Bullish on leading equipment manufacturers to navigate through the cycle.
According to Zhituo Financial APP, Soochow released a research report stating that the performance of Photovoltaic Equipment is under short-term pressure, awaiting an industry recovery. A total of 11 representative companies in the Photovoltaic Equipment industry were selected, including Zhejiang Jingsheng Mechanical & Electrical, Qingdao Gaoce Technology, Liancheng CNC, Suzhou Maxwell Technologies, Shenzhen S.C New Energy Technology Corporation, Wuhan DR Laser Technology Corp., Wuxi Autowell Technology Co., Ltd., Yingkou Jinchen Machinery, Kbc Corporation,Ltd., Shuangliang Eco-Energy Systems, and Robotechnik Intelligent Technology. In terms of revenue: It is expected to achieve a total operating income of 84.86 billion yuan in 2024, an increase of 2% year-on-year, but the growth rate slows down compared to the same period in 2023; In Q1 2025, a total operating income of 15.83 billion yuan is expected, a decrease of 19% year-on-year. In terms of profit: It is expected to achieve a net income attributable to the parent of 5.48 billion yuan in 2024, a decrease of 57% year-on-year, mainly due to slower revenue growth, a decline in gross margin, and increased impairment losses; In Q1 2025, a net income attributable to the parent of 1.5 billion yuan is expected, a decrease of 40% year-on-year.
In the silicon wafer segment, key recommendations include the leading silicon wafer equipment company Zhejiang Jingsheng Mechanical & Electrical (300316.SZ) and Qingdao Gaoce Technology (688556.SH), which is gradually realizing its slicing OEM logic; In the Solar Cells equipment segment, a key recommendation is the leading HJT complete line equipment company Suzhou Maxwell Technologies (300751.SZ); In the module equipment segment, a key recommendation is the leading string welder Wuxi Autowell Technology Co., Ltd. (688516.SH).
Soochow Securities' main viewpoints are as follows:
Annual report summary: Performance is under short-term pressure, awaiting an industry recovery.
A total of 11 representative companies in the Photovoltaic Equipment industry were selected, including Zhejiang Jingsheng Mechanical & Electrical, Qingdao Gaoce Technology, Liancheng CNC, Suzhou Maxwell Technologies, Shenzhen S.C New Energy Technology Corporation, Wuhan DR Laser Technology Corp., Wuxi Autowell Technology Co., Ltd., Yingkou Jinchen Machinery, Kbc Corporation,Ltd., Shuangliang Eco-Energy Systems, and Robotechnik Intelligent Technology. In terms of revenue: It is expected to achieve a total operating income of 84.86 billion yuan in 2024, an increase of 2% year-on-year, but the growth rate slows down compared to the same period in 2023; In Q1 2025, a total operating income of 15.83 billion yuan is expected, a decrease of 19% year-on-year. In terms of profit: It is expected to achieve a net income attributable to the parent of 5.48 billion yuan in 2024, a decrease of 57% year-on-year, mainly due to slower revenue growth, a decline in gross margin, and increased impairment losses; In Q1 2025, a net income attributable to the parent of 1.5 billion yuan is expected, a decrease of 40% year-on-year.
The profitability in 2024 is under short-term pressure due to impairment and other factors, while a recovery is expected in Q1 2025. The gross margin of the Photovoltaic Equipment industry is 24% in 2024, a decline of 6 percentage points year-on-year; the net margin for the industry is 6%, down 9 percentage points year-on-year. The decline in net margin is mainly due to the downward cycle causing price drops in some products, leading to reduced gross margin, increased inventory write-down losses, and credit impairment losses. With the scaling of the industry, cost control capabilities are gradually strengthening, and the industry's period expense rate remains stable. The average period expense rate for the industry is 10.7% in 2024, a decrease of 0.5 percentage points year-on-year. The industry maintains a high level of research and development investment, with R&D expenses reaching 4.62 billion yuan in 2024, an increase of 1% year-on-year, and the R&D expense ratio is 5.4%, mainly due to some companies gradually using platform technologies to enter the semiconductor equipment market, keeping R&D expenses at a high level.
Wafer equipment: low-oxygen monocrystalline furnaces & tungsten wire diamond saw & thin wafer technology has promising prospects, equipment export is ongoing.
Low-oxygen monocrystalline furnaces represent the next generation technical trend for wafer equipment. TOPCon is more susceptible to issues such as concentric circles and black chip problems. This is mainly due to the relatively high-speed convection of molten silicon in the crucible at high temperatures, as the outside is hot while the inside is cold; the bottom is hot while the top is cold, causing the silicon solution inside the crucible to create a 'boiling' phenomenon, resulting in flow that continuously erodes the quartz crucible. As quartz is silicon dioxide, oxygen will infiltrate the silicon solution during this erosion, leading to a higher oxygen content in the crystal. Under subsequent high-temperature processes (like B diffusion), oxygen easily precipitates to form oxygen rings, i.e., concentric circles, affecting efficiency and yield. Thus, TOPCon is more sensitive to the oxygen content in silicon wafers, while HJT, being a low-temperature process, has a low probability of concentric circles and can choose silicon wafers with high oxygen content.
