Junda Shares (002865.SZ): Navigating the Cyclical Trough – Strategic Pivot to Overseas Expansion and Space Photovoltaics Amidst 2025 Losses

Date: January 21, 2026
Analyst: Institutional Research Team
Rating: BUY (Maintained)
Current Price: CNY 84.25
Target Price: Implied Upside based on 2027E Recovery
Sector: Renewable Energy / Photovoltaic Cells & Modules

Executive Summary

Junda Shares (002865.SZ), a leading global supplier of high-efficiency photovoltaic (PV) cells, has released its preliminary earnings guidance for the fiscal year 2025, revealing a significant but anticipated阶段性 (phased) net loss. The company expects a net profit attributable to shareholders ranging from a loss of CNY 1.2 billion to CNY 1.5 billion, marking a year-over-year decline of 103% to 154%. This performance reflects the severe headwinds currently plaguing the domestic PV industry, characterized by profound supply-demand imbalances, intense price competition, and necessary asset impairment provisions adopted under prudent accounting principles.

Despite the short-term financial distress, our analysis suggests that Junda is strategically positioning itself for a robust recovery in the medium to long term. The company is actively executing a dual-pronged growth strategy: globalizing its manufacturing footprint and diversifying into high-value niche markets, specifically space photovoltaics. Key developments include the projected commissioning of its Turkey production facility in Q1 2026, which will enhance its ability to serve non-Chinese markets and mitigate trade barrier risks. Furthermore, Junda’s recent strategic investment in Star Wing Core Energy (Xingyi Xineng) signals a decisive entry into the Colorless Polyimide (CPI) film sector, a critical material for flexible solar wings in aerospace applications. This move not only binds Junda to a high-margin, import-substitution-driven supply chain but also leverages its core competency in cell technology to create synergistic products.

We maintain our BUY rating on Junda Shares. While we have downwardly revised our earnings forecasts for 2025-2027 to reflect the deeper-than-expected industry downturn and higher impairment charges, we believe the market has largely priced in these near-term negatives. The company’s solidified position as a core overseas battery supplier, with overseas revenue exceeding 50% in 2025, provides a crucial buffer against domestic volatility. As the industry cycle bottoms out and new capacity comes online, we anticipate a strong earnings rebound starting in 2026, driven by improved utilization rates, better pricing power in international markets, and the gradual contribution of new business lines. Investors should view the current valuation dip as an attractive entry point for exposure to a resilient industry leader undergoing a strategic transformation.

Key Takeaways

1. Financial Performance: Deep Cyclical Trough and Prudent Impairments

The core narrative for Junda Shares in 2025 is one of "clearing the deck" amidst a brutal industry cycle. The preliminary earnings guidance indicates a net loss of CNY 1.2–1.5 billion, with a deducted non-net profit loss of CNY 1.4–1.8 billion. This represents a stark contrast to the profitability seen in previous years, underscoring the severity of the current PV market conditions.

Detailed Financial Breakdown & Drivers of Loss

• Revenue Contraction: We estimate total operating revenue for 2025 to be approximately CNY 9.32 billion, a year-over-year decline of 6.37% from CNY 9.95 billion in 2024. This contraction is primarily driven by the sharp decline in average selling prices (ASPs) for PV cells across the industry, rather than a significant drop in shipment volumes. The price war, fueled by overcapacity in China’s PV manufacturing sector, has compressed margins to unsustainable levels for many players.
• Asset Impairment Provisions: A significant portion of the 2025 loss is attributed to asset impairment charges. In Q4 2025, adhering to the principle of prudence, Junda recognized substantial impairments on inventory and fixed assets. This "big bath" accounting approach, while painful in the short term, is strategically sound as it clears outdated or overvalued assets from the balance sheet, setting a cleaner base for future profitability. The impairment loss is estimated to impact the P&L by approximately CNY 728 million in 2025 (based on our updated model), compared to CNY 139 million in 2024.
• Margin Compression: The gross margin is projected to turn negative at -2.18% in 2025, down from a slim 0.73% in 2024. This reflects the reality that cash costs for some production lines exceeded the market price of cells during certain periods of the year. However, this is indicative of the industry bottom, where weaker competitors are forced to exit or halt production, eventually leading to supply normalization.

