CITIC Securities: The bottom of the photovoltaic balance sheet has appeared. Pay attention to the clearance of production capacity and the progress of destocking in the upstream.

CITIC Securities 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 industry's financial statements has already appeared, as a large amount of fixed asset impairment in the fourth quarter and the impact of the double reverse policy in Southeast Asia in the first quarter have been reflected in the 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 significantly decline in the coming year. However, existing production capacity still significantly exceeds demand. The industry needs to pay attention to upstream destocking and progress in capacity reduction in the future. Currently, there is still ongoing technological iteration in the battery segment, and cash-strapped companies are unable to carry out TOPCon upgrades or BC capacity construction. Production capacity that cannot be upgraded with TOPCon will gradually find it difficult to obtain orders and will be eliminated from the market, thereby achieving capacity reduction in the battery segment.