52 December

Admin expense (460) (615) (644) (664) (658) Others 6,280 8,616 9,604 10,801 12,093 19

Other income 221 272 305 329 356 Total Non-current Assets 44,713 51,847 40,019 40,255 40,676

Other gains / expenses (88) (358) (101) 56 49 Cash & Cash Equivalents 4,197 1,362 2,885 3,113 3,157 Operating Profit 2,292 3,029 3,052 3,233 3,252 Inventories 0 0 0 0 0 Share of JV / affiliate 5 4 6 8 11 Pledged bank deposits 1,728 1,279 1,343 1,411 1,481

Net finance costs (1,432) (2,277) (1,827) (1,772) (1,703) Trade receivable 4,228 4,930 4,637 4,669 4,735

Profit Before Tax 864 756 1,231 1,469 1,560 Others 569 1,761 1,571 1,582 1,605

Income Tax 40 (7) (114) (157) (174) Total Current Assets 10,721 9,333 10,436 10,775 10,977

Profit After Tax 904 749 1,117 1,312 1,386 Total Assets 55,434 61,180 50,455 51,030 51,653

Non-controlling Interest (63) (280) (328) (353) (399) Short-term debts 7,068 8,323 3,565 4,156 4,509

Shareholders' Profit / Loss 841 470 788 958 987 Convertible bonds 926 0 0 0 0

Loans from fellow subsidiary 1,072 1,031 1,631 2,231 2,831

] 2 r a M t h g i R _ e l b a T [ Basic EPS (RMB) 0.044 0.025 0.041 0.050 0.052 Trade payable 10,851 10,134 8,105 8,239 8,646

Others 110 1,087 1,293 1,511 1,746 Total Current Liabilities 20,026 20,575 14,594 16,137 17,731

Long-term debts 25,482 24,340 21,840 19,840 17,840 [Table_CashFlowStatement] Cash Flow Statement Bonds payables 883 3,934 1,434 1,684 1,934

Convertible bonds, LT 0 2,186 1,686 1,186 686

Year end 31 Dec (RMB) FY17A FY18A FY19F FY20F FY21F Others 247 443 342 376 339

Net income 841 470 788 958 987 Total Non-current Liabilities 26,612 30,904 25,303 23,086 20,800

D&A 1,089 1,510 1,353 1,402 1,479 Total Liabilities 46,638 51,478 39,898 39,223 38,531

Change in working capital (1,364) (1,672) (1,488) 158 404 Total Shareholders' Equity 5,621 6,135 6,825 7,882 8,997

Others 1,287 2,155 1,092 1,547 1,769 Minority Interest 3,175 3,566 3,733 3,924 4,125 (00451 HK) Cash from Operating Activities 1,854 2,462 1,744 4,065 4,639 Total Equity 8,796 9,702 10,557 11,806 13,122

Investing activities BPS (RMB) 0.295 0.322 0.358 0.413 0.472

Capital expenditure (13,634) (8,190) (788) (372) (510)

Placement of pledged bank and other [Table_FinancialRatio] Financial Ratios 协鑫新能源

deposits 300 449 (64) (67) (71)

Acquisition (disposal) of subsidiary / JV 11 (17) (42) (61) (89) FY17A FY18A FY19F FY20F FY21F

Others (31) 29 12,332 35 38 Gross margin (%) 67.3% 66.4% 68.5% 68.2% 67.1%

Cash from Investing Activities (13,354) (7,729) 11,438 (466) (631) EBITDA margin (%) 85.8% 80.6% 85.5% 89.3% 89.9%

Financing activities EBIT margin (%) 58.1% 53.8% 59.2% 62.3% 61.8%

Debt raised / (repaid) GCL New Energy 12,814 4,421 (9,508) (909) (1,148) Net margin (%) 21.3% 8.3% 15.3% 18.5% 18.8% Proceeds from deemed disposal of a ROE (%) 16.5% 8.0% 12.2% 13.0% 11.7%

subsidiary (Suzhou GCL New Energy) 1,500 0 0 0 0 ROA (%) 1.7% 0.8% 1.4% 1.9% 1.9%

Proceeds from disposal of subsidiaries 0 116 246 296 355 EV / EBITDA (x) 10.91 9.85 7.73 7.11 6.74

Others (2,426) (2,086) (2,398) (2,758) (3,172) EV / EBIT (x) 16.09 14.77 11.16 10.19 9.80

