Junda Shares (002865.SZ): 2025 Annual Review – Strategic Pivot to Overseas Markets and Commercial Aerospace Amidst Short-Term Headwinds

Date: April 02, 2026
Rating: Buy (Maintained)
Current Price: CNY 73.18
Target Price Implied Upside: Significant recovery potential driven by 2026-2028 earnings inflection.

Executive Summary

Junda Shares (002865.SZ), a leading manufacturer of high-efficiency solar cells, has released its financial results for the fiscal year 2025. The report reflects a period of significant structural adjustment and strategic transformation. While the company faced substantial short-term profitability pressures due to intense industry competition and asset impairments, resulting in a net loss of CNY 1.42 billion in 2025, the underlying operational metrics reveal a decisive shift towards higher-value overseas markets and technological leadership.

The core investment thesis for Junda Shares rests on three pivotal pillars:
1. Successful Geographic Rebalancing: The proportion of overseas revenue surged from 23.85% in 2024 to 50.66% in 2025, positioning Junda as a core supplier in international markets where margins are historically more resilient. This transition is expected to drive a sequential improvement in profitability starting in Q1 2026.
2. Technological Moat & Capacity Expansion: The company maintains a leading edge in cell efficiency, with its Tunnel Oxide Passivated Contact (TBC) technology reaching ~26.6% efficiency and perovskite tandem cells achieving a record small-area efficiency of 33.53%. Furthermore, the joint venture project in Turkey is scheduled to commence production and shipments in Q1 2026, further solidifying its global supply chain footprint.
3. Diversification into Commercial Aerospace: In a bold strategic move, Junda is expanding beyond photovoltaics into the commercial aerospace sector. Through significant equity stakes in entities like Shanghai Fuyao Xinghe and Star Wing Core Energy, the company is building a full-chain capability in satellite manufacturing, communication, and remote sensing. This diversification aims to create a second growth curve, reducing reliance on the cyclical solar industry.

Despite the challenging 2025 performance, we maintain our "Buy" rating. We anticipate a robust turnaround in 2026, with projected net profit attributable to shareholders reaching CNY 412.6 million, followed by strong growth to CNY 820.5 million in 2027 and CNY 1.14 billion in 2028. The current valuation, while reflecting near-term distress, offers an attractive entry point for long-term investors betting on the company’s technological premium, overseas expansion success, and new business verticals.

Key Takeaways

1. Financial Performance Analysis: Navigating the Cyclical Trough

The fiscal year 2025 was characterized by severe headwinds in the global photovoltaic (PV) sector, marked by overcapacity and price wars. Junda Shares’ financial results reflect this broader industry context, yet also highlight specific company-level dynamics.

1.1 Full Year 2025 Results

• Revenue Decline: Total operating revenue stood at CNY 7.63 billion, representing a year-over-year (YoY) decline of 23.36% compared to CNY 9.95 billion in 2024. This contraction was primarily driven by lower average selling prices (ASPs) across the industry and a deliberate optimization of product mix towards higher-quality, albeit initially lower-volume, overseas contracts.
• Significant Net Loss: The company reported a net loss attributable to shareholders of CNY 1.42 billion, a deterioration of 139.51% YoY. The loss in 2024 was CNY 591 million. The widened loss in 2025 was exacerbated by substantial asset impairment provisions and the negative gross margin environment in the domestic market.
• Gross Margin Pressure: The overall gross margin turned negative at -1.33%, a decrease of 2.1 percentage points (pct) YoY. This indicates that for certain periods or product lines, the cost of goods sold exceeded revenue, a phenomenon common during extreme price crashes in commodity-like industries.
• Net Profit Margin: The net profit margin attributable to shareholders fell to -18.56%, down 12.6 pct YoY, reflecting the combined impact of operating losses and non-operating expenses.

1.2 Fourth Quarter 2025 Deep Dive

Q4 2025 represented the trough of the cycle, with intensified impairments and competitive pressure.
* Q4 Revenue: CNY 1.95 billion, up 11.2% YoY but down 3.6% quarter-over-quarter (QoQ). The YoY increase suggests some volume resilience despite price declines.
* Q4 Net Loss: A staggering loss of CNY 1.0 billion in Q4 alone, compared to a smaller loss in the previous year. This represents a YoY decline of 472.1% and a QoQ decline of 542.3%.
* Q4 Gross Margin: Deteriorated significantly to -9.6%, down 12.3 pct YoY and 10.2 pct QoQ. This sharp decline underscores the severity of price competition in the domestic market during the end of the year and the impact of inventory write-downs.
* Deduction of Non-recurring Items: The deducted non-net profit was CNY -920 million in Q4, indicating that the core operating business was the primary driver of the loss, rather than one-off financial items.

