After the market value evaporated 660 billion yuan a year, the photovoltaic cycle has turning point arrived?

Since the second half of 2022, photovoltaic stocks have entered a downward stage.

In a year's time, the stock price of Longji Green Energy, the leading battery company, has been cut in half, and its market value has evaporated by more than 230 billion ; Shares of Tongwei, a silicon giant , fell by 40% , nearly 100 billion less than peak market value . In addition, Xiexin Science and Technology, Daquan Energy, Hesheng Silicon Industry and other " only counted 35 A-share photovoltaic industry chain listed companies. From June 30, 2022 to June 30, 2023, the market value of the photovoltaic industry chain evaporated 6597.

After a year of slump, the valuation of photovoltaic listed companies has also reached a historic low. The valuation of Longji Green Energy, the leading photovoltaic company, is only 15 times the price-earnings ratio, while the valuation of Tongwei shares has dropped to a record low of about 5 times. In this case, the expectation of photovoltaic reversal is gradually clear.

Recently, the photovoltaic industry chain has changed frequently. On July 10, the share prices of Longji Green Energy and Tongwei Stock, two leading photovoltaic stocks with a market value of hundreds of billions, rose by 8.52% and 7.00% respectively . As the photovoltaic dragon turned over, the market shouted one after another: the turning point of the photovoltaic cycle is coming.

So, is the photovoltaic cycle turning point really coming? From the numerical point of view, the price of silicon materials in the upstream of the photovoltaic industry chain has approached the lowest point in the last cycle, and the degree of callback has far exceeded the previous round. From this point of view, the price of silicon materials is in line with expectations.

2. In fact, in the past two weeks, the price of silicon materials has indeed shown a trend of stabilization and recovery. Particularly noteworthy is that the price of N-type silicon materials has been rising for two consecutive weeks. Even though the prices of silicon wafers, batteries and components have not stopped falling, the rebound in the price of silicon materials at the top of the industry chain has been seen by the market as a signal of the turning point of the photovoltaic industry chain. Photovoltaic stocks at the triple lows of sentiment, valuation and expectation are also gradually coming out of the bottom.

3. This PV cycle is obviously different from the previous one, and there is no sharp decline in demand in this cycle. On the contrary, the global demand for photovoltaics has always been high, which fundamentally inhibits the formation of a long cycle. In addition, the accelerated application of TOPCon new technology and the booming downstream demand have led to the "K-type recovery" of silicon materials. At the same time, the efficiency premium of TOPCon further restrains the price decline of the photovoltaic industry chain and drives the industry chain out of the trough.

Short and intense photovoltaic new cycle

photovoltaic is a typical cyclical industry. This cycle is not a simple demand-capacity cycle, but a triple superposition cycle of demand-capacity-technology. As a

result, the volatility of the photovoltaic industry is particularly intense. The last round of photovoltaic cycle began at the high price at the end of 2017, and experienced a downward period of about 30 months to reach the bottom of the price.

In this process, it is also accompanied by technological substitution. The Photovoltaic Leader Program, which started in 2015, strongly supports higher energy efficiency

This substitution process is quite rapid. In 2017, the market share of BSF batteries was still as high as 83. In fact, it is true. By 2019, the market share of PERC batteries has reached 65%, and further increased to 86 in 2020.

In mid-2020, domestic and overseas photovoltaic demand exploded. From the upstream silicon end to the downstream components, the price began to rise and reached a new high in the second half of 2022. At the same time, photovoltaic stocks in the capital market also ushered in a round of soaring.

With the end of this long photovoltaic cycle, the photovoltaic industry has entered a new cycle, and this cycle has been extremely explosive:

since November 2022, the price of silicon materials has plummeted rapidly from a high of 307 yuan per kilogram to the latest 64 yuan per kilogram. The price of

silicon wafers (taking 182 silicon wafers as an example) dropped from the highest level of 7.54 yuan per wafer to the latest 2.75 yuan per wafer, and the price of

batteries dropped from the highest level of 1.36 yuan/W to 0.71 yuan/W. The

module price dropped from the highest 2.02 yuan/W to 1.35 yuan/W, a decline of 33.

Compared with the most upstream silicon material price, the current silicon material price is close to the bottom of the price of the last round of photovoltaic cycle, and the callback range (79. The performance of silicon wafers is the same.

As for downstream batteries and components, due to technological progress and other reasons, the current price has been lower than bottom of the previous cycle, but the overall callback has not reached the level of the previous round. Silicon materials, as the most upstream of the photovoltaic industry, have

always been the most sensitive link to the cycle. The turning point of this new cycle will also take the lead in silicon materials.

