Get the Latest Investment Ideas Delivered Straight to Your Inbox.


Japan's New Stance on Wind Power Could Mean More Revenue for Turbine Blade Maker
Research Report


A Raymond James report explained the country's turnaround and its potential impact on this Arizona energy company's bottom line.

In a Sept. 5 research note, Raymond James analyst Pavel Molchanov reported that the Japanese government's recently announced intention to loosen permitting regulations for wind power generation projects signals a renewed commitment on its part to this type of renewable energy, which could financially benefit TPI Composites Inc. (TPIC:NASDAQ), a wind turbine blade manufacturer with a footprint in the Asia Pacific.

Molchanov described where Japan has stood historically with wind power, why and what is changing. Today, the country has 0.6% of the world's installed capacity for this kind of power generation, which is unusual for it being the world's fourth largest economy. "Its 3.4 gigawatts (3.4 GW) of wind as of year-end 2017 are only slightly more than what Romania or Ireland has and well below what Australia has," Molchanov noted.

A primary reason for Japan lagging in this regard is its mandate for most wind generation enterprises in Japan, those aiming to make more than 10 megawatts of power. To date, all were required, for permitting, to obtain a full environmental impact assessment (EIA), an expensive, four- to five-year process that many developers chose not to pursue.

However, Japan's Minister of Energy recently announced the system will be revamped to where only the largest projects have to obtain the EIA. The specifics of the new policy are slated to be released by March 2019. "As we await the details, the political commitment to deregulation in this area is already notable; it represents a major policy shift," wrote Molchanov.

The Asian country's new goal is to generate 10 gigawatts of wind power by 2030, a threefold increase from today's number. The analyst purports it would take about 40 GW of wind power and storage to replace the nuclear power generation lost from the shuttered reactors. This equates to about 2.8 GW's worth being added each year to 2030. "That is needle moving for the industry," Molchanov remarked, adding 5% to the recent pace of global new builds, 5060 GW per year."

What this could mean for TPI Composites, Molchanov offered, is a 5% annual boost in incremental revenue, "all else being equal." That would equate to about $50 million a year, based on 2018 revenue guidance. "Bearing in mind the operating leverage, uplift to EBITDA would probably exceed 10%, not a game changer but certainly nicely additive."

Raymond James has an Outperform rating but no price target on the energy firm. Its stock is currently priced at around $28.01 per share.


1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following company mentioned in this article is a billboard sponsor of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.

Disclosures from Raymond James, TPI Composites Inc., September 5, 2018


Analyst Compensation: Equity analysts and their staffs at Raymond James are compensated based on a salary and bonus system. Several factors enter into the bonus determination including quality and performance of research product, the analyst's success in rating stocks versus an industry index, and support effectiveness to trading and the retail and institutional sales forces. Other factors may include but are not limited to: overall ratings from internal (other than investment banking) or external parties and the general productivity and revenue generated in covered stocks.

The views expressed in this report accurately reflect the personal views of the analyst(s) covering the subject securities. No part of said person's compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. In addition, said analyst has not received compensation from any subject company in the last 12 months.

Raymond James Ltd. or its affiliates expects to receive or intends to seek compensation for investment banking services from all companies under research coverage within the next three months.

Raymond James & Associates makes a market in shares of TPIC.

Want to read more about Alternative - Wind investment ideas?
Get Our Streetwise Reports Newsletter Free and be the first to know!

A valid email address is required to subscribe