Source: Gelonghui

Today, when the industry's production capacity is expected to meet expectations, photovoltaic-related concepts are showing vigorous performance.

As of press release, the A-share photovoltaic sector continued to explode. Tongwei shares rose and stopped in the afternoon, Longji Green Energy surged 8%, and nearly 20 shares including King Kong PV, Dongfang Risheng, Tuori Xinneng, Junda, Oujing Technology, TCL Central, and Aixu Co., Ltd. were closed, and many stocks such as Tianhe Solar, Zhonglai, and Tongling shares rose more than 10%.

Hong Kong PV solar energy stocks continued to rise in the afternoon. Xinte Energy rose nearly 16%, GCL Technology rose more than 14%, Follett Glass rose more than 10%, and GCL New Energy and Xinyi Solar Energy rose more than 9%.

According to the news, in response to issues such as falling prices in the industrial chain and pressure on business operations, China's photovoltaic industry held a symposium and proposed that the current plight of the industry should be solved through market-based means and full play to the tangible role of the government.

Tangible hands play a role

On the afternoon of May 17, under the guidance of the Electronic Information Department of the Ministry of Industry and Information Technology, the China Photovoltaic Industry Association organized a “Symposium on High Quality Development of the PV Industry”.

Representatives from 14 organizations including Tianhe Solar, GCL Technology, Jingke Energy, Artes, Longji Green Energy, Tongwei Co., Ltd., Daquan Energy, Yibin Municipal Government, State Council Development Research Center, National Research Tank, National Development and Reform Commission Energy Research Institute, National Engineering Research Center for Silicon-based Material Preparation Technology, China Development Bank, and Industrial Bank attended the conference.

The conference proposed encouraging industry mergers and restructuring, unblocking market exit mechanisms, and strengthening the crackdown on vicious competition in sales below cost prices.

The conference pointed out that the photovoltaic industry is an industry with a very high degree of marketization. It is more appropriate to solve the current industry difficulties through market-based means, but it is also necessary to give full play to the tangible role of a good government, including:

Optimize the guiding role of photovoltaic manufacturing industry management policies in industry capacity construction and improve key technical indicators;
Standardize and manage the investment promotion policies of local governments and establish a unified national market;
Adapt to the characteristics of rapid iteration of photovoltaic technology and establish effective intellectual property protection measures;
Encourage industry mergers and restructuring, and smooth the market exit mechanism;
Strengthen the crackdown on vicious competition in below-cost sales;
Guarantee the steady growth of the domestic photovoltaic market, explore supporting advanced technology applications through demonstration projects, change the situation of winning bids at low prices, etc.

The conference also said that photovoltaic companies and industries also need to do themselves well, fully recognize their main responsibility for solving the current industry difficulties, put an end to vicious competition, truly stand on the industry's standpoint and make decisions, adhere to innovation-driven, long-term principles, win-win cooperation, and jointly maintain a fair competitive order.

In the future, the China Photovoltaic Industry Association will focus on promoting the following tasks:

The first is to support the Electronics Department of the Ministry of Industry and Information Technology, give full play to the role of the “PV Manufacturing Industry Specification Conditions”, and guide and standardize the development of the industry.
The second is to continue to push forward the construction of a price index model and explore more reasonable domestic and international price formation mechanisms through photovoltaic module futures, etc.
Third, it is planned to hold a symposium on TopCon battery efficiency calibration and storage downgrade issues to discuss the causes and solutions.
Fourth, continue to strengthen industry monitoring. Relevant industry information will be released to the public in a timely manner to guide industry decisions.

Organization: layout α

Since 2023, the new energy industry has faced overcapacity and a continuous decline in prices. The photovoltaic industry chain is no exception. Prices of silicon materials, silicon wafers, cells, modules, etc. have entered a rapid downward channel.

At present, silicon prices have fallen below the cash costs of most silicon companies, and some silicon companies have begun to stop production and maintenance.

Affected by this, the performance of photovoltaic companies was under pressure, and the entire industry almost lost money.

The sector's revenue for the first quarter of this year was 211.5 billion yuan, down 20.6% year on year and 28.5% month on month; net profit to mother was 3.95 billion yuan, -89.4% year on year, reversing losses from month to month.

Under the plight of overcapacity in the industry, government departments have taken steps to rectify and expand production.

Earlier, the Ministry of Industry and Information Technology issued documents such as the “Lithium Battery Industry Specification Conditions (2024 version)” to guide enterprises to reduce and expand production.

At the same time, the market expects that the “PV Manufacturing Industry Specification Conditions” will also enter the time window for the release of the new edition in 2024.

Market-based forces are leading, and policy-side efforts are the icing on the cake. It is worth looking forward to seeing the clear production capacity of the photovoltaic industry chain.

Guojin Securities believes that all signs indicate that the market's pessimism about the downturn in the PV industry is fully reflected in current stock prices.

Currently, the PB valuation of some leading companies in the sector is below the 2% fraction of the valuation range over the past ten years, close to the low valuation point after the 2018 531 policy.
At the same time, after the release of some companies' unsatisfactory Q1 results, stock price performance also showed resilience beyond expectations.

<含二线>Guojin suggests that in the context of sector beta restoration, key layout: 1) companies that verify significant alpha advantages in a quarterly report, such as Sunshine Power, Artes, Autoway, Follett, Foster, etc.; 2) areas where Q2 is expected to improve significantly month-on-month, glass, inverters, tracking brackets, etc.

Editor/jayden