汇丰银行-全球-能源行业-海上风力发电走向全球-2019.2-102页.pdf

Disclaimer&Disclosures:This report must be read with the disclosures and the analyst certifications in the Disclosure appendix,and with the Disclaimer,which forms part of ithttps:/Offshore windFebruary 2019Equities/IndustrialsPlay interview with Sean McLoughlinOffshore windGoing globalThe rise of the US and new Asian markets over the next decade is a growth opportunity for the European supply chainAs turbines super-scale to drive down costs,oil&gas entrants are new competitors for utilities and suppliers alikeWe highlight 10 Buy-rated stocks that offer sector exposureEqUITIESIndustrIalsFebruary 2019By:Sean McLoughlin,Adam Dickens,Tarek Soliman,Kim Fustier,Evan Li and Gordon Gray 1 EQUITIES INDUSTRIALS February 2019 Executive Summary 2 Investment themes 6 Europe growth spurt post 2021 13 Take off beyond Europe 18 Supply chain expanding 25 Where do offshore oilfield services(OFS)fit in?35 Company sections 43 Nexans(NEX FP)44 Prysmian(PRY IM)47 Shanghai Electric(2727 HK)50 Siemens Gamesa(SGRE SM)52 Sif Group(SIFG NA)55 Iberdrola(IBE SM)58 rsted(ORSTED DC)62 Petrofac(PFC LN)66 Saipem(SPM IM)69 Wood Plc(WG/LN)72 Equinor(EQNR NO)75 Royal Dutch Shell(RDS LN)79 Subsea 7(SUBC NO)83 TechnipFMC(FTI US)86 Vestas Wind(VWS DC)89 Xinjiang Goldwind(2208 HK)92 Disclosure appendix 97 Disclaimer 100 Contents Yash Banthia,contributed to this report.Yash Banthia is employed by a non-US affiliate of HSBC Securities(USA)Inc.,and is not registered/qualified pursuant to FINRA regulations EQUITIES INDUSTRIALS February 2019 2 An attractive growth sector within renewables As super-scale offshore wind turbines become a reality,the industry is set to witness a global expansion beyond its birthplace in the North Sea across the Atlantic and into Asia at a global 9%CAGR over the next decade.Key auction results in the UK and US due in H1 2019 will provide the next data points in an industry that is driving down its cost of energy towards true competitiveness.New entrants from the oil&gas sector are joining the investment mix and have the potential to change long-term competitive dynamics,particularly in the US market.In this report,we assess how suppliers in Europe and Asia are positioned for growth and we look at the leading oil companies investing in offshore wind.We highlight several Buy-rated stocks active in offshore wind,including supply chain stocks Siemens Gamesa and Sif Group.Moving away from home Offshore wind(OW)remains a highly attractive growth sector within renewables.It is growing from a small base:the 23.8GW of installed OW capacity by YE 2018 accounted for a mere 4%of the c600GW operational wind fleet globally.Yet in terms of MW,10%of new wind installations in 2018 were offshore and we forecast this figure will double to 20%by 2025.As the capex outlay for OW is far higher compared to its onshore counterpart,the bulk of wind investment in USD post 2025 will be offshore,on our estimates.Today the leading OW markets are in Europe,the industrys birthplace.In the UK,arguably the most established market,over 8.2GW of OW was installed by YE 2018 and in 2018 OW already supplied 7.6%of the nations electricity and we estimate this will rise above 10%by 2020.With 6.6GW of installed OW capacity by YE 2018,Germany follows the UK in second place.High policy visibility beyond 2025 provides a new layer of growth in Europe that involves an increasing number of countries.Yet the real transformation is the rapid global expansion that the industry is poised for.Already in 2018,China registered the highest volumes of new installations(1.9GW)and should close the capacity gap on the European leaders over the next five years.The first capacity tenders in Taiwan and US have also begun paving the way for other new markets over the next decade.The strength of new markets is such that by 2027 we see China firmly in first place in terms of installed capacity,overtaking current market leader UK.Over the next decade we expect more volumes installed outside Europe than within it as the industry goes global.Executive Summary OW growing from a small base to 50%of wind sector investment post 2025e UK and Germany are the leading markets today;supportive policy can drive new European OW markets China,Taiwan and the US first markets outside Europe;50%of installations outside Europe over the next decade 3 EQUITIES INDUSTRIALS February 2019 Super-scale turbines becoming a reality The industrys progression to bigger,more powerful turbines on larger foundations(minimising installation costs per unit)as well as larger wind farms(driving economies of scale)are the key drivers for cost of energy for OW falling firmly below EUR50/MWh.Bid prices at OW auctions have been falling markedly since 2015 to reflect these trends.Germany and the Netherlands have successfully held subsidy free auctions,with winning bidders happy to sell at the wholesale power price.In the next UK auction,the level of subsidy could fall as low as GBP2/MWh for projects