1.3 Cash Flow and Balance Sheet Strength

Despite the income statement challenges, Junda’s balance sheet remains robust, providing a crucial buffer for the upcoming expansion phase.
* Cash Reserves: As of year-end 2025, the company held CNY 4.4 billion in monetary funds and CNY 600 million in transactional financial assets, totaling CNY 5.0 billion in highly liquid assets. This liquidity position is critical for funding the Turkey project and aerospace investments without excessive leverage.
* Operating Cash Flow: Full-year operating cash flow was negative at CNY -486 million, a YoY decline of 174.2%. However, a notable turnaround occurred in Q4, where operating cash flow turned positive at CNY 370 million. This sequential improvement signals better working capital management and potentially improved collection cycles or reduced inventory buildup towards the end of the year.
* Capital Expenditure (CapEx): Full-year CapEx was CNY 200 million, down 54.2% YoY, reflecting a cautious approach to domestic expansion amidst uncertainty. Q4 CapEx was negative (CNY -40 million), likely due to adjustments in payable accounts for previously incurred investments.
* Inventory: Inventory levels rose to CNY 638 million, a 15.6% increase from the beginning of the year. While this poses a risk of further impairments if prices drop, it also positions the company to meet immediate demand as the market stabilizes.

(Note: Some 2024 figures derived from YoY change percentages provided in the source text.)

2. Operational Highlights: The Overseas Pivot and Technological Leadership

The most compelling aspect of Junda’s 2025 performance is not the top-line decline, but the structural shift in its revenue composition and its relentless focus on next-generation technology.

2.1 Surge in Overseas Revenue Contribution

In response to saturation and margin compression in the Chinese domestic market, Junda aggressively pivoted towards international clients.
* Market Share Shift: The proportion of overseas revenue jumped from 23.85% in 2024 to 50.66% in 2025. This doubling of international exposure is a strategic masterstroke. Overseas markets, particularly in Europe, the Middle East, and emerging economies, often offer better pricing power and less volatile demand compared to the hyper-competitive domestic landscape.
* Core Supplier Status: Junda has established itself as a core battery cell supplier for key overseas clients. This status provides stickier relationships and potentially longer-term contracts, enhancing revenue visibility.
* Outlook for 2026: We expect the overseas contribution to continue rising in Q1 2026. Given that overseas margins are typically healthier, this mix shift is the primary catalyst for the anticipated sequential improvement in profitability. The company’s ability to navigate trade barriers and logistics challenges will be key to sustaining this trend.

2.2 Sales Volume and Pricing Dynamics

• 2025 Sales Volume: The company sold approximately 29.54 GW of battery cells in 2025, a 12.5% decline YoY. This volume reduction was partly intentional, as the company prioritized higher-margin overseas orders over low-margin domestic volume.
• Q4 2025 Volume: Estimated sales in Q4 were between 7.0 GW and 7.5 GW. This represents a slight YoY increase of ~1% but a QoQ decrease of ~10%. The sequential drop may reflect seasonal factors or a temporary pause in shipments ahead of the new capacity ramp-up.
• Unit Economics: Our calculations suggest a loss per watt of approximately CNY 0.03–0.04 in Q4. This unit loss was heavily influenced by asset impairment charges. As these one-time impairments clear and higher-efficiency products dominate the mix, the unit economics are expected to normalize and turn positive.

2.3 Technological Edge: TBC and Perovskite Tandem Cells

Junda continues to invest heavily in R&D, ensuring it remains at the forefront of PV technology. In an industry where efficiency gains directly translate to levelized cost of energy (LCOE) reductions, this leadership is a durable competitive advantage.

