Photovoltaic capital market is turbulent, how do several major securities firms look at the future?

Since

May 26th, photovoltaic concept stocks have fallen. As of today, only 181 of the 400 stocks in the photovoltaic concept sector have risen, ranking 330th in the industry (390 industries in total). Today, the net inflow of funds is only-4.7 billion yuan, with a turnover of more than 80 billion yuan. In

contrast, the Shanghai Photovoltaic Exhibition SNEC held not long ago was unprecedented, with 300,000 people pouring into the Shanghai exhibition site. So, let's listen calmly to how securities firms analyze the existing market? Sinolink

Securities

Photovoltaic & Energy Storage Co., Ltd.: The exhibition area, exhibitors and number of SNEC set a record in an all-round way, and new technologies, new products, new businesses, new cooperation, new production capacity and new orders were released intensively, which not only conveyed the super-high heat of the industry, but also triggered concerns about "overheating" once again. We believe that "excess" in " SNEC has set a record in all aspects of data this year. "Hot" is the unanimous feeling of all participants. There are factors that will stop the exhibition for one year in 2022, but we think it is more important. The scale of industry demand has more than doubled in two years, and the expansion of supply is even greater. At the same time, unlike the high proportion of capital market participants in previous years, the exhibition site is mainly composed of upstream and downstream business personnel in the industrial chain, full of "business atmosphere" inside and outside the venue, and there are a large number of customers from Asia, Africa and Latin America, which also reflects the outbreak and spread of photovoltaic demand in the global scope from one side. There are two core functions of the

exhibition: one is to release new technologies, new products and new businesses; the other is to negotiate upstream and downstream trade and sign major contracts/cooperation.

Judging from the exhibition situation in recent years, although many enterprises have "saved" some materials to be released at the exhibition, there are few hard-core new technologies that are eye-catching on the whole, thus creating an illusion that the technological progress of the industry is slowing down or even stagnating, but this is not the case. We understand that, on the contrary, due to the rapid technological progress and frequent product iteration in recent years, in order to achieve the most ideal publicity effect, enterprises began to hold separate conferences for major technological breakthroughs and heavy new product releases, so as to avoid being submerged in the massive information of SNEC. Therefore, this year's SNEC gives the impression that there are few bright spots in new technologies/products, and the layout of new businesses is relatively eye-catching (such as the layout of upstream enterprises' downward integration, the layout of component enterprises' distributed systems, energy storage, and BIPV application scenarios);

Upstream and downstream supply and demand communication and order negotiation are the more important purposes for enterprises to participate in SNEC, perhaps because the popularity of the exhibition and the enthusiasm of customers'demand exceed the previous expectations of many enterprises, so some enterprises represented by the leading integrated components are finally participating in the exhibition. Component demand expectations for 2023, which had been expressed relatively conservatively out of the principle of caution, have been raised to varying degrees. As early as half a year ago, we clearly put forward the global demand judgment of 500GWdc in 2023 in our annual strategy report. With the continuous climbing of industry production schedule in recent months and the recent upward revision of enterprise caliber, it has gradually become the consensus expectation of the market.

As we have repeatedly pointed out before, with the upward revision of demand expectations in 2023 and the unexpected demand elasticity since this year, some market views have begun to become slightly optimistic about demand in 2024. At present, it is possible that demand growth in 2024 will be between 20% and 50%. Demand forecasts for next year, whether pessimistic or optimistic, can not be proved or falsified with high confidence at this stage, but objectively speaking, whether 20% or 50%, it is almost inevitable for the industry to return to a state of overall excess, which is nothing more than a marginal difference in the degree of excess, but this sentiment is restored in the current stock price position. It is still valuable and has a substantial driving force for the stock price. The core of

this year's demand exceeding expectations is "elasticity" exceeding expectations. Since this year, with the downward price of the industrial chain, the export and domestic installed data and structure (distributed high proportion), which continue to increase year-on-year and exceed expectations, have pointed to a more important conclusion, in addition to triggering the demand expectation of 2023 and the upward revision of corporate earnings forecast, that is, in the era of parity and the gradual elimination of supply side bottlenecks. The "elasticity" of global PV demand release is significantly higher than expected. Although this is still unable to completely block the operation law of the industrial boom cycle, it will undoubtedly make us more optimistic about the "ceiling" of the industry's future demand space, as well as the time when the industry's supply and demand will return to balance and the boom cycle will go up again after the current round of price/profit bottoming. In the ten years before

2008, the photovoltaic industry was in a state of surplus in all links for most of the time, which did not hinder the realization of excess profits of leading companies and the performance of stock prices. For most of the links except silicon materials, the period from 2023 to 2024 was not a process of qualitative change from "shortage" to "surplus". In addition, with the continuous improvement of battery efficiency in recent years driven by the improvement of material quality requirements (this round of N-type trend is significantly catalyzed) and the increase of factors affecting the price/cost of components, the leading advantages of many links are showing a trend of enlargement rather than narrowing.

Investment advice: We believe that the PE decline of the PV sector has largely reflected the potential downside risk of EPS in advance (note that it is only possible), so the risk-return ratio of the current position is still very good.

