Guojin Securities: The PV supply and demand relationship continues to improve, and the profit inflection point of the industrial chain is expected to arrive at 25Q2 as soon as possible

The Zhitong Finance App learned that Guojin Securities released a research report saying that at present, the main photovoltaic industry chain has continued to lose money for more than half a year, and most links have entered a state of cash flow loss. Under the combined effects of association initiatives and corporate self-discipline, “cutting production and raising prices” may become a consistent direction of action for leading enterprises in all links of the industry chain. Considering that the current capital expenditure of the industry has slowed significantly, with backward production capacity being phased out, the supply and demand relationship in all parts of the industrial chain continues to improve, and is expected to accelerate during the “end of the year” period from the end of '24 to the beginning of '25. The bottom of the PV industry is solid and clear. The profit inflection point of the most common and significant main industry chain is expected to reach 25Q2 as soon as possible. It is expected that most targets will show a “fluctuating upward” trend in the future.

According to Guojin Securities, it is currently recommended to focus on the following three main lines: 1) high-quality leaders (US optical storage, photovoltaic glass, cells, silicon, etc.) where the static PB or expected PE angle is still significantly underestimated; 2) new technology equipment/consumables/component vendors with a “growth” label; 3) stable pattern and “leftovers are king” leaders in all aspects.

Guojin Securities's main views are as follows:

Supply: The economy is gradually progressing on the right side, and glass, cells, and silicon materials are expected to take the lead in recovering profits. Considering the characteristics of the production capacity structure, cost curve, and supply and demand status of various sectors, the bank believes that the photovoltaic glass, cell (including internal production capacity of integrated head components), and silicon materials sectors are expected to show significant improvements in the supply and demand relationship in 2025 and drive profit recovery for leading companies in related sectors, with serious losses since this year and the industry's cost curve remains relatively steep after the withdrawal of backward production capacity.

Photovoltaic glass: Production capacity control is getting stricter, and under profit pressure, the ignition of projects under construction is delayed, and the cold repair of old kilns is expected to soon reach an inflection point in inventory and profit; in addition, it is estimated that small and medium-sized kilns of less than 1,000 tons still account for 23% of the existing production capacity (including cold repair). The cost curve for photovoltaic glass is expected to remain steep as new supply continues to be limited. Currently, the second- and third-tier enterprises are both weak, and the share of both oligopolies is expected to rise.

Cell: After PERC is cleared, the relationship between supply and demand is relatively optimal in the main industry chain. Significant differentiation in R&D capabilities and process upgrade capabilities of various enterprises will make the cost curve of existing production capacity even steeper. As the industry re-enters the technical iterative observation period in 2025, it will be difficult for new technologies to be implemented on a large scale in the short term, and the profit restoration of efficient TopCon batteries is expected to exceed expectations. Silicon materials: Although there is a large amount of overcapacity, leading companies maintain a stable cost advantage due to the gap in electricity consumption and silicon consumption, and investment in new production capacity has stagnated against the backdrop of pressure on industry profits. It is expected that the advantages of leading companies on the lean management side of production will expand in the future.

New technology: Focus on the main line of battery technology iteration and focus on “black technology” to reduce costs and increase efficiency. The general direction of investment in new technology in 2025 should still focus on technological changes in the battery process: the TopCon battery process enters the post-efficiency improvement cycle, and the subsequent introduction of efficiency improvement methods by major manufacturers; HJT and xBC are beginning to expand, and HJT's overseas production expansion logic is strengthened in the context of the patent war, which is expected to usher in large-scale production expansion and catalytic production by major companies. xBC expects leading companies to ship, profit, and join new players; the gradual establishment of the perovskite pilot line is expected to drive the GW class production line to be launched in 2025. At the same time, from the perspective of trading strategies, the obsession with industrialization progress can be reduced in stages for “black technology” investment opportunities with large potential for cost reduction when there is a large market space and the possibility of falsification in the short term is not possible.

Terminal: Demand is blooming, and the global layout of leading companies supports sales premiums and excess profits. Against the backdrop of a sharp drop in the cost of optical storage systems, it is expected that the regional distribution of PV installations will continue to diversify. The installed capacity growth rate in the three traditional markets of China, Europe, and the US may gradually stabilize. Emerging markets are expected to achieve high growth under a low base due to factors such as energy transformation and resource advantages, driving continued growth in global demand. It is expected that new PV installations will maintain a growth rate of more than 10% throughout 2025, and module demand will rise to 650-700GW. Currently, the US market has significant premiums and excess profits. The bank believes that the number of people employed in downstream PV installation and construction in the US is huge, sacrificing installation policies or facing tremendous pressure, and costs determine that PV demand continues to trend upward; while high trade barriers bring high premiums and high profits, companies with “ability to supply to the US and eligibility for subsidies” are expected to continue to enjoy excess profits. The Middle East region has sufficient lighting resources. As photovoltaic costs continue to fall, photovoltaics in Saudi Arabia, the United Arab Emirates, Turkey and other countries have developed rapidly in recent years. The government has actively promoted energy transformation through electricity price subsidy policies and large-scale bidding programs. The drop in superimposed module prices has brought economic efficiency. Demand for photovoltaics in the Middle East is expected to grow rapidly.

Risk warning:

There is a risk that traditional energy prices will fluctuate drastically (downward), the risk that the international trade environment will deteriorate, and the cost reduction of energy storage and flexible resources will fall short of expectations.