• TBC (Tunnel Oxide Passivated Contact) Technology:

  • Efficiency Milestone: Junda’s TBC cell efficiency has consistently improved, rising from ~25% to approximately 26.6%. This places Junda among the global leaders in mass-production-ready TBC technology.
  • Commercial Viability: TBC technology combines the benefits of TOPCon and HJT, offering higher efficiency potential and better temperature coefficients. As the industry transitions from PERC to TOPCon and then to TBC/HJT, Junda’s early mastery of TBC positions it to capture premium pricing in the next technology cycle.

• Perovskite Tandem Cells:

  • Record Efficiency: The company achieved a small-area efficiency of 33.53% for its perovskite-silicon tandem cells. This figure is at the forefront of global industry standards.
  • Validation Complete: Junda has completed key technical validations for this technology. While commercial mass production of tandem cells is still a few years away, this R&D breakthrough ensures that Junda will not be disrupted by next-gen technologies but will instead lead them.
  • Strategic Implication: Ownership of such IP enhances the company’s valuation multiple, as it transitions from a pure manufacturing play to a technology-driven enterprise.

2.4 International Capacity Expansion: The Turkey Project

To mitigate geopolitical risks and serve local markets more effectively, Junda is expanding its manufacturing footprint abroad.
* Joint Venture in Turkey: The company has partnered with a Turkish client to co-build a high-efficiency battery cell project.
* Timeline: Production and shipments are scheduled to begin in Q1 2026.
* Strategic Benefits:
1. Tariff Avoidance: Local production helps bypass potential import tariffs in Europe and surrounding regions.
2. Supply Chain Resilience: Diversifying production locations reduces reliance on Chinese exports, appealing to international clients seeking supply chain security.
3. Market Access: Direct presence in the Turkey/MENA region opens up new customer bases.

3. Strategic Diversification: Entry into Commercial Aerospace

Perhaps the most surprising and potentially transformative development in Junda’s 2025 strategy is its entry into the commercial aerospace sector. This move signifies a deliberate effort to diversify revenue streams and tap into a high-growth, high-barrier industry.

3.1 Investment in Star Wing Core Energy (Xingyi Xineng)

• Transaction Details: Junda signed capital increase and shareholder agreements with Star Wing Core Energy and related parties.
• Investment Amount: CNY 30 million in cash.
• Equity Stake: Acquired 16.67% equity in Star Wing Core Energy.
• Joint Venture Formation: Junda and Star Wing will establish a joint venture focused on the manufacturing of CPI (Colorless Polyimide) films and products combining CPI films with crystalline silicon cells.
• Strategic Rationale:
  • CPI Films: These are critical materials for flexible electronics and space applications due to their lightweight, high strength, and thermal stability.
  • Space Solar Integration: The combination of CPI films with silicon cells suggests development of lightweight, flexible solar panels specifically designed for satellite and aerospace applications. This leverages Junda’s core competency in solar cells while adapting it for a specialized, high-margin niche.

3.2 Control of Shanghai Fuyao Xinghe and Xuntian Qianhe

• Ownership Structure: Junda holds a 60% stake in Shanghai Fuyao Xinghe.
• Subsidiary: Shanghai Fuyao Xinghe wholly owns Shanghai Xuntian Qianhe.
• Business Scope: Xuntian Qianhe covers the entire value chain of commercial satellites, including:
  • Satellite Manufacturing
  • Communication Systems
  • Remote Sensing
  • Data Processing
  • System Integration
• Implications:
  • Vertical Integration: By controlling a satellite integrator, Junda can potentially become a preferred supplier of power systems (solar arrays) for these satellites.
  • New Growth Engine: The commercial space economy is projected to grow exponentially in the coming decade. Early entry allows Junda to establish brand recognition and technical standards in this nascent market.
  • Synergy: The expertise in high-efficiency, lightweight, and radiation-hardened solar cells required for space applications aligns perfectly with Junda’s R&D direction in TBC and perovskite technologies.

This dual-pronged approach—investing in material science (CPI) and system integration (Satellites)—suggests a well-thought-out strategy rather than a speculative diversification. It transforms Junda from a pure-play PV component maker into a broader advanced manufacturing and aerospace technology platform.

4. Expense Management and Operational Efficiency

Despite the revenue decline, Junda demonstrated disciplined cost control, although the fixed cost burden weighed heavily on margins due to lower utilization rates.

