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Exhibit 1: China's Monthly Residential Real Estate Construction Activity, Rolling 6Month Moving Average, %Y/Y
Residential Starts
Land Area Purchased
pla yers
Feb-16
Aug-16
play ers
May-16
Module ~ 400
May-15
Feb-15
Nov-14
Aug-14
May-14
Aug-13
May-13
Feb-13
Nov-12
Aug-12
May-12
Feb-14
~100
play ers
Nov-15
Cells
Aug-15
Ingot/Wafer
Nov-13
60%
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
Nov-11
Feb-12
Polysilicon
Residential Completions
Residential Space Sold
Note: January assumes December's growth as NBS does not release January statistics.
Source: National Bureau of Statistics, Axiom Capital Research.
Ingot/Wafer
Polysilicon
4.0%
Cells
~100
play ers
Ingot/Wafer
Cells
~100
play ers
Module ~ 400
play ers
pla yers
Module ~ 400
play ers
pla yers
3.0%
2.0%
1.0%
0.0%
-1.0%
-2.0%
Tier 1
Tier 2
Tier 3
Other
Total
Polysilicon
Ingot/Wafer
Axiomcapital.com
Cells
~100
play ers
Module ~ 400
play ers
pla yers
Page 3 of 11
Exhibit 3: New Home Prices 70-Cities M/M: Number of Cities Up vs. Down
Polysilicon
>40 play ers
100%
Net Ingot/W
% of cities
afer
No. of cities
Cells
Module ~ 400
~100
play ers
play ers
70
60
50%
50
0%
40
30
-50%
20
-100%
10
0
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
Oct-12
Dec-12
Feb-13
Apr-13
Jun-13
Aug-13
Oct-13
Dec-13
Feb-14
Apr-14
Jun-14
Aug-14
Oct-14
Dec-14
Feb-15
Apr-15
Jun-15
Aug-15
Oct-15
Dec-15
Feb-16
Apr-16
Jun-16
Aug-16
-150%
Exhibit 4:
China's Secondary Economic
Indicators
versus Headline
GDP, %Y/Y
Polysilicon
Ingot/W
afer
Cells ~100
>40 play ers
Polysilicon
Ingot/Wafer
play ers
Cells
~100
play ers
Module ~ 400
play ers
Module ~ 400
play ers
pla yers
Note: Each indicator applies the Y/Y change on the 4-month moving average (4MMA), except GDP growth.
Source: National Bureau of Statistics, Customs General Administration, China Automotive Info Net, Axiom Capital Research.
Polysilicon
Ingot/Wafer
Axiomcapital.com
Cells
~100
play ers
Module ~ 400
play ers
pla yers
Page 4 of 11
11.5
MMIngot/W
bbl/d afer
Cells
~100
play ers
Module ~ 400
play ers
pla yers
11.0
10.5
10.0
9.5
9.0
8.5
8.0
J
2010
2011
2012
2013
2014
2015
2016
Note: Apparent oil demand is estimated as barrels of crude oil processed, plus net imports of refined petroleum products.
Source: National Bureau of Statistics, Customs General Administration, Axiom Capital Research.
Exhibit 6:
China's YTD Apparent Steel
Demand
and Y/Y Change
Polysilicon
Ingot/W
afer
Cells
>40 play ers
Polysilicon
600
Ingot/W
million metric
tons afer
Module ~ 400
~100
play ers
Cells
pla yers
35%
Module ~ 400
~100
play ers
play ers
play ers
30%
500
25%
400
20%
15%
300
10%
200
5%
0%
100
-5%
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
-10%
2001
%Y/Y (rhs)
Source: National Bureau of Statistics, World Steel Association, China Iron & Steel Association, Axiom Capital Research.