Historical and Projected Financial Trajectory

The following table summarizes the key financial metrics, highlighting the transition from profitability to loss and the expected recovery path:

Source: Company Reports, Dongwu Securities Institute Estimates

Analysis of the Recovery Path (2026-2027):
Our model projects a sharp V-shaped recovery beginning in 2026. Revenue is expected to surge by 56.97% to CNY 14.63 billion in 2026, driven by the full-year contribution of overseas capacities and a stabilization in cell prices. By 2027, revenue is forecast to reach CNY 19.22 billion. Correspondingly, net profit is expected to swing back to positive territory, reaching CNY 471 million in 2026 and exceeding CNY 1 billion in 2027. This recovery is predicated on the assumption that industry capacity rationalization will take effect, allowing leaders like Junda to regain pricing power.

2. Strategic Pivot: Globalization as a Defensive and Offensive Moat

In response to the saturated and hyper-competitive domestic market, Junda has aggressively pursued an internationalization strategy. This shift is not merely about sales distribution but involves a fundamental restructuring of its manufacturing footprint to align with global trade dynamics.

Overseas Revenue Dominance

By 2025, Junda’s overseas revenue share has surpassed 50%, establishing it as a core supplier of PV cells to international markets. This geographic diversification is a critical risk mitigation tool. While domestic prices remain depressed due to local overcapacity, international markets—particularly in Europe, the Middle East, and emerging economies—have maintained relatively healthier demand-supply balances. By securing a dominant position in these markets, Junda insulates itself from the worst effects of the Chinese domestic price war.

Turkey Production Base: A Strategic Gateway

A cornerstone of Junda’s globalization strategy is its new production facility in Turkey.
* Timeline: The Turkey plant is scheduled to commence production and shipments in Q1 2026.
* Strategic Rationale:
1. Trade Barrier Mitigation: Turkey serves as an ideal manufacturing hub to access both the European Union and other regional markets without facing the same tariff barriers imposed on direct exports from China. The EU’s increasing scrutiny on Chinese PV imports makes local or near-shore production increasingly valuable.
2. Cost Efficiency: Turkey offers competitive energy and labor costs compared to Western Europe, while maintaining high logistical connectivity.
3. Market Proximity: Being physically closer to key European customers reduces lead times and enhances supply chain reliability, a key differentiator in utility-scale projects.

The successful ramp-up of the Turkey facility is expected to be a major catalyst for the 2026 revenue rebound. It allows Junda to capture higher-margin orders that are inaccessible to competitors relying solely on Chinese exports. Furthermore, this move demonstrates management’s agility in adapting to geopolitical shifts in trade policy, a crucial capability for long-term sustainability in the global energy sector.

3. New Growth Engine: Entry into Space Photovoltaics via Star Wing Core Energy

Beyond traditional terrestrial PV, Junda is making a calculated move into the high-barrier, high-margin sector of space photovoltaics. On January 15, 2026, the company announced the signing of capital increase and shareholder agreements with Star Wing Core Energy (Xingyi Xineng) and related parties.

Deal Structure and Strategic Intent

• Investment: Junda will invest CNY 30 million in cash to acquire a 16.67% equity stake in Star Wing Core Energy.
• Asset Consolidation: Star Wing Core Energy is a newly established project company formed by the team behind Shangyi Optoelectronics. It is designed to consolidate all assets, personnel, and business operations of Shangyi Optoelectronics, which will subsequently become a wholly-owned subsidiary of Star Wing.
• Joint Venture Formation: Junda and Star Wing will establish a joint venture focused on the manufacturing of CPI (Colorless Polyimide) films and hybrid products combining CPI films with crystalline silicon cells.
• Exclusivity Clause: A critical component of this agreement is the mutual exclusivity clause. Star Wing is prohibited from establishing joint ventures or cooperative enterprises with third-party PV companies in the field of CPI films and CPI-silicon hybrid products. This locks in Junda’s access to this proprietary technology and supply chain, preventing competitors from leveraging the same partnership.

