There are reports that a meeting will be held in Yibin, and the quota for photovoltaic battery modules will be released, with the idea being 70% production + 30% capacity in the first half of the year (with an additional 20% increase in BC capacity).

1. It has been pointed out earlier that a basic intention regarding quotas for silicon wafers, batteries, and modules has been reached, where the quota = a * 23-year shipment volume + (1 - a) * current capacity, with different weight parameters a for each link (roughly, a for batteries is 0.7, for silicon wafers is 0.5).

2. The battery sector is significantly affected because there is a large new capacity expansion for N-type batteries, and last year the operating rates of first and second-tier battery manufacturers varied greatly, resulting in significant differences in quota coefficients among companies, while the quota is tied to the operating rate, which will also significantly affect costs.

3. Two types of companies will benefit: a) first, those with high shipment volumes in 2023 and no major expansions domestically in the second half of last year; b) secondly, those that have recently increased their BC capacity, which have been given a certain floating quota. The former will benefit the most, such as hainan drinda new energy technology, which has practically secured its entire domestic capacity quota of 40GW, and can approach full production. The latter will see benefits mainly for shanghai aiko solar energy, and longi will also benefit, both securing significant floating quotas, with overall operating rates also higher than their peers.

4. In the silicon wafer sector, longi and Zhonghuan hold the majority of quotas, while those of Shuangliang and others are also satisfactory. The actual impact on modules is relatively small.

The quota situation in the silicon material sector may need further observation due to significant differences in energy consumption and operating conditions; however, leading companies have already begun substantial production cuts.

5. The photovoltaic annual meeting will be held, and the main meeting on the industry's focus of "preventing internal competition" will take place tomorrow (the 5th) afternoon. Overall, it will proceed according to the deployment, further reaching a consensus. According to our understanding, numerous closed-door meetings in the industry have been held yesterday and today, discussing production limits and pricing throughout various stages. The production quota was calculated based on output, capacity coefficients, and other factors, with multiple detailed aspects being implemented and relatively strict supervision measures supporting it.

The details of the policy and its implementation effect are worth looking forward to.

According to Zhito Finance APP, Sinolink has released a research report stating that at the current time, the main photovoltaic industry chain has been continuously losing money for over six months, and most segments have entered a cash flow loss state. With the joint effects of the association's initiative and corporate self-discipline, "production cuts and price stability" may become a phase of unified action direction among leading enterprises in the industry chain. Considering the current slowdown in industry capital expenditures, as backward production capacity is gradually eliminated, the supply and demand relationship across various stages of the industry chain is continually improving, and it is expected to accelerate during the "year-end" period from late 2024 to early 2025.

The emergence of a clear bottom for profitability across various stages of the photovoltaic industry is solidified, and a common and significant turning point for profitability in the main industry chain is expected to arrive by Q2 of 2025, with most targets likely to show a trend of "volatile upward movement" thereafter.

Photovoltaic sector related companies:

Xinte Energy (01799), GCL Tech (03800), Xinyi Solar (00968), Flat Glass (06865), and more.