• Period Expenses: Total period expenses for 2025 were CNY 720 million, a slight YoY decrease of 2.4%.
• Expense Ratio: The expense ratio rose to 9.5% (from ~7.5% in 2024), an increase of 2 pct. This increase is largely mathematical, as the denominator (revenue) shrank significantly while fixed costs remained relatively sticky.
• Q4 Expenses: Q4 period expenses were CNY 200 million, up 10.1% YoY and 11% QoQ. The expense ratio in Q4 was 10.4%.
• Breakdown:
  • R&D Expenses: Maintained at healthy levels (CNY 111 million in 2025), underscoring the commitment to innovation.
  • Administrative & Sales: Kept under tight control, reflecting management’s focus on efficiency during the downturn.

The stability in absolute expense terms, despite the revenue drop, indicates a lean operational structure. As revenue rebounds in 2026, operating leverage should significantly boost net margins.

Risks / Headwinds

While the long-term outlook is positive, investors must be aware of several significant risks that could impede the projected recovery.

1. Intense Industry Competition and Price Wars

The PV industry is notorious for its cyclical boom-and-bust patterns.
* Overcapacity: Global solar cell manufacturing capacity, particularly in China, still exceeds demand. If competitors engage in aggressive price cutting to clear inventory, ASPs could remain depressed for longer than anticipated, delaying Junda’s return to profitability.
* Margin Compression: Even with a shift to overseas markets, global competition is intensifying. European and US manufacturers are receiving substantial government subsidies, which could distort pricing and erode the margin advantage of Chinese exporters.

2. Raw Material Price Volatility

• Silicon Wafer Costs: Fluctuations in the price of silicon wafers, the primary raw material for solar cells, can impact gross margins. While Junda passes some costs to customers, rapid spikes can squeeze margins if contract terms are rigid.
• Silver Paste: High-efficiency cells like TBC and HJT require significant amounts of silver paste. Rising silver prices can increase non-silicon costs, impacting the economic viability of advanced technologies.

3. Geopolitical and Trade Policy Risks

• Trade Barriers: As Junda increases its overseas exposure, it becomes more vulnerable to trade policies. Tariffs, anti-dumping duties, or local content requirements in key markets (EU, US, India, Turkey) could disrupt supply chains or reduce competitiveness.
• Turkey Project Execution: The success of the Turkey JV depends on stable political relations and regulatory approval. Any delays in construction or permitting could push back the revenue contribution from this project.

4. Execution Risk in New Businesses (Aerospace)

• Unproven Track Record: Commercial aerospace is a fundamentally different business from PV manufacturing. It involves longer development cycles, stricter regulatory hurdles, and different customer dynamics.
• Capital Intensity: Scaling up satellite manufacturing and space-grade solar production requires significant capital. There is a risk that these investments may dilute returns in the short term without generating immediate profits.
• Integration Challenges: Integrating CPI film technology and satellite systems into Junda’s existing operations requires new talent and management capabilities. Failure to execute this integration smoothly could lead to operational inefficiencies.

5. Asset Impairment Risks

• Inventory Write-downs: With inventory levels at CNY 638 million, any further decline in PV module prices could necessitate additional impairments, hurting future earnings.
• Fixed Asset Impairment: If older production lines become obsolete faster than expected due to the rapid adoption of TBC/Perovskite, Junda may need to write down the value of its existing PERC or early TOPCon assets.

6. Financial Leverage and Liquidity

• Debt Levels: The资产负债率 (Asset-Liability Ratio) stands at 77.69% (LF). While manageable given the cash reserves, high leverage limits financial flexibility.
• Interest Rates: Rising interest rates could increase financing costs, particularly for the capital-intensive aerospace and overseas expansion projects.

Rating / Sector Outlook

Sector Outlook: Photovoltaics & Commercial Aerospace

Photovoltaics:
The global PV sector is currently in a "clearing" phase. The excess capacity built during the 2023-2024 boom is being absorbed through bankruptcies, consolidation, and slower expansion. We expect the industry to reach a bottom in late 2025/early 2026, followed by a gradual recovery in 2027.
* Technology Transition: The shift from P-type to N-type (TOPCon, HJT, TBC) is accelerating. Companies with leading N-type technology, like Junda, will gain market share at the expense of laggards.
* Globalization: The era of purely China-centric manufacturing is ending. Successful players will be those with global footprints (like Junda’s Turkey project) that can navigate trade barriers.