In fact, the recent rise in the prosperity of the photovoltaic industry chain is largely due to the stabilization and recovery of the price of silicon materials.
As of July 5, among the latest prices of solar-grade polysilicon, the average transaction price of N-type silicon materials was 74,200 yuan per ton, with the average price rising by 0.68% week on week, while the average price of monocrystalline re-feeding materials, monocrystalline dense materials and monocrystalline cauliflower materials was flat;
As of July 12, in the latest price of solar polysilicon, the average transaction price of N-type silicon materials has further increased to 74500 yuan per ton, up 0.
While the prices of silicon wafers, batteries and components are still at the bottom, the prices of silicon materials, especially N-type silicon materials, have stabilized and rebounded for two consecutive weeks. To a large extent, it gives investors great confidence, and it seems that a new rising cycle will begin from now on.
In addition, the strong demand of the global photovoltaic industry further supports the market's expectation of photovoltaic reversal. From January to May
this year, the newly installed capacity of PV in China was 61.Among them, the newly installed capacity of PV in China in May was 12.9 GW, representing a year-on-year increase of 89% and a month-on-month decrease of 11.The decline in the installed capacity of PV in
May was partly due to the rapid decline in the price of PV and the serious wait-and-see mood of downstream customers. However, as the price of photovoltaic continues to decline, the overall profit of the industry chain is transmitted downward, which is expected to drive the yield of terminal power plants to increase, and the new installed capacity of photovoltaic is expected to continue to increase in the second half of 2023.
In the overseas market, the export scale of photovoltaic modules in China from January to May this year was 88 GW, up 39% from the same period last year. At present, overseas photovoltaic demand continues to rise, and the domestic photovoltaic industry chain has a repressive competitiveness.
However, under the panic of the market about the photovoltaic cycle, the current photovoltaic stocks are at a triple low level of sentiment, valuation and expectation.
According to Guojin Securities, as of July 12, the average and median of PE in 2023 corresponding to the core target of the optical storage sector were only 18 and 15 times respectively, of which the valuation of head integrated component companies such as Longji Green Energy was less than 15 times, and the valuation of Tongwei shares, a silicon giant, was less than 6 times, which was already at the lowest level in history.
With the price of silicon materials showing signs of stabilization, photovoltaic stocks are gradually coming out of the bottom.
Taking Longji Green Energy and Tongwei shares as an example, the share price of Longji Green Energy reached its lowest point on June 9 this year. The
technology iteration dividend will be realized
. Strictly speaking, this round of photovoltaic cycle is obviously different from the previous one.
On the one hand, there is no serious demand shrinkage caused by policy factors in this round of photovoltaic cycle, on the contrary, the global demand for photovoltaic continues to rise, which greatly shortens the cyclical fluctuation of photovoltaic. On the other hand, the application of new technologies has begun to be recognized by downstream power plants, driving the photovoltaic industry chain to usher in a "K-type recovery".
In the last photovoltaic cycle, PERC batteries replaced traditional BSF batteries, the fundamental reason is that PERC batteries have higher conversion efficiency.However, after a long period of technological research and development, the current mass production efficiency of PERC batteries has gradually approached the theoretical conversion efficiency. That is to say, PERC technology has ushered in the ceiling. According to the
figures, the theoretical conversion limit of PERC battery technology is 24.5%, and the actual mass production conversion efficiency of leading enterprises is about 23.
In this case, photovoltaic technologies with higher conversion efficiency limits such as TOPCon and HJT have accelerated their development. Among them, TOPCon technology is the most mature and developing most rapidly. TOPCon batteries are theoretically more efficient
than PERC batteries. On the mass production side, the current mass production efficiency of TOPCon is about 25.3%, and is expected to increase to more than 25.7% by the end of the year, compared with the current PERC 23.
On the cost side, the cost difference between the current TOPCon battery and PERC can be controlled at 0. With the increasing recognition of TOPCon by downstream customers, the current sales premium of TOPCon batteries over PERC is stable at 0.
Data show that the shipment of TOPCon batteries in 2022 is close to 20GW, occupying the photovoltaic market. 8. Entering 2023, the demand for TOPCon batteries is still booming. Taking Junda as an example, its TOPCon battery shipments in 2022 were 1.87 GW, but only in the first half of this year, its TOPCon product shipments had reached 6.
Affected by the TOPCon battery business, Junda's share price almost doubled from mid-May to the end of June this year. In addition to Junda shares, the current valuation of leading TOPCon companies such as Jingke Energy and Zhonglai shares is basically 30-35 times, which is much higher than that of PERC battery companies. The replacement of
new technologies is also very rapid. According to the capacity planning of TOPCon in the industry, TOPCon shipments will account for 20% -30% of the total battery output this year, and surpass PERC to become the new main line of battery technology in 2024.
At present, photovoltaic cell enterprises are basically accelerating the layout of TOPCon production capacity. Even Longji Green Energy, which is dominated by PERC batteries, is expected to start production of its Ordos 30GW N-type TOPCon battery capacity in August this year. The
recent stabilization and recovery of the price of N-type silicon materials is directly driven by the downstream demand of TOPCon batteries. The higher conversion efficiency of TOPCon weakens the downward trend of PV prices to a certain extent. As TOPCon batteries further drive the market demand, the PV industry chain is expected to further step out of the bottom and enter the upward period.
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