completing in 2024/25,which is virtually subsidy free.We also expect competitive pricing in the upcoming US tenders in H1 2019.Recently held offshore wind auction prices Top 12 OW markets by capacity in 2027e Source:BNEF Source:Wood Mackenzie A large and rising project pipeline gives the supply chain a clear mandate:to develop 13-15MW turbines by 2025,a significant upscale compared to the 6-8MW turbines which constituted the bulk of OW installations in 2018.The scale of these new goliaths cannot be underemphasised;once erected in Rotterdam in 2019,GEs(GE US,USD8.9,NR)prototype next-generation turbine will be the tallest construction in the Netherlands.Turbine producers have already begun to develop a new generation of super-sized turbines with the first 10MW turbine launched by Vestas in September 2018 and larger 10+MW machines under development by GE and Siemens Gamesa for market entry by 2021/22.With these new turbines offering concrete visibility on the industrys next leg of growth within and beyond Europe,in our view European participants stand to benefit from the global growth opportunity.A multi-sector deep dive into the key OW industry trends In this multi-sector report we build on the conclusions reached in the February 2018 report“Offshore wind:New Giant of the Sea”.We look in detail at the major markets and analyse how the developers and suppliers are adapting to a changing growth outlook.We also take a detailed look at the rising participation of oil&gas companies(both oil majors as asset owners and oilfield service companies as specialist installers)and discuss what changes they will bring.Overall we highlight four key investment themes,namely:1.A growth industry going global 2.Super-scale turbines are becoming a reality 3.The oil companies:Are new entrants tomorrows kings?4.Divide and conquer:Driving a competitive supply chain 0.0050.00100.00150.00200.002015201620172018USD/MWhUnited KingdomDenmarkNetherlandsNetherlandsUSGermanyTaiwan122345799132232010203040South KoreaJapanPolandBelgiumDenmarkFranceUSTaiwanNetherlandsGermanyUKChinaTop 12 markets in 2027e by capacity(GW)Larger turbines are a key driver of OW cost reduction Falling auction prices to the EUR50/MWh level reflect rising confidence that larger turbines will be available The race to 13-15MW turbines by 2025 has begun cementing a global growth opportunity for suppliers and developers Multi-sector report looking at four key themes EQUITIES INDUSTRIALS February 2019 4 Stock ratings We look at 15 stocks which offer exposure to OW.These span supply chain(including the leading Chinese turbine suppliers),developers,oil majors and oil field service companies.Of the 15 companies,10 are Buy-rated.We have upgraded Siemens Gamesa(SGRE)and Sif Group to Buy from Hold in two separate notes also published today.We make some estimate changes for Nexans in this report,which have no bearing on our valuation.Key changes to estimates and ratings Company Ticker Currency Current price Target price Rating Upside/downside Wind supply chain Shanghai Electric 2727.HK HKD 2.72 3.50 Buy 29%Siemens Gamesa SGREN.MC EUR 12.5 15.2 Buy 22%Sif Group SIFG.AS EUR 8.79 14.0 Buy 59%Vestas Wind VWS.CO DKK 541.4 550.0 Hold 2%Xinjiang Goldwind 2208.HK HKD 8.69 7.10 Hold-18%Nexans NEXS.PA EUR 26.1 33.0 Buy 26%Prysmian PRY.MI EUR 18.6 24.0 Buy 29%Utility developers Iberdrola IBE.MC EUR 7.11 7.80 Buy 10%rsted ORSTED.CO DKK 461.1 515.0 Buy 11%Oil majors Equinor EQNR.OL NOK 190.1 206.0 Hold 8%Shell RDSa.L GBp 2,276 2,640 Hold 16%Oil field services Petrofac PFC.L GBp 544 665 Buy 22%Saipem SPMI.MI EUR 4.05 4.50 Buy 11%Subsea7 SUBC.OL NOK 93.3 105.0 Hold 13%Technip FTI.N USD 23.1 24.0 Hold 4%Wood Group WG.L GBp 534 745 Buy 39%Source:Refinitiv Datastream,priced at close of 30 January 2019 Key Buy ideas Company Offshore wind exposure Key investment thesis Nexans 5%of 2018 revenues from OW cable supply/installation Strong internal focus and well covered 2019 subsea sales can drive a re-rating Prysmian 5%of 2018 revenues from OW cable supply/installation Enhanced market leadership positions across energy,industrial and telecom cable segments Shanghai Electric 6%of revenue and gross profit in 1H18 Defensive industrial conglomerate with a well-diversified business model Siemens Gamesa 38%revenue from OW turbine sales in 2018 Cementing OW market leadership with new 10MW turbine;stabilising pricing onshore Sif Group 92%of 2017 revenue from OW Improving delivery visibility for 2019,supportive comps and recent correction in valuation Iberdrola 545MW of OW capacity under operation and 2.5GW work in progress;global#4 developer Sound management quality,currently in favour of more aggressive growth in offshore and Brazil rsted 5.6GW of controlled OW capacity and 7.2GW under construction or in pipeline.Target 30GW by 2030;global#1 developer Unique investment proposition within the utilities space.Expected improvement in political situations should favour the company Petrofac First USD200m OW substation order signals