The performance of the inverter sector was divided in the first half of the year. Shipments in the US, Asia, Africa and Latin America accounted for relatively high performance, and the performance of leading adhesive film and glass companies exceeded expectations. Leading film and glass companies performed steadily, and their profitability was much higher than that of second-tier manufacturers.
The Zhitong Finance App learned that CICC released a research report indicating that the performance of the inverter sector in the first half of the year was divided. Shipments in the US, Asia, Africa and Latin America were relatively high, and the performance of leading adhesive film and glass companies exceeded expectations. Leading film and glass companies performed steadily, and their profitability was much higher than that of second-tier manufacturers. Looking ahead to Q3, the export value of inverters declined slightly month-on-month in July, mainly disrupted by European holiday factors. Combined with the rainy season in Asia, Africa, and Latin America, the market demand mixed up and down, but short-term fluctuations did not change the long-term growth trend, and demand is expected to recover at the end of the September holiday. Furthermore, glass companies are currently cutting production by closing furnace openings, and it is expected that the rate of increase in glass inventories will slow down in September.
The main views of CICC are as follows:
Inverters: 1H24 emerging regions rise, European market recovery
1H24 inverters were exported 26.32 million units, -13% year over year, and the inverter export value was 4.229 billion US dollars, -33% year over year. On a monthly basis, the export value and number of units exported increased month-on-month in April, May, and June, and there was a clear month-on-month increase trend for inverters in Q2. Looking ahead to Q3, export values declined slightly month-on-month in July, mainly disrupted by European holiday factors. Combined with the entry of the rainy season in some regions of Asia, Africa, and Latin America, the market demand mixed up and down, but short-term fluctuations did not change the long-term growth trend, and demand is expected to recover after the September holiday. The profit performance of manufacturers may still be divided. The profit performance of centralized inverters and high-power string inverters may be better, and the overall profit level in the second half of the year may be higher than in the first half of the year, mainly due to the high fulfillment of overseas orders in the second half of the year.
Adhesive film: 1H24 capacity utilization rate declined, and both price and cost decreased
CICC pointed out that demand for photovoltaic film was weak due to the decline in module operating rates in late April, and the average operating rate of enterprises continued to decline. Currently, it is around 45%. The prices of film and raw materials EVA and POE particles have both dropped, putting pressure on manufacturers' profits. In terms of demand structure, demand for Q2POE films has increased. Currently, N-type modules mainly use EPE+EVA solutions to meet packaging reliability requirements. Looking ahead to Q3, EVA film is in loss at the current price, and POE film is still profitable. The main reason is that the price drop is less than the drop in the price of POE particles. If the industry continues to lose money, it may accelerate the clearance of the industry, and the market share of leading companies is expected to increase.
Glass: The number of days in stock is at an all-time high, and manufacturers have reduced production by cold repairing production lines+sealing furnaces
There are 16 new 1H24 photovoltaic glass ignition production lines, with a total production capacity of 17,200 tons/day. The decline in module production schedule in late April led to an increase in laminated glass production capacity, which in turn led to a continuous decline in glass prices. Looking ahead to Q3, the number of inventory days has recently risen to 37 days, which is at an all-time high, but the growth rate of inventory days has slowed down, mainly due to marginal supply contraction due to high cold repair production capacity for glass in July and a decrease in new production lines. Up to now, a total of 25 kilns have been cold repaired this year, with a cooling production capacity of 13,230 tons/day during the year. Currently, glass companies are cutting production by closing furnaces, and it is expected that the increase in glass inventory days will slow down in September.
Target aspects: We recommend Sunshine Power (300274.SZ), Jinlang Technology (300763.SZ), Hemai Co., Ltd. (688032.SH), and Yuneng Technology (688348.SH).
Risk factors: Storage and installation alone fall short of expectations, risk of trade policy fluctuations, risk of changes in raw material prices.