Why CPI? The Aerospace Opportunity

The focus on CPI film is highly strategic. CPI is a critical encapsulation material for flexible solar wings used in satellites and spacecraft.
* Technical Requirements: Space-grade CPI must withstand extreme environmental conditions, including high temperatures, rapid thermal cycling, atomic oxygen erosion, and cosmic radiation. These stringent requirements create a high barrier to entry.
* Market Dynamics: Currently, the global supply of aerospace-grade CPI film is dominated by foreign giants such as Kolon Industries (South Korea) and Sumitomo Electric (Japan). This reliance on imports poses supply chain security risks for China’s growing aerospace sector.
* Import Substitution Potential: There is a significant push for domestic substitution in China’s aerospace supply chain. The current price of aerospace CPI base film is approximately CNY 4,000 per square meter, reflecting its high value-added nature. As domestic producers like the Shangyi team (now part of Star Wing) mature their processes, they can capture a substantial share of this market at competitive prices, offering attractive margins.

Synergies with Junda’s Core Business

Junda’s involvement is not purely financial; it is operational and technological.
1. Product Integration: The joint venture will produce hybrid products combining CPI films with crystalline silicon cells. Junda’s expertise in high-efficiency cell manufacturing complements Star Wing’s CPI technology, creating a unique product offering for lightweight, flexible solar applications.
2. Supply Chain Security: By binding itself to the leading domestic CPI producer, Junda secures a stable supply of advanced materials for its own R&D in flexible PV, potentially opening up new terrestrial applications (e.g., building-integrated photovoltaics, portable power).
3. Valuation Re-rating: Success in the space PV sector could lead to a re-rating of Junda’s valuation multiple. Unlike the commoditized terrestrial cell market, the aerospace supply chain commands higher multiples due to higher barriers to entry, stickier customer relationships, and superior margins.

4. Valuation and Investment Thesis

Revised Earnings Forecasts

Given the deeper-than-anticipated industry downturn and the significant asset impairments taken in 2025, we have adjusted our earnings forecasts.

Note: The downgrade reflects the larger impairment charge in 2025 and a more conservative assumption on the speed of price recovery in 2026.

Despite the lower absolute numbers, the directional trend remains intact: a deep trough in 2025 followed by a robust recovery in 2026 and 2027. The 2027 net profit forecast of CNY 1.04 billion still represents a significant recovery from the losses, implying a compound annual growth rate (CAGR) from the 2025 low that is highly attractive.

Valuation Metrics

At the current price of CNY 84.25, the stock trades at:
* P/E (2027E): ~23.6x
* P/B (Current): ~5.29x

While a P/E of 23.6x might seem elevated for a manufacturing firm, it is important to contextualize this within the cyclical nature of the industry. The forward P/E is based on normalized earnings in 2027, when the company is expected to have fully recovered its margin structure. Historically, leading PV technology providers have commanded premium valuations during recovery phases due to their operating leverage.

The Price-to-Book (P/B) ratio of 5.29x reflects the market’s recognition of Junda’s technological leadership and its intangible assets (R&D capabilities, customer relationships, brand). As the company returns to profitability, the P/E multiple will compress rapidly, offering upside potential.

Comparative Advantage

Compared to peers who are heavily exposed to the domestic module market, Junda’s pure-play focus on cells and its overseas orientation provide a distinct advantage.
1. Technology Leader: Junda has consistently been at the forefront of N-type TOPCon technology adoption, ensuring its products remain in demand even as older P-type technologies become obsolete.
2. Agile Capacity Management: The company has demonstrated the ability to adjust capacity utilization and shift production focus faster than integrated giants, allowing it to minimize losses during downturns.
3. New Optionality: The space PV venture provides a call option on high-growth, non-cyclical revenue streams that most peers lack.

Risks / Headwinds

While the investment thesis is compelling, investors must be aware of several significant risks that could derail the recovery trajectory or impact short-term stock performance.

1. Intensifying Industry Competition and Price Wars

The PV industry is notorious for its cyclical boom-and-bust patterns. Despite ongoing capacity rationalization, there is a risk that new entrants or existing players with deep pockets may continue to produce at a loss to maintain market share, prolonging the period of negative margins. If the supply-demand imbalance persists longer than expected into 2026, Junda’s gross margins may remain under pressure, delaying the projected profit recovery.

