CITIC Securities: The possibility of anti-cavity in the photovoltaic industry may help the industry return to the era where silicon was dominant.

Citics Securities released a special report on the photovoltaic industry, stating that photovoltaics have become a representative industry in the fight against internal competition. In the recent crackdown on selling below cost, the price end of the industry chain has achieved initial success, with silicon materials, silicon wafers, and cells successfully increasing in price. The focus will now shift to the pricing of components. Citics Securities estimates that a 40% capacity utilization rate corresponds to a full cost of silicon materials of about 47,000-63,000 yuan per ton. With the restriction of "not selling below full cost", the cost end provides strong support for current prices, weakening the competitiveness of high-cost enterprises and leading to the gradual exit of outdated capacity. In the event that demand growth slows down in 2026, Citics Securities believes that in order to further boost the industry chain's prosperity, it will be necessary to see unexpected efforts to control production capacity in the industry. If demand growth can be stimulated by certain external factors in the future, the prosperity of the industry chain will continue to improve. Citics Securities believes that under the overarching direction of the "anti-internal competition" policy, the industry's long-term profit center is expected to return to a reasonable level of profitability. It is optimistic about the silicon material segment, which directly benefits from the "anti-internal competition" policy. Core targets include Tongwei Co., Ltd., Daqo New Energy Corp., and leading silicon granule companies. Downstream silicon wafers, cells, and components will also benefit from breaking the cycle of deflation, with improved revenue and profits. Companies to watch include Longi Green Energy, JA Solar Technology Co., Ltd., TOPCon 3.0, JA Solar, Jinneng Energy, Jun De shares, Hengdian Group DME, ATES, TCL Tech. Environmental protection, etc.