According to Zhitong Finance APP, Soochow has released a research report stating that the photovoltaic supply side is accelerating clearance optimization, with the Ministry of Industry and Information Technology imposing stricter regulations on energy and water consumption for new production capacity, possibly using energy consumption control to further curb existing output; industry self-discipline has further strengthened, with continuous production reductions across various links. By November 2024, the operating rates for silicon materials, wafers, batteries, and modules have decreased to 53%/45%/56%/49% respectively. It is expected that output will balance with demand in December, and demand is anticipated to recover after the Spring Festival next year, potentially driving price increases and profit recovery in the industry. In terms of various technologies, TOPCon is expected to remain the industry mainstream for the next two years, while 0BB is gradually being introduced, driving TPC cost reduction and efficiency increase; HJT's cost has reduced significantly after introducing silver-plated copper, with equipment cost reductions and expansion of mass production scale, future profitability and penetration rates are worth looking forward to.

The main viewpoints of soochow securities are as follows:

Demand: The overseas interest rate reduction cycle continues to grow significantly, while the domestic high base remains stable.

In 2025, based on the high base and consumption issues, domestic installations will remain stable. The USA remains an excess return market, and its tariff and subsidy policies need continued attention. Europe and the USA are entering a rate reduction cycle, with installation demand maintaining steady growth. It is estimated that the global new photovoltaic installations will reach 565GW in 2025, a year-on-year increase of 15%, with China, the USA, and Europe adding 248/44/84GW respectively, year-on-year growth of 3%/10%/20%. Emerging markets contribute significantly to the increase, especially project plans in Middle Eastern and Indian countries, with installation growth rates possibly exceeding expectations, reaching 28/31GW, with year-on-year increases of 87%/29%.

Supply: Industry self-discipline is strengthening, and there is great potential for profit recovery.

On the one hand, policies support prices, with CPIA estimating the minimum cost at 0.68 yuan/W (including tax), which is the industry's price bottom line. Coupled with the new export tax refund regulations coming into effect, domestic and international prices have begun to stabilize and rebound.

On the other hand, the supply side is accelerating clearance and optimization, with the Ministry of Industry and Information Technology tightening regulations on energy and water consumption for new production capacity, which may further curb existing output through energy consumption control; the industry's self-discipline is further strengthened, and each link continues to reduce production. As of November 2024, the operating rates for silicon materials/ silicon wafers/ solar cells/ modules have decreased to 53%/ 45%/ 56%/ 49%. It is expected that production and demand will be balanced in December, and demand is expected to recover after the Spring Festival next year, which may drive price increases and profit recovery in the industry.

The elasticity for various links to recover to reasonable profitability is large. Based on ROIC calculations, the neutral point for silicon material is a profit of 0.01 million/ton (9-year payback period/11% ROIC); silicon wafers/solar cells/integrated modules are 3/2.5/7.5 cents/watt (6/6/6-year payback period); glass/membrane are 1.5/0.2 yuan/square meter (8/10-year payback period).

Supply chain: Leaders have significant cost and channel advantages, the industrialization progress of new technologies is accelerating, and the industry profit inflection point has emerged.

Silicon materials: Prices have fallen to 0.04 million, breaking through cash costs, production shutdowns are accelerating and clearing out, and energy restrictions will strongly drive price rebounds; silicon wafers: High levels of surplus, self-discipline production reductions stabilize prices, and profits are expected to warm up in 2025; solar cells: TOPCon technology iteration, light surplus, low inventory price sensitivity and elasticity are sufficient; modules: price wars + financing restrictions, overcapacity is accelerating elimination, high-end markets contribute premiums, leaders have strong resilience, and are expected to break out of the cycle relying on new technologies.

Glass: Continuous cold repair production reduction due to industry-wide losses, inventory inflection point is approaching, and leaders have obvious advantages; membrane: Prices are at historical lows, new players have begun to clear out, a dominant position is stable, and leaders are outstanding; power inverters: Strong demand for energy storage in the USA and China, explosive demand in the Middle East and Europe, and vibrant demand for energy storage parity, home storage, and grid connection in emerging markets; brackets: Benefiting from the outbreak of Southeast Asian and Middle Eastern markets, overseas layout orders are sufficient, and profitability is structurally improving; silver paste: Processing fees have dropped to the bottom, and the technological iteration of copper paste and others has vast potential.

In terms of technology: TOPCon is expected to remain the industry's mainstream within two years, 0BB will be gradually introduced, promoting TPC cost reduction and efficiency improvement; BC has entered the industrialization stage, with advantages of high efficiency and aesthetics in the monofacial market, and the bifacial market is expected to achieve verification breakthroughs. After introducing silver-clad copper, HJT has seen significant cost reductions, and as equipment costs decrease and production scale expands, future profitability and penetration rates are worth looking forward to; calcium-titanate GW-level production lines have been gradually launched, and it is expected to officially debut after 2027, with stacking or likely to stand out first, leading the industry's technological iteration.

Key recommended symbols.

High prosperity direction: power inverters and brackets, sungrow power supply (300274.SZ), deye co.,ltd. (605117.SH), sineng electric (300827.SZ), arctech solar holding (688408.SH), ginlong technologies (300763.SZ), hemai co.,ltd. (688032.SH), jiangsu goodwe power supply technology co.,ltd. (688390.SH), shenzhen sinexcel electric (300693.SZ), airo energy (688717.SH), jiangsu tongrun equipment technology (002150.SZ), yuneng technology (688348.SH), shenzhen kstar science & technology (002518.SZ), pay attention to kehua data co.,ltd. (002335.SZ).

The photovoltaic leaders benefiting from supply-side reforms and having significant cost advantages include gcl tech (03800), tongwei co.,ltd (600438.SH), flat glass group (601865.SH), hangzhou first applied material (603806.SH), etc.; as well as the leading companies in the component sector with strong channel advantages like jinkosolar (688223.SH), arctech solar holding (688472.SH), ja solar technology (002459.SZ), trina solar co., ltd. (688599.SH), longi green energy technology (601012.SH), hengdian group dmegc magnetics (002056.SZ), etc.

Leaders in new technology include longi green energy technology (601012.SH), hainan drinda new energy technology (002865.SZ), shanghai aiko solar energy (600732.SH), tcl zhonghuan renewable energy technology (002129.SZ), 聚和材料 (688503.SH), wuxi dk electronic materials co., ltd. (300842.SZ), yangling metron new material (300861.SZ), etc.

Risk warning: Increased competition, restrictions on power grid consumption, unexpected changes in photovoltaic policies, and new installed capacity not meeting expectations.