Changes and Implications
We revise down Sungrow’s net profit estimates by 1.5-3.4% for 2016-18,mainly to factor in the latest interim financial data and trim theassumptions in solar EPC sales. We lower our 12m P/B vs. ROE based TPfrom Rmb28.1 to Rmb27.4 (historical average P/B vs ROE ratio down from23.3x to 22.5x), mainly to reflect a change in company’s book value afterthe completion of its share placement (with Rmb2.6bn in net cashproceeds). We do not view these changes as material and maintain ourBuy rating. Key risks: Margin pressure in solar EPC on competition andsolar tariff cut; delay in solar EPC receivable payment due to feed-in-tariffdelay for solar farm operators; price competition and margin pressure forsolar inverter and energy storage products.