East China Securities: Photovoltaic silicon material prices have stabilized at the bottom, and the recovery of wind turbine prices is expected to continue.

East Sea Securities released a research report stating that the price of silicon materials has slightly increased. Currently, there is a certain divergence in new contract prices, with downstream gradually accepting price increases for large orders from leading enterprises, while the prices for other companies remain stable. Component prices are decreasing, with recent collective procurement project bid prices continuing to decline, with bid prices below 0.7 yuan appearing. Overall, land-based wind power bidding and project opening sizes continue to increase, providing strong support for the annual newly installed capacity. The profit margin of whole machine enterprises is being compressed in the 2023 market competition, with performance stabilizing. Since the beginning of the year, the bid prices for components have gradually returned to normal market levels, and with market demand remaining strong, the performance recovery of whole machine enterprises is expected to continue in the second half of this year. Silicon material prices have stabilized at the bottom, while the bid prices for components continue to decrease. 1) Silicon materials: Prices have slightly increased. Currently, there is a certain divergence in new contract prices, with downstream gradually accepting price increases for large orders from leading enterprises, while the prices for other companies remain stable. As of now, there are 14 companies undergoing maintenance or load reduction, with one company expected to add new capacity within the month. The supply of silicon materials is expected to decline in the fourth quarter, as some companies with deferred capacity recovery progress have not met expectations. However, considering that the inventory of polycrystalline silicon in the industry is still around 300,000 tons, the short-term upside for silicon material prices is relatively limited. 2) Silicon wafers: Prices are stable. Last week, the upstream and downstream sectors were in a stalemate phase, with domestic silicon wafer production in September expected to be between 45-46GW, about 5GW less than downstream demand, and inventory continuously decreasing to around 27GW. The leading companies have a strong willingness to maintain prices. However, due to the slowdown in domestic demand for battery components, the price increase is difficult for end users to accept, resulting in stable silicon wafer prices. 3) Battery cells: Prices are stable. Last week, PV cell prices continued to be stable after the Mid-Autumn Festival, with stable market sentiment and few new orders. Despite no changes in the operating rate of domestic battery cell facilities, the actual production in September was lower than expected due to typhoon impacts on some overseas facilities. As the National Day holiday approaches, the operating rate of battery manufacturers remains stable, and a new round of bid prices may continue to stabilize. Some battery manufacturers have a strong willingness to maintain prices, but successful implementation depends on a recovery in demand at the component end. 4) Components: Prices are decreasing. Recently, bid prices for collective procurement projects have continued to decline, with bids below 0.7 yuan appearing. Accumulated inventory pressure has led manufacturers to adopt more aggressive price competition strategies, making it difficult for component prices to rebound. There were no significant changes in component production adjustments in September, with only a few top enterprises with full order books adjusting production expectations upwards. Component production in October is expected to continue to increase compared to the previous month. Recommended focus: Wuxi Dk Electronic Materials Co., Ltd.: 1) The company is a leading producer of TOPCon paste materials, with a market share of over 50% and a shipping share of over 86.53% for TOPCon. 2) In terms of laser-induced firing, the company collaborates closely with top and second-tier companies, and its leading technology advantage is expected to further enhance profitability. The recovery of whole machine prices is expected to continue, with a focus on export opportunities for marine products. Last week (ending September 20), land-based wind turbine bids were approximately 601.5MW, with bid openings totaling around 890MW, with an average bid price for towers of around 2064.6 yuan/kW. Overall, the scale of land-based wind power bidding and project openings continues to increase, providing strong support for the annual newly installed capacity. Looking at the average bid prices for land-based wind turbines in recent periods, the overall bid price stabilizes, with the bare machine price above the 1000 yuan/kW line for whole machine manufacturers. East Sea Securities believes that the profit margin of whole machine enterprises is being compressed in the 2023 market competition, with performance stabilizing. Since the beginning of the year, the bid prices for bare machines have gradually returned to normal market levels, and with market demand remaining strong, the performance recovery of whole machine enterprises is expected to continue in the second half of this year. Regarding marine wind power, last week, the Zhejiang Rui'an Project in Zhejiang Province started wind turbine bidding, with a scale of approximately 146MW. Several projects in Guangdong Province are about to start the construction of onshore supporting facilities, and have announced the candidates for the survey design of a 1000MW project; the Fujian Sea Wind Project has announced the candidates for the post-protection engineering of sea cables; the Hainan Sea Wind Project has completed the installation of the first wind turbine; and a new project in Shandong Province (tentatively 400MW) has launched the bid for preliminary consulting services. The construction of marine wind projects in various regions is steadily advancing, with the reserve project size continuing to increase. Overall, due to restrictive factors affecting marine wind projects in Guangdong and Jiangsu provinces, the market sentiment has been low, and the marine wind sector has generally taken a wait-and-see approach. However, the recent initiation of sea cable procurement bids in Guangdong and Jiangsu provinces indicates a weakening of the restrictive factors, and domestic marine wind construction is expected to accelerate. Companies specializing in sea cables in these two provinces may be the first to benefit. The overseas development of marine wind power is strong, and with domestic marine products having successful overseas delivery experience, export opportunities are expected to continue to strengthen. Against the background of resonating domestic and international marine wind demand, the marine wind sector as a whole is expected to experience intensive catalysis. East Sea Securities believes that component manufacturers still have a certain degree of flexibility in their performance in the second half of this year. Recommended focus: Dajin Heavy Industry (002487.SZ): The company is a leader in marine equipment, with full production capacity at the Penglai base. The industry's lowest recent disclosure of half-yearly report for 2024 shows a significant increase in gross profit margin and operating cash flow compared to the same period last year, with stable earnings from overseas operations, benefiting from the rapid development of offshore wind power overseas, leading to an overall increase in the company's profitability and collection capabilities. Ningbo Orient Wires & Cables (603606.SH): The company is a leader in sea cable production, with a rich product portfolio and leading technology in high-end sea cables, having won bids for several domestic and international marine wind projects with extensive delivery experience. In the recent release of the semi-annual report for 2024, the operating income growth rate turned positive year-on-year, and net profit continued to increase. Benefiting from the rapid development of domestic marine wind power, the company's performance is expected to continue to grow. Risk warning: (1) Global macroeconomic fluctuations; (2) Fluctuations in upstream raw material prices; (3) Risks of wind and solar installation falling short of expectations.