Considering the long-term competitive barriers in each link, the profitability in the fluctuation of the future boom cycle, and the current poor market expectations, it is recommended to continue to focus on the allocation of: integrated components/high-efficiency batteries, large storage, alpha silicon materials/silicon wafers, auxiliary materials/consumables with high boom and bottom profits, and equipment leaders.

Ping An Securities

May 24-26, SNEC 16th (2023) Photovoltaic Exhibition was held in Shanghai, more than 3000 enterprises participated in the exhibition, and new photovoltaic technologies and products were released intensively.

Comments: This week, Shanghai SNEC Photovoltaic Exhibition was held grandly. Many photovoltaic enterprises released new technologies and products during the exhibition. Under the background of continuous improvement of photovoltaic demand, they actively promoted cooperation and signed bills, which led to the enthusiasm of the industry and the sector. From the exhibition situation, N-type technology products have become the mainstream of market concern, among which TOPCon technology is the main product of leading photovoltaic enterprises, HJT product participants increase, cost reduction and efficiency increase accelerate, XBC product differentiation is significant, perovskite technology products are greatly concerned, and the trend of integration and intellectualization of photovoltaic storage and charging is deepened. In terms of new TOPCon products, Longji Green Energy has released a new component Hi-MO7 based on high-efficiency HPDC (High Performance and Hybrid Passivated Dual-Junction Cell) technology, which uses high and low junctions on the back of the battery. Through film design and deposition process to optimize the global passivation effect, Tongwei, Jingke, Jingao, Tianhe, Zhengtai Xinneng and other new TOPCon products have been released. In the field of HJT, power 700w + component products have become the main force of the exhibition. Huasheng, Risheng, Baoxin, Mingyang, Longji, Tongwei and Tianhe have all displayed HJT mass-produced or conceptual products. In terms of

volume, TOPCon has established the mainstream position of photovoltaic expansion, and this year's production capacity is expected to exceed 400GW. Due to the differences in cost, yield, photoelectric conversion efficiency and production efficiency among enterprises, even in the context of TOPCon's substantial expansion, it is still expected to form differentiation. Head enterprises continue to reduce costs and increase efficiency through slurry optimization, laser SE, double-sided passivation and other technologies, and brand premium is difficult to level in a short time. HJT is in the critical period of cost reduction and efficiency enhancement. It is suggested to pay attention to the reduction of silicon wafer thickness, the introduction of 0 BB and double-sided silver-clad copper, and the bidding application of downstream power plants. At present, new photovoltaic technologies have made breakthroughs repeatedly, and the integration of enterprises has accelerated the expansion of production and overseas distribution. This week, Longji announced the realization of crystalline silicon-perovskite tandem cells on commercial grade textured CZ silicon wafers. 31

. Comments on

Huafu Securities

Exhibition 1. Brief introduction of events: 1) May 24-26. The 16th SNEC (2023) International Solar Photovoltaic and Smart Energy (Shanghai) Conference and Exhibition was held in Shanghai New International Expo Center, with more than 500,000 exhibitors, more than 3,000 exhibitors and more than 270,000 square meters of exhibition area, creating a new record. 2. Main highlights: 1) N-type has become the mainstream product in parallel with PERC: the efficiency of N-type modules is above 22% or even above 23%, while the efficiency of PERC modules is basically between 21-22%, the gap is more obvious; the proportion of N-type has exceeded 40% in domestic bidding; Major manufacturers have also launched products with the highest power of 700 W +, and components have entered the era of 700 W +;

2) Differentiated products: new technologies include perovskite, cadmium telluride, etc., new applications include flexible components, lightweight components, BIPV, etc., in addition, all kinds of all-black, no main grid and transparent components, while taking into account efficiency, also focus on the pursuit of architectural aesthetics;

3) Energy storage products are flourishing, and photovoltaic leaders have started the integrated layout of photovoltaic and energy storage: the earlier ones, such as Tianhe, Linyang and Zhengtai, have also released new energy storage products, such as Jingao, Jingke, Atlas, Risheng and GCL, and Longji, Shuangliang and Linyang also have the layout of hydrogen energy. The industry is moving from photovoltaic parity to photovoltaic storage parity, and the demand for photovoltaic + energy storage will usher in a big turning point. Leading enterprises are also competing to lay out their own energy storage business and start a new journey.3. Our view: At present, the PV industry is in the stage of N-type gradual iteration of P-type, and the release speed of TOPCon is slower than expected, because its technology is not as mature as PERC, some know-how is in the hands of manufacturers, and there is a certain learning curve; There are relatively few component enterprises mainly based on HJT, most of which are based on pilot line output, and only a few enterprises have achieved large-scale production, such as Huasheng, Risheng, Aikang, etc. However, compared with TOPCon, HJT still needs a longer time to reduce costs and increase efficiency; XBC battery technology will shine brilliantly in distribution. The industry trend

of N-type products iterating P-type products is accelerating, but limited by the fact that it takes longer for N-type products to climb the ramp, PERC still has a cost-effective advantage in the current period. The old capacity of photovoltaic industry is gradually excessive, while new technologies and new applications stand out and blossom. Cost reduction and efficiency enhancement is the eternal theme of the photovoltaic industry. New production capacity eliminates old production capacity, and the technology iteration of the photovoltaic industry constantly brings new investment opportunities. Marginal changes in

the PV industry chain:

1. Silicon materials: the price has dropped to about 120 yuan/kg, the industry inventory has exceeded one month, it is difficult for many leading enterprises to support the price, the willingness of crystal pulling factories to lower the price is strong, and it is expected that a large number of new production capacity will be put into operation after July. The price still has a downward trend;

2. Silicon wafer: the price continues to fall, and the expected profit is not significantly reduced by adding the profit given by the price reduction of silicon materials. At the same time, there is a certain support for demand, and the inventory of leading enterprises is slightly reduced this week;

3. Cells: The price of cells was driven down by the upstream price reduction, the overall profit was restored, and the trading volume was increased;

4. Components: The price is slightly lower, the inventory is higher for the peak season, the cost pressure is reduced, some enterprises quote low prices for the market share target, the terminal wait-and-see sentiment is aggravated, the price is expected to be stronger, and some projects may be delayed;

5. Quartz sand: the price is stable at a high level this week, but the leading enterprises may have plans to continue to raise the price in June;

6. Film: the upstream particle price continues to decline, the film price may continue to decline, and the film production schedule in June is upward on a month-on-month basis;

7, Donghai Securities

was affected by the exhibition, the photovoltaic sector was boosted this week, and the market's enthusiasm for technology tracking has rebounded.". If the component and terminal game improves in the follow-up fundamentals, the industry is expected to repair under the lower valuation.

The upstream continued to reduce prices, and the profit margin of solar cells increased

. 1) Silicon materials: prices continued to decline. Due to the reversal of supply and demand, the gap between supply and demand of silicon materials continued to increase, and the price of signed bills remained downward. The overall production level of the silicon wafer pulling sector has declined significantly in the near future, and the overall inventory level of the superimposed silicon material sector is still high and rising on a month-on-month basis. It is expected that the spot inventory scale is close to or has reached the overall production scale of one month, and it is expected that the sales pressure of the silicon material sector will continue in June.

2) Silicon wafers: prices continued to fall, but the decline was significantly narrowed. The impact of the decline in crystal pulling will gradually be reflected in June, and the current phenomenon of supply exceeding demand is difficult to have a short-term impact. In addition, the spot inventory level of monocrystalline silicon wafers is also continuously superimposed, and whether the inventory level can be reduced depends on the downward revision of the production level of the crystal pulling link, which is expected to continue to be observed in June.

3) Battery slice: the price is slightly reduced. The production level of cells is still at a high level, the inventory level is maintained at a healthy level within about 5 days, and the purchasing demand for cells is still strong. As the current battery has not fully reflected the decline of silicon wafers, the overall profit margin is still maintained, and the sustainability of profit margin remains to be observed.

4) Components: slightly lower price. In May, the domestic market was affected by the project pull, and the upstream clear signs of loosening also made the terminal wait-and-see mentality more clear, the project part was delayed, the absorption speed was not as expected, and the component price dropped slightly. Overseas component prices are stable for the time being.

Soochow Securities

Silicon Materials: This issue coincides with the opening of "SNEC Exhibition", one of the annual photovoltaic events, in Shanghai as scheduled, which attracts the attention of the industry and the atmosphere of the venue is warm. Due to the reversal of supply-demand relationship, the gap between supply and demand of silicon materials continued to increase, the trend of oversupply continued to strengthen, and the signing price still maintained a downward trend. The scale of new orders signed in the current period has a trend of shrinking on a month-on-month basis. As the overall production level of the crystal pulling process has begun to decline significantly in the near future, the demand capacity for primary polysilicon has declined on a month-on-month basis, and the attitude of purchasing and signing orders has shown a sustained downturn, the buyers of silicon materials only need to maintain the purchasing range just needed for production. In terms of

price, the mainstream price range of dense block materials dropped to 120-132 yuan per kilogram, the price level of second-and third-tier enterprises continued to maintain the price difference range of 10-15 yuan per kilogram, and the price difference level of granular materials also expanded compared with the previous period. N-type materials maintain the price difference range of 2-4 yuan per kilogram, and the supply capacity is still concentrated in the first echelon enterprises for the time being.

As of the end of May, the overall inventory level of silicon materials is still high and rising on a month-on-month basis. It is expected that the spot inventory scale is close to or has reached the overall production scale of one month. The sales pressure of silicon materials will continue and it will be difficult to improve in June. Silicon wafers: although the price of monocrystalline silicon wafers continued to decline in the current period, the decline was significantly narrowed and the rate of decline slowed down. The price

of M10 monocrystalline silicon wafers has fallen to 4.1-4.4 yuan per wafer, and the low price level in spot trading is even close to 4 yuan per wafer in a few cases, but the mainstream price is around 4.15 yuan per wafer, and the price of 9.G12 monocrystalline silicon wafers has fallen to 5.9-6.1 yuan per wafer. Average price level in the vicinity of 6 yuan per piece, week ring ratio fell 1.