Commercial Aerospace:
This sector is in a high-growth early stage. Driven by the proliferation of Low Earth Orbit (LEO) satellite constellations for communication and remote sensing, demand for satellite components and integration services is skyrocketing.
* Policy Support: Both China and other major economies are prioritizing space infrastructure, providing a favorable policy tailwind.
* High Barriers: The high technical and regulatory barriers protect incumbents and early movers, offering potential for sustained high margins once scale is achieved.

Company Rating: Buy (Maintained)

We maintain our Buy rating on Junda Shares.

Rationale:
1. Valuation Attractiveness: The stock is currently priced at a P/E of 55.21x for 2026E earnings. While this appears high, it reflects the base effect of the 2025 loss. Looking at 2027E, the P/E drops to 27.76x, and to 19.97x for 2028E. This trajectory offers a compelling risk-reward profile for growth investors.
2. Turnaround Visibility: The combination of overseas revenue growth (higher margins), new capacity coming online (Turkey), and industry stabilization provides a clear path to profitability in 2026.
3. Optionality Value: The commercial aerospace business provides significant upside optionality. If successful, it could re-rate the company from a cyclical manufacturing stock to a high-tech aerospace conglomerate, commanding a higher multiple.
4. Balance Sheet Safety: With CNY 5 billion in cash, Junda has the firepower to survive the downturn and invest in growth, unlike many weaker competitors who may face liquidity crises.

Price Target Considerations:
Based on a blended valuation approach (DCF and Peer Comparison for 2027E), the current price of CNY 73.18 offers a reasonable entry point. As earnings recover in 2026 and 2027, we anticipate significant upward revision in price targets.

Investment View

Core Investment Logic

Junda Shares represents a classic "turnaround + growth" investment opportunity. The market has largely priced in the negative news of 2025, focusing on the losses and industry downturn. However, this perspective overlooks the structural improvements in the company’s business model and its strategic foresight.

1. The "Overseas Alpha"

Junda’s shift to >50% overseas revenue is not just a statistical change; it is a fundamental improvement in business quality. Overseas customers typically prioritize reliability and efficiency over lowest price, allowing Junda to leverage its technological lead. As the Turkey plant comes online in Q1 2026, this trend will accelerate. Investors should monitor the quarterly breakdown of domestic vs. overseas margins to confirm this thesis.

2. Technology as a Moat

In the PV industry, technology leadership is transient unless continuously reinforced. Junda’s progress in TBC (26.6%) and Perovskite Tandem (33.53%) demonstrates its ability to stay ahead of the curve. This R&D capability ensures that Junda will not be commoditized. As the industry moves towards higher-efficiency modules, Junda’s products will command a premium.

3. The Aerospace Catalyst

The entry into commercial aerospace is the wildcard that could drive outsized returns. While currently a small part of the revenue, the strategic positioning in satellite manufacturing and space-grade solar cells aligns with national strategic priorities and global trends. This diversification reduces the company’s beta to the solar cycle and introduces a new, high-growth narrative.

Financial Forecast and Valuation Analysis

We have updated our financial forecasts to reflect the 2025 actuals and the new strategic direction.

Key Assumptions for 2026-2028:
* Revenue Recovery: We project a 104% revenue jump in 2026 to CNY 15.57 billion. This is driven by the full-year contribution of overseas contracts, the ramp-up of the Turkey facility, and a general recovery in global PV demand.
* Margin Expansion: Gross margins are expected to recover to 9.47% in 2026, rising to 11.72% by 2028. This assumes a stable pricing environment and the higher margin mix of overseas and advanced technology products.
* Profitability Inflection: The return to net profit in 2026 (CNY 413 million) marks the turning point. Strong operating leverage will drive net profit growth to nearly 100% in 2027.
* CapEx Cycle: Significant CapEx is planned for 2026-2027 (CNY 3.6+ billion annually) to fund the Turkey project and aerospace facilities. This will be funded by a mix of operating cash flow (which turns strongly positive in 2026/2027) and existing cash reserves.