Cash from Financing Activities 11,888 2,452 (11,660) (3,372) (3,965) Net gearing (%) 517.60 595.92 376.87 309.88 257.19

Net Changes in Cash 388 (2,815) 1,523 228 44 AR turnover (x) 1.1 0.9 0.9 0.9 0.9

Adjustments (18) (20) 0 0 0 AP turnover (x) 8.4 5.4 5.0 5.0 5.0

Cash at Beg of Year 3,826 4,197 1,362 2,885 3,113 Quick ratio (x) 0.5 0.4 0.6 0.6 0.5

Cash at End of Year 4,197 1,362 2,885 3,113 3,157 Current ratio (x) 0.5 0.5 0.7 0.7 0.6

Source: the Company, Guotai Junan International.

Report

Company

See the last page for disclaimer Page 5 of 6 [Table_PageHeader]GCL New Energy (00451 HK)

Company[Table_CompanyRatingDefinition] Rating Definition

The Benchmark: Hong Kong Hang Seng Index ] 1 r a M t h g i R _ e l b a T [

Time Horizon: 6 to 18 months

Rating Definition 9

Buy 买入 Relative Performance>15%; 201 or the fundamental outlook of the company or sector is favorable. Accumulate 收集 Relative Performance is 5% to 15%;

or the fundamental outlook of the company or sector is favorable.

December

Neutral 中性 Relative Performance is -5% to 5%; 19 or the fundamental outlook of the company or sector is neutral. Reduce 减持 Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable.

Sell 卖出 Relative Performance <-15%; or the fundamental outlook of the company or sector is unfavorable.

Sector[Table_ RatingIndustry DefinitionRatingDefinition] The Benchmark: Hong Kong Hang Seng Index Time Horizon: 6 to 18 months Rating Definition Outperform 跑赢大市 Relative Performance>5%;

] 2 r a M t h g i R _ e l b a T [ or the fundamental outlook of the sector is favorable. Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral. Underperform 跑输大市 Relative Performance<-5%; Or the fundamental outlook of the sector is unfavorable.

[DISCLOSURETable_DISCLOSUREOFINTERESTS OF INTERESTS ]

(1) The Analysts and their associates do not serve as an officer of the issuer mentioned in this Research Report. (2) The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report. (3) Except for KAISA GROUP (01638 HK),GUOTAI JUNAN I (01788 HK),JXR (01951 HK),CHINA MINSHENG BANKING CORP.- H

SHARES (01988 HK),BANK OF GANSU (02139 HK),JINSHANG BANK (02558 HK),ZHONGLIANG HLDG (02772 HK),BINHAI (00451 HK)

INVESTMENT (02886 HK),CAM SCSMALLCAP (03157 HK),HAITIANTIAN (08227 HK),Guotai Junan and its group companies do not hold equal to or more than 1% of the market capitalization of the issuer mentioned in this Research Report. (4) Guotai Junan and its group companies have not had investment banking relationships with the issuer mentioned in this Research Report within the preceding 12 months.

(5) Guotai Junan and its group companies are not making a market in the securities in respect of the issuer mentioned in this Research 协鑫新能源 Report. (6) Guotai Junan and its group companies have not employed an individual serving as an officer of the issuer mentioned in this Research Report. There is no officer of the issuer mentioned in this Research Report associated with Guotai Junan and its group companies.

GCL New Energy DISCLAIMER

This Research Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by Guotai Junan Securities (Hong Kong) Limited ("Guotai Junan"). Guotai Junan and its group companies may do business that relates to companies covered in research reports, including investment banking, investment services, etc. (for example, the placing agent, lead manager, sponsor, underwriter or invest proprietarily).

Any opinions expressed in this report may differ or be contrary to opinions or investment strategies expressed orally or in written form by sales persons, dealers and other professional executives of Guotai Junan group of companies. Any opinions expressed in this report may differ or be contrary to opinions or investment decisions made by the asset management and investment banking groups of Guotai Junan.

Though best effort has been made to ensure the accuracy of the information and data contained in this Research Report, Guotai Junan does not guarantee the accuracy and completeness of the information and data herein. This Research Report may contain some forward-looking estimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and mutable situation, so uncertainty may contain. Investors should understand and comprehend the investment objectives and its related risks, and where necessary consult their own financial advisers prior to any investment decision.

This Research Report is not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in

any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject

Guotai Junan and its group companies to any registration or licensing requirement within such jurisdiction.

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