2. Raw Material Price Volatility

Junda’s primary cost inputs include silicon wafers, silver paste, and other chemicals. Fluctuations in the prices of these raw materials can significantly impact gross margins. Specifically:
* Silicon Prices: While silicon prices have fallen, any supply disruption or unexpected demand spike could raise input costs.
* Silver Paste: As N-type cells (like TOPCon) use more silver than P-type cells, volatility in silver prices directly affects production costs. If Junda cannot pass these costs onto customers due to weak pricing power, margins will suffer.

3. Execution Risk in Overseas Expansion

The success of the Turkey facility is critical to the 2026 recovery plan. Risks include:
* Construction Delays: Any delay in the Q1 2026 commissioning timeline would push revenue recognition into later quarters, impacting 2026 earnings.
* Operational Challenges: Managing a workforce and supply chain in a new jurisdiction involves regulatory, cultural, and logistical hurdles. Failure to achieve target yields or cost structures in Turkey could erode the expected margin benefits.
* Geopolitical Shifts: Changes in trade policies in the EU or Turkey could alter the economic viability of the Turkey plant. For instance, if the EU imposes stricter rules of origin or tariffs on Turkish exports, the strategic advantage could be diminished.

4. Uncertainty in New Business Ventures (Space PV)

The investment in Star Wing Core Energy is a long-term play with inherent uncertainties:
* Technology Commercialization: The transition from lab-scale CPI production to mass manufacturing for aerospace applications is complex. Yield issues or technical failures could delay revenue generation.
* Market Adoption: The pace of satellite launches and the adoption of flexible solar wings by aerospace contractors may be slower than anticipated.
* Integration Risks: Integrating the Star Wing team and technology into Junda’s existing operations requires effective management. Cultural clashes or misalignment of strategic goals could hinder synergy realization.

5. Short-Term Stock Price Volatility

Given the reported losses for 2025, the stock may experience heightened volatility in the near term. Institutional investors may react negatively to the headline loss figures without fully appreciating the underlying strategic shifts. Additionally, broader market sentiment towards the renewable energy sector, influenced by macroeconomic factors (interest rates, government subsidies), can cause price swings unrelated to company-specific fundamentals.

6. Asset Impairment Continuity

While the 2025 impairments are intended to clear the balance sheet, there is a risk that further impairments may be necessary in 2026 if asset values continue to decline. This would create additional drag on earnings and undermine investor confidence in management’s forecasting accuracy.

Rating / Sector Outlook

Sector Outlook: Bottoming Out with Structural Divergence

The global photovoltaic sector is currently navigating the deepest part of its cyclical trough. However, we observe a clear divergence in the recovery trajectories of different segments and geographies.

1. Domestic China Market: Expected to remain challenging in H1 2026 as excess capacity is gradually cleared through bankruptcies and mergers. Price stability is likely to emerge only after significant capacity exits, potentially in late 2026.
2. International Markets: Demand remains robust in Europe, the Middle East, and Asia-Pacific. Markets that value supply chain security and carbon footprint standards are willing to pay a premium for non-Chinese or locally produced components. This creates a favorable environment for companies with overseas manufacturing footprints.
3. Technology Shift: The transition from P-type to N-type (TOPCon, HJT) is nearly complete. Leaders who have successfully scaled N-type production are gaining market share at the expense of laggards. This technological moat is becoming a key determinant of survival and profitability.
4. Niche High-Value Segments: Sectors like space PV, BIPV (Building-Integrated Photovoltaics), and agrivoltaics are emerging as high-growth niches less susceptible to commodity price cycles. Companies that can diversify into these areas offer better risk-adjusted returns.

Company Rating: BUY (Maintained)

We maintain our BUY rating on Junda Shares (002865.SZ).

Rationale:
1. Resilience in Crisis: Junda has demonstrated resilience by maintaining its market position despite severe industry headwinds. The decision to take large impairments in 2025 is a sign of financial discipline, clearing the way for a cleaner future.
2. Strategic Positioning: The >50% overseas revenue mix and the upcoming Turkey plant position Junda to benefit from the bifurcation of the global PV market. It is less exposed to domestic price wars and better positioned to capture international premiums.
3. Optionality and Innovation: The entry into space PV via Star Wing Core Energy adds a high-growth, high-margin dimension to the business model. This diversification reduces reliance on the commoditized terrestrial cell market and opens up new valuation avenues.
4. Valuation Appeal: At current levels, the stock offers an attractive risk-reward profile for long-term investors. The market has priced in the 2025 losses, and the potential upside from the 2026-2027 recovery is significant. The forward P/E of ~23x for 2027 is reasonable for a technology leader with diversified revenue streams.

