The era of low-priced products disrupting the order of the photovoltaic industry market may come to an end, the industry chain pattern is expected to be reshaped, component prices are expected to enter an upward trend, bullish for leading component companies.
Futu Securities learned that Minsheng Securities issued a research report stating that recently, affected by the increase in component prices and expectations for energy consumption control on the supply side of silicon materials, the photovoltaic sector has rebounded. If subsequent top-level design introduces relevant supply-side reform policies, the profits of the main photovoltaic chain are expected to see a bottom reversal. According to the Digital New Energy DNE public account news on October 28, component prices rose last week, with industry leaders taking action last week and this week, Trina Solar Co., Ltd., increased by 3 points/W last week, and Longi Green Energy raised prices by 1-3 points/W for certain models on October 29. For some time, silicon materials have faced the issue of overcapacity. In July, the Ministry of Industry and Information Technology required that the comprehensive electricity consumption of polycrystalline silicon projects be less than 60kwh/kg, and for new and expanded projects, the comprehensive electricity consumption be less than 57kwh/kg. Regulatory measures or industry self-discipline limiting production may accelerate the process of clearing excess capacity.
The main points of the Minsheng Securities report are as follows:
Industry Trend 1: Component prices are gradually becoming rational.
According to the Digital New Energy DNE public account news on October 28, component prices rose last week, with industry leaders taking action last week and this week, Trina Solar Co., Ltd., increased by 3 points/W last week, and Longi Green Energy raised prices by 1-3 points/W for certain models on October 29. Combined with the previous rebound in component collective purchase prices and the association proposing a component cost price of 0.68 yuan/W, the bank believes that the era of low-priced products disrupting the order of the photovoltaic industry market may come to an end, the industry chain pattern is expected to be reshaped, component prices are expected to enter an upward trend, bullish for leading component companies.
Industry Trend 2: Improvement Expected in the Supply Side of Silicon Materials.
For some time, silicon materials have faced the issue of overcapacity, and regulatory measures or industry self-discipline limiting production may accelerate the process of clearing excess capacity. In July, the Ministry of Industry and Information Technology issued the "Conditions for Standardization of the Solar Manufacturing Industry (2024 Edition)," which requires that the comprehensive electricity consumption of polycrystalline silicon existing projects be less than 60kwh/kg, and for new and expanded projects, the comprehensive electricity consumption be less than 57kwh/kg, with subsequent energy consumption limits expected to further tighten. The bank believes that the bottom of silicon material prices may have stabilized, and if subsequent production restriction documents are implemented, it will be advantageous for granular silicon enterprises with low electricity consumption advantages and first-line enterprises using the Siemens method.
Investment advice:
1) Recommended silicon granules with leading cost and low power consumption advantages, as well as top-tier Siemens method companies. Recommend GCL Tech (03800), Tongwei Co., Ltd. (600438.SH), Daquan Energy (688303.SH), and pay attention to Xinte Energy (01799). Also keep an eye on glass companies like Flat Glass Group (601865.SH), and Xinyi Solar (00968), which are expected to benefit from supply-side energy consumption control.
2) Component prices are expected to return to an upward range, with leading battery component companies likely to restore profitability first. Recommend Hainan Drinda New Energy Technology (002865.SZ), Altair Nano (688472.SH), JinkoSolar (688223.SH), JA Solar Technology (002459.SZ), Longi Green Energy Technology (601012.SH), Trina Solar Co., Ltd. (688599.SH), Tongwei Co., Ltd. (600438.SH), Shanghai Aiko Solar Energy (600732.SH), etc. Keep an eye on TCL Huaxing (002129.SZ), Shuangliang Eco-Energy Systems (600481.SH), Hoyuan Green Energy (603185.SH), and Clean Energy Materials Technology (301030.SZ) among others.
3) Auxiliary materials and equipment are expected to benefit from the progress and iteration of battery technology. It is recommended to focus on Wuhan Dr Laser Technology Corp., Ltd. (300776.SZ), Laplace (688726.SH), Poly Material (688503.SH), Wuxi DK Electronic Materials Co., Ltd. (300842.SZ) and others.
Risk Warning: Downstream demand falling below expectations, policies not meeting expectations, etc.
