Guolian: Clear signals of reversal at the bottom of the photovoltaic glass industry, leading advantages strengthened.

Guolian released a research report stating that the photovoltaic glass is currently in a dual bottom phase of short and long cycles. The industry's short-term bottom turning point may have been reached, with high marginal price elasticity, while the long-term requires deep adjustment on the supply side to be completed. The adjustment direction with low energy consumption, technological and financial advantages has emerged. During the adjustment process of the photovoltaic industry supply side, photovoltaic glass is expected to be the first to clear the tail end. Leading enterprises have technological experience, ample funds, and advantages in production capacity scale, and industry profits are expected to concentrate towards the top. Focus on leading companies with technological and financial advantages. Guolian's main views are as follows: One of the short-term changes: Capacity supply tightening Since 2024H2, there has been an increase in cold repair kilns for photovoltaic glass, coupled with delays in ignition at some planned production kiln sites, leading to a continuous decrease in production scale for photovoltaic glass. By mid-January 2025, the domestic photovoltaic glass production capacity for raw slices was 89690 t/d, a decrease of 7.8% year-on-year, corresponding to a monthly component output of approximately 52GW and an annualized output of approximately 622GW, coupled with some enterprises limiting production, further reducing actual production capacity. Second short-term change: Industry starting to reduce inventory After experiencing a seven-month inventory accumulation period, photovoltaic glass saw a downturn in inventory days starting in November 2024, with the inventory-to-output ratio decreasing in December, and industry inventory was about 33 days by mid-January 2025, still some distance from the historical equilibrium level of around 20 days. With the arrival of the next component production acceleration period, inventory is expected to accelerate downward. Historically, the fluctuation trends of photovoltaic glass inventory days and prices have been basically opposite, with the rapid decline in inventory days expected to lead to a price rebound. Third short-term change: Price stabilization and slight increase Since April 2024, the price of photovoltaic glass has been continuously declining, corresponding to the inventory accumulation period. At the same time, due to the slowdown in demand for photovoltaic installations and intensified competition in components, cost pressures have been passed on to auxiliary materials, resulting in prices reaching a historical low point in December and the industry's average profits falling into losses. With the inventory turning point catalyzed, combined with strong willingness from enterprises to raise prices, starting from January 2025, the price of photovoltaic glass and the industry's average gross profit level have shown preliminary signs of rebound. Long-term outlook: Deep adjustment period for supply and demand From mid-2024 to mid-January 2025, the total capacity of domestic photovoltaic glass kiln cold repair reached 25570 t/d, accounting for 22% of the total production capacity (including cold repair). Despite control of new production capacity areas and industry losses leading to delays in the commissioning of some production lines, the industry still faces the impact of large-scale recovery of cold repair production capacity in 2025. However, according to calculations, the supply-demand gap for photovoltaic glass is expected to rebound in 2025Q4, with the impact of cold repair recovery being short-term, but the long-term trend of tightening supply has been established, leading to a gradual tightening of supply. In this process, the trend towards larger kilns is expected to accelerate. Investment recommendation: Focus on leading companies with technological and financial advantages in photovoltaic glass Flat Glass Group (06865, 601865.SH) is recommended as a key player in the photovoltaic glass industry. Risk warning: Photovoltaic installation below expectations; significant fluctuations in raw material prices; policy changes related to photovoltaic glass.