China Securities Co.,Ltd.: The bottom of the photovoltaic statement has appeared, focusing on the clearance of production capacity and the progress of upstream destocking.

China Securities Co., Ltd. released a research report stating that the profitability of the photovoltaic industry has significantly declined based on the 2024 annual report and the 2025 first quarter report. However, the bottom of the photovoltaic industry's financial statements has already appeared, with a large amount of fixed asset impairment in the fourth quarter and the impact of anti-dumping measures in Southeast Asia reflected in the first quarter's financial statements. It is expected that the probability of further deterioration in profitability is small. From the perspective of production capacity, the industry's willingness to expand production has significantly decreased due to low profitability, and the growth rate of fixed assets is expected to decrease substantially in the coming year. However, existing production capacity still significantly exceeds demand. The industry needs to focus on destocking in the upstream and the progress of capacity elimination in the future. Currently, there is still some technological iteration in the battery segment, and cash-strapped companies will be unable to carry out TOPCon upgrades or BC capacity construction. The inability to upgrade TOPCon capacity will gradually make it difficult to obtain orders and eliminate from the market, resulting in a reduction of battery production capacity. Key points from China Securities Co., Ltd.: - The bottom of the photovoltaic financial statements has appeared based on the annual report and the first quarter report. - The willingness of the industry to expand production has significantly declined, and capital expenditure has decreased sharply. - The industry is currently at the bottom of the cycle, and attention should be focused on destocking in the upstream and the progress of industry capacity elimination. From a financial perspective, the profitability of the photovoltaic industry is at historically low levels, but there is still significant pressure from oversupply of existing production capacity. Silicon material, as the "mother of the cycle" in the photovoltaic industry, has a significant impact on the overall supply and demand due to its supply and pricing. Currently, silicon material inventory is around 4-5 months, putting pressure on inventory levels. Assuming silicon wafer production volumes of 700GW and 840GW in 2025 and 2026 respectively, it is expected that silicon material inventory will return to less than 1 month in the first half of 2026. In the medium term, cash-strapped companies will be unable to upgrade TOPCon capacity or build BC capacity, and TOPCon capacity that cannot be upgraded will gradually struggle to obtain orders and be eliminated from the market, achieving capacity elimination in the battery segment.