On October 23, a bullish news hit, and the A-share photovoltaic sector suddenly surged in the afternoon, with the increase reaching 7.58% at one point.

Individual stocks erupted in a wave of limit-up trading. By the closing, Anergy Polymer 30CM surged, Daquan Energy, Haiyou New Materials 20CM surged, Flat Glass, Hainan Drinda New Energy Technology, Tongwei Co.,Ltd surged to the limit.

In addition, in the Hong Kong stock market, photovoltaic power stocks also rose in sync. As of the drafting time, GCL Tech surged over 23%, Flat Glass, Xinyi Solar, Xinte Energy surged over 10%.

A bullish signal ignited the market.

In the afternoon, a news triggered the market, namely a major change in the USA's solar energy policy towards China.

According to the official website of the United States federal government, on October 21, the U.S. Department of Commerce initiated a Circumvention Inquiry (CCR), considering partially revoking the anti-dumping and countervailing duties on Chinese crystalline silicon photovoltaic cells, involving some small, low-wattage, off-grid crystalline silicon photovoltaic (CSPV) cells.

It is understood that the United States has previously taken a series of trade protection measures to restrict the export of Chinese photovoltaic products to the United States. In 2011, the U.S. Department of Commerce announced anti-dumping and countervailing duty investigations on Chinese solar cells exported to the United States. In 2018, the United States further imposed tariffs on solar cell panels, photovoltaic modules, and other products imported from China under the "201" and "301" sections, further limiting the sales of Chinese photovoltaic products in the United States.

Therefore, although the range of products involved is limited, mainly used in small scenarios such as solar street lights, electronic products, and auto parts, some institutions still consider this as a bullish signal, indicating a loosening of the U.S. double-reverse sealing on photovoltaic products.

Industry insiders believe that this will directly benefit the export of photovoltaic modules and solar cells, indirectly benefit photovoltaic auxiliary material companies, and help Chinese photovoltaic enterprises expand overseas markets.

On the other hand, recently, the official WeChat account of the China Photovoltaic Industry Association released a "Current Cost Analysis of Photovoltaic Modules: Suspected Illegal Low-cost Bidding for Winning Bids", disclosing that the lowest taxable cost of photovoltaic modules in October was 0.68 yuan/Watt.

At the same time, the association also stated that in response to the below-cost winning bids, as well as the potential issues of substandard products and failure to fulfill contracts after winning bids below cost, the association will pay attention to and consider strengthening industry self-discipline through industry-wide reporting to regulatory authorities and other means to promote healthy development of the industry.

CICC International believes that since component manufacturers need to openly participate in bidding for terminal power station projects, bid prices have strong transparency and are relatively easy to be monitored by third parties. Therefore, the association guiding market prices through a "cost-based approach" will first drive up component prices, benefiting component profit restoration.

Institutions: The industry is expected to see marginal improvement.

In recent years, the photovoltaic industry has been developing rapidly, with many companies expanding production. Coupled with 'internal competition' within the industry, this has led to severe overcapacity in all aspects. In the case of supply-demand imbalance, prices along the photovoltaic industry chain continue to decline, leading to widespread losses among photovoltaic industry chain companies.

According to an Orient Securities report, in the first half of the year, 71 photovoltaic listed companies collectively generated 530.6 billion in revenue, a year-on-year decrease of 18.86%; net income attributable to shareholders was 4.3 billion, a year-on-year decrease of 94.6%.

However, by the fourth quarter, the photovoltaic industry enters the traditional peak season for installations, and the demand side has already sent positive signals. Data shows that in September, the new installed capacity of photovoltaics reached 20.89GW, an increase of 32.38% year-on-year and 26.9% month-on-month.

Furthermore, multiple departments have issued policies to restrict the expansion of low-end capacity. In July, the Ministry of Industry and Information Technology released the 'Normative Conditions for the Photovoltaic Manufacturing Industry (2024 Edition)', aiming to guide photovoltaic enterprises to reduce projects that simply expand capacity, avoiding low-level redundant expansions.

The National Development and Reform Commission and the National Energy Administration jointly issued a notice 'Regarding Matters Related to Promoting the Healthy Development of the Photovoltaic Industry Chain', indicating that through measures such as ensuring rational production of polycrystalline silicon and supporting advanced production capacity, the disorderly expansion of low-end capacity will be effectively limited.

Looking ahead, as outdated capacities continue to be phased out and industry consolidation accelerates, the photovoltaic industry is expected to see marginal improvement.

Sinolink Securities points out that the current prices and profits along the photovoltaic industry chain are clearly at the bottom, and the process of clearing out outdated supply has begun since Q4 of 23. It has already gone through several stages with landmark events such as the dropouts of second- and third-tier companies, mass exits of cross-border enterprises, and the integration of leading capacities. Currently, it has entered the middle and late stages of this round of supply-side reshuffling. As Q4 approaches the year-end, it is expected that the signals of clearance may further accelerate.

Hainan Drinda New Energy Technology believes that currently, prices of products such as silicon materials, silicon wafers, and modules in the photovoltaic industry are close to or below the cost line for companies. Multiple aspects along the industry chain are continuously in a state of losses. The current industry-wide loss situation is not conducive to the sustainable and healthy development of the photovoltaic industry, and the bottom of the industry is expected to clear out faster. Combining the recent positive signals of supply-side reforms within the industry, the supply-demand landscape of the photovoltaic industry is expected to gradually see marginal improvements. Overall, the valuation of the photovoltaic sector is currently low, suggesting attention should be paid to the subsequent valuation recovery opportunities driven by improvements in the supply-demand landscape.