HSBC Research report pointed out that with the updated expectations for mainland China's supply-side policies, for the solar energy industry, it is estimated that the likelihood of strong supply reduction policies led by the mainland government landing in the near future is small. Currently, the government seems to lean towards allowing the industry to reduce supply on its own and introduce price controls, rather than directly issuing production reduction orders. However, the government may intervene to promote improved energy efficiency.
Looking ahead to 2025, the bank expects that even without policy promotion, the market will gradually self-adjust in terms of supply and pricing. Given the forecast of 10% annual growth in global solar energy demand next year (flat in China), some segments of the supply chain are expected to recover faster. It is estimated that solar polysilicon and glass companies will lead the market recovery next year, while solar module companies remain relatively disadvantaged.
Furthermore, the new US government may bring more policy challenges to Chinese solar module manufacturers in the US market, considering that pricing in the US market is three times higher than elsewhere. These challenges present a significant profit risk in 2025. As for China's solar polysilicon and glass, the potential impact of US policy changes is relatively small, as they are either excluded from the US or have no alternatives.
The bank believes that the worst period for the solar energy industry has passed, with a bullish outlook for the market leadership positions of GCL Tech (03800.HK) and Flat Glass (06865.HK).
HSBC Research's investment rating and target price for solar energy stocks
Stock | Investment Rating | Target Price (HKD)
GCL Tech (03800.HK) | Buy | HK$1.7 → HK$1.9
Xinte Energy (01799.HK) | Buy | HK$11.3 → HK$11
Flat Glass (06865.HK) | Buy | HKD 16.8 → HKD 16.7
Xinyi Solar (00968.HK) | Hold | HKD 3.5 → HKD 3.4
Xinyi Energy (03868.HK) | Hold | HKD 0.9