market entry Valuation overly discounting SFO investigation,in our view Saipem Well-established offshore EPC franchise as well as heavy lift crane vessels that have been used for offshore wind installation works Positive structural change around its drilling fleet and partnerships.We expect the Onshore E&C turnaround to pay a dividend by 2021 Wood Group 6%of revenues in 2017 Wood looks attractive on a P/E basis(less than 10 x on 2020e)relative to its historical multiple levels and to peers Source:Company data,HSBC estimates 5 EQUITIES INDUSTRIALS February 2019 Next generation 10MW+turbines are a step closer,enabling the next phase of cost reductionOffshore wind:new growth opportunitiesSource:company data,Wood Mackenzie,HSBC estimatesKey Buy rated stocks that offer sector exposureOffshore wind market rising at a 10%CAGR toUSD66bn by 2027eInstalled capacity in US and APAC expected to surpassEurope between 2018-27e(GW)Senvion 6.3M 152Output:6.3MWDiameter 152mBlade length:74mSwept area:18,150m2Max height:179mPower reg:gear boxAvailable:nowVestas V164Output:8-10MWDiameter 164mBlade length:80mSwept area:21,125m2Max height:193mPower reg:gear boxAvailable:nowSGRE SG 10.0-193 DDOutput:10MWDiameter 193mBlade length:94mSwept area:29,300m2Max height:227mPower reg:direct driveAvailable:2022GE Haliade-XOutput:12MWDiameter:220mBlade length:107mSwept area:38,000m2Max height:260mPower reg:direct driveAvailable:202113-15MW turbine?Output:13-15MWBlade length:110+mSwept area:40,000m2Max height:300mPower reg:direct drive/gear box?Available:2024-25?Eiffel Towerto scale0102030405060702011201320152017201920212023202520279 yr CAGR17%0.039.77%8%Equipment capex(foundations,turbines,cables,substations)Installation capexTurbine servicing(opex)Capacity YE20179.79.79.79.715.847.42.943.4EuropeAPACExpected Capacity additions to 2027eUSNexansNEXS.PAPrysmianPRY.MIShanghai Electric2727.HKSiemens GamesaSGREN.MCSif GroupSIFG.ASIberdrolaIBE.MCrstedORSTED.COPetrofacPFC.LSaipemSPMI.MIWood GroupWG.LOil field servicesUtility developersWind supply chain EQUITIES INDUSTRIALS February 2019 6 Theme 1:A growth industry going global According to latest Bloomberg estimates,investment in OW projects in 2018 grew 14%y-o-y to USD25.7bn.This proved a pocket of strong growth within a clean energy sector that saw overall global investment fall 8%y-o-y(to USD332bn).BNEF calculates that 44%of the OW total invested(USD11.4bn)was in China,underlining the industrys ongoing expansion beyond Europe.The increasing size of financing packages for OW signals how comfortable investors have become with the construction and operational risks associated with this technology.High appetite from lenders and banks is also helping secure ever larger deals.Of the clean energy sectors largest new build asset finance deals in 2018,four out of five were for OW farms,again highlighting the strong appetite for large-scale investment in OW(the fifth was a solar project).That a USD1.5bn Chinese project figures among this list is testament to the strong backing for OW in China.Four largest offshore wind asset finance deals in 2018 were USD1.5bn and above Name of offshore wind farm Country Type of transaction Capacity(MW)Value(USDbn)USD/W Moray Firth UK Debt 950 3.34 3.51 Triton Knoll UK Debt 860 2.59 3.01 Borssele III&IV NL Equity 731 1.50 2.06 Guangdong Baolihua New Energy Shanwei Lufeng Houhu China Equity 500 1.48 2.96 Note:data refers to new build financing deals,so excludes the GIP project financing for Hornsea One,which was for the acquisition of a secondary stake.Source:Bloomberg Appetite for secondary deals also remains high.In September 2018,infrastructure fund Global Infrastructure Partners(GIP)set a new record for the largest single project financing in the global renewable energy sector when it closed the acquisition of a 50%stake in rsteds 1.2GW Hornsea One OW farm for GBP4.5bn.GIP secured the deal thanks to a GBP3.5bn financing package which included mezzanine debt,bonds and long-term financing from a number of lenders as well as GBP800m of guarantees from the Danish export credit agency.Takeoff outside Europe In Europe,we see policy visibility post 2025 anchoring a new leg of growth from a higher number of countries(e.g.Poland,Ireland).Initial extra-European markets(US,China,Taiwan)may well help to inspire a number of new entrants(India,Turkey,Japan,Korea).New markets are however not without risks as the example of the re-striking of tariff prices in Taiwan shows(see p 23)and some US permit delays could result from by the government shutdown.Investment themes 9%market CAGR to 2027e;rising globalisation is the next industry phase as demand broadens beyond Europe into Asia and US Developers continue to pressure supply chain on cost but suppliers are delivering;international strategies are key to harness growth Longer term,oil&gas entrants can drive an industry switch from near-shore,bottom-fixed capacity to floating,far-shore installations Global investment in OW up 14%y-o-y in 2018,of whi