Lu Yeung, a Hong Kong-based analyst covering solar power companies at Bank of America Merrill Lynch, made two crucial calls last year that helped land him the top spot as the best equity analyst covering alternative energy stocks in the Wall Street Journal’s latest ranking, out today.
At the depth of the financial crisis, when credit had all but evaporated and project developers and banks were hunkering down, Yeung issued a “light at the end of the tunnel” report. It was actually titled “It’s Always Darkest Before Dawn,” and it predicted that an avalanche of government stimulus money would make-up for the lack of credit and fuel global demand for solar panels.
Also, Yeung’s decision to upgrade PV panel maker Trina Solar from “hold” to “buy” and maintain a “buy” rating on Yingli Green Energy were “spot on”, writes the Wall Street Journal. By the end of the year Trina returned 600 percent to its investors and the share price of Yingli more than doubled, mission accomplished for Yeung.
Now, will Trina and Yingli outperform their 2009 performance? The Chinese alternative energy sector is facing some challenges, including a fairly thin intellectual property portfolio. The price advantage that’s allowed them flood foreign markets with discounted PVs is also eroding. Yeung points out that over the long-term wining solar PV companies won’t win on price alone and will also have to develop technologies that will make panels more efficient in turning sun energy into electricity. Chinese PV makers are definitely wining the price war but they’re lagging behind when it comes to developing homegrown technologies.
Runner-ups to Yeung are Canaccord Adams’s Jonathan Dorsheimer and Daniel Ries at Collins Stewart, see here for the full ranking.