In 2024, capacity layout in the Middle East is emerging, providing overseas opportunities for domestic equipment manufacturers. The photovoltaic demand in the Middle East is expected to grow significantly, with installed capacity likely to exceed 35 GW by 2027. Traditional oil-producing countries are gradually transitioning from a reliance on oil & gas as a single energy and financial revenue structure to a diversified, clean, and sustainable energy system. Against this backdrop, particularly with the push from Saudi Arabia's 'Vision 2030' initiative, the installed capacity of photovoltaics in the Middle East is expected to increase to 29-35 GW by 2027. Riding on the Belt and Road Initiative Concept and the Middle East's energy transition, domestic equipment manufacturers are presented with overseas opportunities. From the current layout of major photovoltaic companies in the Middle East, all aspects of the Industry Chain have been covered, including silicon material, silicon wafers, solar cells, modules, photovoltaic brackets, power inverters, and power stations, with plans to build silicon material capacity of 0.05 million tons, silicon wafer capacity of 50 GW, 35 GW of solar cell modules, 6-8 GW of photovoltaic brackets, and 1.5 GW of photovoltaic power stations, with a total investment amount of about 35 billion yuan. Zhejiang Jingsheng Mechanical & Electrical, as a leader in the global photovoltaic monocrystalline furnace market, is expected to fully benefit from the capacity layout in the Middle East.
Battery equipment: the new production capacity of HJT reduces costs and increases efficiency, with expectations for the overseas order volume to increase.
Historically, the lead program has guided a shift toward a more efficient and cost-effective monocrystalline route. The essence of the iterative improvement in photovoltaic technology is that when the efficiency of the previous generation technology reaches its limit, there will be a pursuit for the next generation's higher efficiency and lower-cost technology. Taking the technical iteration of replacing polysilicon with monocrystalline as an example, in the past, the mainstream technological route was polysilicon, while Longi, as a latecomer, chose the monocrystalline silicon route: (1) Monocrystalline has higher efficiency and significant cost-reduction potential: the cost difference between the two can be bridged through technological improvements. Monocrystalline contains fewer impurities and has higher conversion efficiency, but its disadvantage is higher production costs and greater technical difficulty. On the other hand, polysilicon has more impurities and lower conversion efficiency, but it is mature in technology and lower in cost; (2) The demand for grid parity in photovoltaics: The launch of the photovoltaic lead program in 2015 has guided downstream power stations toward the monocrystalline route with higher efficiency and lower levelized cost of electricity.
In China, HJT will become the mainstream technology route for the next generation of solar cells. Driven by the demand for cost reduction and efficiency improvement by photovoltaic companies, HJT battery technology, with its high conversion efficiency, high bifacial rate, and clear cost-reduction route, will become the mainstream technology route for the next generation of solar cells. HJT has a theoretical efficiency limit reaching 29.4%, exceeding the TOPCon bifacial Poly route's 28.7%, with a bifacial rate exceeding 90%, far surpassing other battery technologies. On the other hand, HJT has clear cost-reduction pathways, including 0BB, silver-coated copper, full-frame screen printing, all of which have made substantial progress.
Component equipment: reforms extend the prosperity cycle, benefiting equipment manufacturers from overseas expansion.
Against the backdrop of rising silver prices, the industrialization progress of 0BB technology is expected to accelerate. 0BB (no main grid) is a further upgrade of the SMBB technology. On one hand, it directly eliminates the main grid of the solar cells, further reducing silver consumption; on the other hand, it uses copper PV ribbon in the component section instead of the original main grid for conducting current, with past MBB module welding ribbon diameters between 0.2-0.4mm, while the 0BB ribbon is thinner, with a diameter of 0.2mm, resulting in smaller shading area and theoretically able to enhance module power. Calculations indicate that for every 1000 yuan increase in silver price, 0BB can save an additional 2-4 cents/W. HJT under 20BB has a slurry consumption of about 10 mg/W, which can be reduced to 6-7 mg/W with the application of 0BB, saving 3-4 mg/W. Considering pure silver slurry or silver-coated copper slurry, we estimate if silver prices rise from 6000 yuan/KG to 12000 yuan/KG, the cost savings from 0BB could increase from 0.01-0.02 yuan/W to 0.02-0.04 yuan/W.
Risk Warning
The installed capacity of Photovoltaic Power Station is below expectations, and the upgrade process of new technology is also not meeting expectations.
