Guotai Haitong: The photovoltaic sector will usher in a new round of growth, and the current position is worth close attention.

Guotai Haitong released a research report stating that from 2020 to 2026, after experiencing a period of rapid capacity expansion, the photovoltaic industry is now in a consolidation phase. As anti-involution efforts advance and outdated capacity is phased out, high-quality companies will survive the winter, demand-side growth potential remains substantial, and the sector will usher in a new round of growth. Currently, fund holdings and share prices are both at bottom levels, with some segments recovering first. Considering that market performance often precedes fundamental improvement, the current position is worth close attention. Guotai Haitong's main points are as follows: Demand side: From "subsidies" and "subsidy removal" to "market-based electricity pricing," photovoltaics are gathering strength for the next wave of growth From 2000 to 2012, the market was in an early stage of development, with growth mainly driven by subsidy policies. Europe's share of global installations rose from 39% in 2002 to 74% in 2011, becoming the core market. Starting in 2013, domestic distributed photovoltaics began to develop rapidly. China's new installations reached 44.26GW in 2018, accounting for 42% of the global total, making it an important source of global installation growth. Starting in 2020, "carbon neutrality" led a new round of domestic growth, and under grid parity conditions, photovoltaic demand broke free from its past excessive reliance on policy. In 2025, demand entered a phase of periodic adjustment, and the industry is expected to resume growth in 2027. In the long term, the potential for photovoltaic installations is enormous. Supply side: From rapid expansion to comprehensive oversupply, supply has continued to contract since 2025 From 2020 to 2022, prices rose sharply amid tight supply in the industrial chain, which also stimulated supply expansion. With rapid supply expansion, phased overcapacity emerged in 2024, and the industry generally suffered losses. In 2025, anti-involution and capacity reduction entered a substantive phase. New standards will be fully implemented on January 1, 2027, and are expected to eliminate outdated capacity. From 2020 to 2026, share prices experienced three stages: high growth, valuation contraction, and bottom recovery From 2020 to 2022Q3, carbon neutrality supported the industry's long-term development, geopolitical conflicts increased the urgency of energy transition, supply-demand relations returned to a healthy state, and both performance and industry valuations rose. LONGi Green Energy Technology's PE (earnings forecast) rose from 16.1x in January 2020 to 46.7x in October 2021, as the market assigned a growth premium. From 2022Q4 to 2024Q3, the market expected a reversal in supply-demand relations, supply tightness began to ease, and share prices trended downward. The photovoltaic index reached a high in 22Q3, then generally trended downward from 22Q4 to 24Q3. The photovoltaic index fell 24.18% in 2023 and 19.88% in 2024. Some companies such as Sungrow Power Supply performed normally, but dragged down by the overall industry, their PE (earnings forecast) valuations fell back to the 10-20x range. Starting in 2024Q4, the industry began supply-side clearing and anti-involution. In June 2025, the revision of the Anti-Unfair Competition Law explicitly prohibited below-cost dumping. The emergence of anti-involution and second growth curves brought some structural improvements in holdings. Some companies such as Ningbo Deye Technology Corporation had performance support, and their share prices showed upward continuity, with PE (earnings forecast) generally fluctuating in the 10-30x range. Risk warnings: Industry policy fluctuation risk; intensifying competition risk; new technology substitution risk; product price fluctuation risk; demand falling short of expectations risk.