Polysilicon
Ingot/Wafer
Axiomcapital.com
Cells
~100
play ers
Module ~ 400
play ers
pla yers
Page 5 of 11
4,000
CNYIngot/W
billion afer
Cells
~100
play ers
3,500
Module ~ 400
play ers
pla yers
3,000
2,500
2,000
1,500
1,000
500
0
RMB loans
Bank bills
Aug-15
1,085.6
775.6
(62.0)
119.8
31.7
(157.7)
288.0
47.9
Sep-15
1,329.0
1,041.7
(234.4)
242.2
(15.9)
(127.9)
352.4
34.9
Foreign loans
Bond financing
Oct-15
Nov-15 Dec-15
Jan-16
Entrusted loans
Non-fin equity
Jul-16
May-16
Trust loans
Mar-16
Jan-16
Nov-15
Sep-15
Jul-15
May-15
Mar-15
Jan-15
Nov-14
Sep-14
Jul-14
May-14
Mar-14
Jan-14
Nov-13
Sep-13
Jul-13
500
Jul-16
Aug-16
Aug-16
Aug-16
Aug-16
Aug-16
%M/M
201.3%
75.1%
-117.5%
-19.3%
251.1%
-92.6%
51.1%
-5.3%
%Y/Y
35.4%
2.7%
-111.3%
19.5%
132.2%
-76.1%
14.8%
124.4%
Ingot/Wafer
Polysilicon
6,000
Cells
Module ~ 400
~100
play ers
CNYIngot/W
billion afer
Cells
play ers
~100
pla yers
Module ~ 400
play ers
pla yers
play ers
5,000
4,000
3,000
2,000
1,000
May-16
Jan-16
Sep-15
Jan-15
May-15
Sep-14
May-14
Jan-14
Sep-13
May-13
Jan-13
Sep-12
May-12
Jan-12
Sep-11
Jan-11
May-11
Sep-10
May-10
Jan-10
Sep-09
May-09
Jan-09
Sep-08
May-08
Axiomcapital.com
Page 6 of 11
Ingot/Wafer
Billion
CNY
~50 pla yers
Cells
35
Module ~ 400
~100
play ers
play ers
1-year (lhs)
Sep-16
Jul-16
Aug-16
Jun-16
May-16
Apr-16
May-15
6-month (lhs)
Feb-16
-5
Mar-16
700
Jan-16
Dec-15
200
Nov-15
Oct-15
300
Sep-15
10
Jul-15
800
Aug-15
15
Jun-15
1,300
Apr-15
20
Feb-15
1,800
Mar-15
25
Jan-15
2,300
Nov-14
30
3-month (lhs)
2,800
Dec-14
Polysilicon
Exhibit 10:
Change in Monthly Long-Term
Household Loans and
Change in Mortgage Loans,
%Y/Y
Polysilicon
Ingot/Wafer
Cells ~100
Module ~ 400
>40 play ers
Polysilicon
>40 play ers
350%
300%
Ingot/Wafer
~50 pla yers
play ers
Cells
~100
play ers
play ers
Module ~ 400
play ers
pla yers
250%
200%
150%
100%
50%
0%
-50%
-100%
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
Oct-12
Dec-12
Feb-13
Apr-13
Jun-13
Aug-13
Oct-13
Dec-13
Feb-14
Apr-14
Jun-14
Aug-14
Oct-14
Dec-14
Feb-15
Apr-15
Jun-15
Aug-15
Oct-15
Dec-15
Feb-16
Apr-16
Jun-16
Aug-16
-150%
Polysilicon
Ingot/Wafer
Axiomcapital.com
Cells
~100
play ers
Module ~ 400
play ers
pla yers
Page 7 of 11
4,000
CNYIngot/W
billions afer
Cells
Module ~ 400
~100
play ers
120%
play ers
3,500
100%
3,000
80%
2,500
60%
2,000
40%
1,500
20%
1,000
0%
500
0
-20%
%Y/Y (rhs)
Ingot/Wafer
Polysilicon
>40 play ers
75
Ingot/Wafer
Cells
Cells
CNY trillions
~50 pla yers
Module ~ 400
~100
play ers
play ers
Module ~ 400
~100
play ers
play ers
pla yers
14.5%
14.0%
70
13.5%
65
13.0%
12.5%
60
12.0%
55
11.5%
11.0%
50
10.5%
Jul-16
May-16
Mar-16
Jan-16
Nov-15
Sep-15
Jul-15
May-15
Mar-15
Jan-15
Nov-14
Sep-14
Jul-14
May-14
Mar-14
10.0%
Jan-14
45
%Y/Y (rhs)
Polysilicon
Ingot/Wafer
Axiomcapital.com
Cells
~100
play ers
Module ~ 400
play ers
pla yers
Page 8 of 11
Exhibit 13: China's Credit Growth (TSF) versus Bank Asset Growth versus Bank Deposit Growth, %Y/Y
Polysilicon
35%
Ingot/Wafer
Cells
~100
play ers
Module ~ 400
play ers
pla yers
30%
25%
20%
15%
10%
5%
TSF y/y%
Apr-16
Sep-15
Feb-15
Jul-14
Dec-13
May-13
Oct-12
Mar-12
Aug-11
Jan-11
Jun-10
Apr-09
Nov-09
Sep-08
Feb-08
Jul-07
Dec-06
May-06
Oct-05
Mar-05
Aug-04
Jan-04
0%
Note: Bank assets are as of July, whereas TSF and bank deposits are as of August.
Source: Peoples' Bank of China (PBOC), Axiom Capital Research.
Polysilicon
Ingot/W
afer Banks' Claims on
Cells
~100
Module ~ 400
Exhibit 14:
China's Total Bank Assets
versus
Non-Financial
Institutions
>40 play ers
Polysilicon
250
play ers
Ingot/Wafer
Cells
pla yers
12%
Module ~ 400
~100
play ers
CNY trillions
~50 pla yers
play ers
play ers
11%
200
10%
150
9%
100
8%
7%
50
6%
Jul-16
Jun-16
May-16
Apr-16
Mar-16
Feb-16
Jan-16
Dec-15
Nov-15
Oct-15
Sep-15
Aug-15
Jul-15
Jun-15
May-15
Apr-15
Mar-15
Feb-15
5%
Jan-15
Polysilicon
Ingot/Wafer
Axiomcapital.com
Cells
~100
play ers
Module ~ 400
play ers
pla yers
Page 9 of 11
Analyst Certification:
I, Gordon Johnson, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer.
Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this
research report.
Explanation of Ratings
Outperform/Buy We expect the stock to outperform the S&P 500 Index and post absolute price appreciation of at least 10%.
Neutral/Hold We expect the stock to perform in line with the S&P 500 Index.
Underperform/Sell We expect the stock to underperform the S&P 500 Index and post absolute price depreciation of at least 10%
Current distribution of ratings as of September 20, 2016
Rating
Number
Outperform/Buy
13
36%
Neutral/Hold
17%
Underperform/Sell
17
47%
Investment banking services were not provided to any of the companies with the aforementioned ratings. All current required disclosures are available
rd
by contacting: Compliance Department at 780 Third Avenue, 43 Floor, New York, NY 10017
Valuation Methods for Fundamental Analysis
One or more of the following valuation methods are used in making a price projection: Analysis of the supply and demand for a security to ascertain
how high or low a stock price may move before either overhead supply or underneath demand develops; Analysis of a companys P/E ratio, price/book
ratio, price/cash ratio, earnings expectations or sales growth as they relate within an industry group or to the broader market; Dividend yield of the S&P
500 vs. the yield of the 10-year government bond; Individual sector analysis along with investor sentiment, and Federal Monetary Policy.
Valuation Methods for Technical Analysis
Valuations are based on technical analysis techniques using some or all of the following inputs: trend recognition, pattern recognition, Japanese
candlestick formations, oscillator readings (short-term), relative performance, money flows, support and resistance levels, volume, sentiment indicators,
and seasonal analysis.
This communication is neither an offer to sell nor a solicitation of an offer to buy any securities mentioned herein. This publication is confidential and for
the information of the addressee only and may not be reproduced in whole or in part, copies circulated, or disclosed to another party, without the prior
written consent of Axiom Capital Management, Inc.
This material has been prepared by Axiom Capital Management, Inc., a registered U.S. broker-dealer, employing appropriate expertise, and in the belief
that it is fair and not misleading. Axiom Capital Management, Inc. accepts no liability for loss arising from the use of the material presented in this
report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to
Axiom Capital Management, Inc. This report is not to be relied upon in substitution for the exercise of independent judgment. Axiom Capital
Management, Inc. may have issued, and may in the future issue, other reports that are inconsistent with, and reach different conclusions from, the
information presented in this report. Those reports reflect the different assumptions, views, and analytical methods of the analysts who prepared them
and Axiom Capital Management, Inc. is under no obligation to ensure that such other reports are brought to the attention of any recipient of this report.
Axiomcapital.com
Page 10 of 11
Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is
made regarding future performance. Information, opinions, and estimates contained in this report reflect a judgment at its original date of publication
by Axiom Capital Management, Inc. and are subject to change without notice. The price, value of, and income from any of the securities mentioned in
this report can fall as well as rise. The value of securities is subject to exchange rate fluctuations that may have a positive or adverse effect on the price
or income of such securities. Investors in securities such as ADRs, the values of which are influenced by currency volatility, effectively assume this risk.
Securities recommended, offered, or sold by Axiom Capital Management, Inc.: (1) are not insured by the Federal Deposit Insurance Corporation; (2) are
not deposits or other obligations of any insured depository institution; and (3) are subject to investment risks, including the possible loss of principal
invested. Indeed, in the case of some investments, the potential losses may exceed the amount of initial investment and, in such circumstances; you
may be required to pay more money to support these losses.
We and our affiliates, officers, directors, and employees, excluding equity analysts, will from time to time have long or short positions in, act as principal
in, and buy or sell, the securities or derivatives (including options and warrants) thereof of covered companies referred to this research.
ADDITIONAL DISCLOSURES
The analyst or a member of the analysts family holds a stock or options position in the following securities mentioned in this report: None.
Options Disclosures
Options are not suitable for all investors and not all options strategies are suitable for all investors who may be suitable to trade options. At or prior to
being approved for options trading, investors must be given and should read Characteristics and Risks of Standardized Options, the risk disclosure
booklet issued by the options exchanges. All accounts must meet options suitability requirements prior to any options trading. Options strategies may
entail significant risks. Certain strategies may contain risks beyond the initial investment and cause the investor to incur losses beyond such investment.
Risks associated with the strategies contained herein are included in the discussions on breakeven point, maximum risk and maximum loss discussions,
to the extent applicable. Annualized returns cited in this report may be achieved only if the parameters described can be duplicated and there is no
certainty of doing so.
Axiom Capital Management, Inc. previously provided to you a copy of the booklet entitled Characteristics and Risks of Standardized Options. A current
rd
copy of this booklet may be obtained by calling Eric Miller or by sending a written request to: Axiom Capital Management, Inc. at 780 Third Avenue, 43
Floor, New York, NY 10017.
Axiomcapital.com
Page 11 of 11