Strategic Recommendations for Investors

1. Accumulate on Weakness: Given the volatility associated with the turnaround story, any dips in the stock price due to short-term macro noise or sector-wide sentiment should be viewed as buying opportunities.
2. Monitor Q1 2026 Closely: The first quarter of 2026 is critical. Investors should look for:
   • Confirmation of positive sequential margin improvement.
   • Updates on the Turkey project’s production start.
   • Initial revenue contributions or milestones from the aerospace subsidiaries.
3. Long-Term Horizon: This is not a short-term trade. The full realization of the aerospace strategy and the stabilization of the PV cycle will take 2-3 years. Investors should adopt a 12-24 month horizon to capture the full value of the turnaround.
4. Risk Management: Keep an eye on global trade policies. Any sudden imposition of harsh tariffs on Chinese PV products in key markets could derail the overseas growth thesis. Hedging strategies or diversification within the portfolio may be prudent.

Conclusion

Junda Shares is navigating a difficult transitional period with strategic clarity and financial prudence. The 2025 losses, while stark, are largely indicative of an industry-wide reset and specific one-time impairments. The underlying business is strengthening through its overseas pivot, technological leadership, and bold diversification into aerospace.

For institutional investors, Junda offers a rare combination of cyclical recovery potential in its core PV business and secular growth optionality in commercial aerospace. The strong balance sheet provides the necessary runway to execute this strategy. We believe the market has underestimated the speed and magnitude of the 2026 turnaround. Therefore, we maintain our Buy rating, expecting significant outperformance as the company transitions from loss to profit and from a pure PV player to a diversified tech-manufacturing leader.

Appendix: Detailed Financial Analysis

A. Profitability Drivers

1. Gross Margin Reconstruction
The negative gross margin in 2025 (-1.33%) is unsustainable and anomalous. Our model assumes a return to positive territory in 2026 (9.47%) based on:
* Product Mix: Higher share of TBC and overseas cells.
* Cost Reduction: Economies of scale from the Turkey plant and optimized supply chain.
* Price Stabilization: Industry consolidation leading to more rational pricing.

2. Operating Leverage
With fixed costs (R&D, Admin) remaining relatively stable around CNY 700-800 million, every incremental dollar of revenue in 2026-2028 will flow disproportionately to the bottom line. This is evident in the projected net margin expansion from 2.65% in 2026 to 5.61% in 2028.

B. Cash Flow Sustainability

1. Operating Cash Flow Turnaround
The shift from negative OCF in 2025 (-CNY 486 million) to strongly positive in 2026 (+CNY 1.65 billion) and 2027 (+CNY 4.82 billion) is a key validation of the turnaround. This cash generation will fund the heavy CapEx requirements without needing excessive debt.

2. CapEx Management
The projected CapEx of ~CNY 3.6 billion annually in 2026-2028 is significant but manageable given the cash reserves and improving OCF. Investors should monitor the ROI on these investments, particularly in the aerospace segment, to ensure capital efficiency.

C. Valuation Metrics

1. P/E Ratio Analysis
* 2026E P/E: 55.21x: Reflects the first year of profitability. High, but typical for turnaround stories.
* 2027E P/E: 27.76x: Approaches fair value for a high-growth manufacturing tech company.
* 2028E P/E: 19.97x: Becomes attractive relative to peers, assuming sustained growth.

2. P/B Ratio Analysis
* Current P/B: 5.85x: Elevated due to the drop in book value from losses.
* 2026E P/B: 3.35x: Normalizes as equity base rebuilds through retained earnings.

3. ROIC and ROE
* ROIC: Expected to improve from -8.54% in 2025 to 9.74% in 2028, indicating efficient capital allocation.
* ROE: Expected to rise from -38.68% to 12.67%, demonstrating effective use of shareholder equity.

D. Comparative Peer Analysis (Conceptual)

While specific peer data is not provided in the source, Junda can be compared against other leading N-type cell manufacturers (e.g., Aiko Solar, Tongwei, etc.). Junda’s differentiation lies in:
1. Higher Overseas Exposure: Peers are still heavily domestic-focused.
2. Aerospace Diversification: Few pure-play PV companies have such a direct entry into satellite manufacturing.
3. TBC Leadership: Junda is one of the few with mass-production ready TBC at high efficiency.

These factors justify a premium valuation relative to traditional PV manufacturers.

Disclaimer: This report is based on information available as of April 02, 2026, and provided by Dongwu Securities. It is intended for institutional investors only. Past performance is not indicative of future results. Investors should conduct their own due diligence.