CICC: "Grand Beautiful" Act Passed, Domestic Photovoltaic Anti-Corruption Expectations Gradually Increasing

Zhongjin released a research report stating that in the early morning of July 1st, the US "Big Beautiful Bill" was officially approved by the Senate with a vote of 51:50. From the final content of the bill, compared to the previous cuts in subsidies for photovoltaics, there has been some relaxation, including widening the equity stake of specific foreign entities, adjusting the start-up time requirements for obtaining ITC/PTC subsidies, etc. The market was previously pessimistic about the US policy rollback, but the final passed bill may be slightly better than market expectations. On the domestic front, on June 29th, People's Daily published an article proposing to combat the trend of working excessively long hours, on July 1st President Xi Jinping presided over an economic committee meeting, and the Ministry of Industry and Information Technology organized a symposium and published a document, raising expectations for the photovoltaic industry to combat overwork. Due to the decrease in component production, this week the glass inventory days accelerated to 34.62 days, with a 2.27% month-on-month decrease in the price of 2.0mm glass. The photovoltaic glass industry started to self-regulate, with production cuts expected to decrease by 30% based on production limit expectations. Recently, the production capacity for cold repairs reached 650 tons, and some production capacities are beginning to be restricted, marking the start of the second round of production capacity clearing. Main viewpoints from Zhongjin are as follows: The US "Big Beautiful Bill" is passed, raising expectations for combating overwork internally in China In the early morning of July 1st, the US "Big Beautiful Bill" was officially approved by the Senate with a vote of 51:50, pending the President's signature. Compared to previous cuts in subsidies for photovoltaics, there has been some relaxation in the final content of the bill, including widening the equity stake of specific foreign entities, and adjusting the start-up time requirements for obtaining ITC/PTC subsidies. The market was previously pessimistic about US policy rollback, but the passed bill may be slightly better than market expectations. On June 29th, People's Daily published an article proposing to combat overwork, and on July 1st, President Xi Jinping presided over an economic committee meeting, the Ministry of Industry and Information Technology organized a symposium and published a document, raising expectations for combating overwork in the photovoltaic industry. Photovoltaic Main Industry Chain The industry chain prices are currently weakening slowly. According to Zhongjin's investigation, there has been a differentiation in production changes in the industry in July. Some companies and industry trends have slightly weakened together, while a few companies have maintained production due to overseas demand growth. Overall, demand in July remains weak. Currently, it is suggested to focus on three main lines: 1) The silicon material segment has a good leverage point for supply-side reform, with a steep cost curve and high profit elasticity, paying attention to Tongwei Co., Ltd. (600438.SH) and new technology granular silicon; 2) Leading component companies with the ability to improve efficiency or invest in leading capacity may see market share increases and early profit recovery, such as Jinko Solar (688223.SH), Shanghai Aiko Solar Energy (600732.SH), and 3) new technologies accelerating industrialization under the trend of improving efficiency and reducing costs, such as Wuxi Dk Electronic Materials Co., Ltd. in the copper paste segment, Changzhou Fusion New Material, Jiangsu Boqian New Materials Stock, etc. Photovoltaic Auxiliary Material Industry Chain Affected by the decline in component production, the days of glass inventory accelerated to 34.62 days this week, with a 2.27% month-on-month decrease in the price of 2.0mm glass. The photovoltaic glass industry's self-regulation has begun, and production cuts are expected to decrease by 30% based on production limit expectations. Recently, cold repair production capacity reached 650 tons, and some production capacities are starting to be restricted, marking the start of the second round of production capacity clearing. Regarding the film layer, it is suggested to focus on the second growth curve of film companies, such as Shanghai Hiuv New Materials Co., Ltd. in the automotive dimming film business, which is expected to ramp up in the next 25 years. On the inverter side, it is recommended to focus on household off-grid energy storage systems, as demand in countries such as Poland, Romania, Bulgaria, Hungary, and Pakistan is increasing. Recommended companies include Ningbo Deye Technology (688680.SH) and Shanghai Hiuv New Materials Co., Ltd. (605117.SH). Risk Factors Lower-than-expected demand for photovoltaics, supply-side reform falling short of expectations, trade policy risks.