Investment Horizon:
This recommendation is suited for investors with a medium-to-long-term horizon (12-24 months). Short-term traders may face volatility due to the negative earnings headlines, but the fundamental turnaround story is intact.

Investment View

Core Investment Logic

The investment case for Junda Shares rests on three pillars: Cyclical Recovery, Geographic Arbitrage, and Technological Diversification.

1. Playing the Cyclical Rebound

The PV industry is inherently cyclical. We are currently at the "capitulation" phase, where losses are widespread, and weaker players are exiting. History shows that investing in leading manufacturers during the trough yields superior returns as the cycle turns. Junda, with its strong balance sheet (relative to peers) and technological edge, is well-positioned to survive the winter and thrive in the spring. The projected swing from a CNY 1.27 billion loss in 2025 to a CNY 1.04 billion profit in 2027 represents a massive earnings inflection point.

2. Geographic Arbitrage: The Overseas Premium

Junda is effectively arbitraging the difference between the depressed domestic Chinese market and the healthier international markets. By shifting production to Turkey and focusing sales overseas, it captures higher margins. This strategy is sustainable because trade barriers (tariffs, local content requirements) are rising globally, making local production in regions like Turkey increasingly valuable. Junda is ahead of many peers in executing this shift, giving it a first-mover advantage.

3. Technological Diversification: Beyond Terrestrial PV

The investment in Star Wing Core Energy is not just a financial stake; it is a strategic bridge to the aerospace sector. Space PV is a nascent but rapidly growing market driven by the proliferation of low-earth orbit (LEO) satellite constellations. By securing an exclusive partnership for CPI film and hybrid cells, Junda gains access to a market with:
* Higher Barriers to Entry: Reducing competitive pressure.
* Higher Margins: Aerospace components command premium pricing.
* Longer Contract Durations: Providing revenue visibility and stability.

This diversification mitigates the risk of being solely dependent on the volatile terrestrial PV market.

Operational Catalysts to Monitor

Investors should track the following key milestones in the coming quarters:

1. Turkey Plant Ramp-Up (Q1-Q2 2026):

   • Metric: Monthly output volume and yield rates.
   • Significance: Successful ramp-up confirms the ability to execute overseas expansion and validates the 2026 revenue growth assumptions.

2. Quarterly Gross Margin Trends (2026):

   • Metric: Gross margin percentage quarter-over-quarter.
   • Significance: A consistent improvement in gross margins from the negative territory of 2025 to positive levels in 2026 will confirm that the industry bottom has passed and pricing power is returning.

3. Star Wing Joint Venture Progress (H2 2026):

   • Metric: Announcement of pilot production lines or initial contracts for CPI films.
   • Significance: Tangible progress in the space PV venture will validate the new growth narrative and could trigger a valuation re-rating.

4. Asset Impairment Closure:

   • Metric: Confirmation in 2025 Annual Report that impairments are one-off.
   • Significance: Clarity that the balance sheet is clean and no further significant write-downs are expected will restore investor confidence in earnings quality.

Conclusion

Junda Shares is navigating a challenging period with a clear and coherent strategy. The 2025 losses, while significant, are a reflection of industry-wide conditions and prudent financial management rather than company-specific failures. The company’s aggressive push into overseas markets and high-value niche sectors like space photovoltaics positions it for a strong recovery.

For institutional investors, the current dislocation between the stock price and the long-term fundamental value presents a compelling opportunity. The risk-reward profile is favorable, with limited downside given the already priced-in negatives and substantial upside potential as the cyclical recovery unfolds and new growth engines ignite. We recommend accumulating positions on weakness, with a focus on the 2026-2027 recovery horizon.

Appendix: Detailed Financial Analysis

Balance Sheet Strength and Liquidity

Despite the reported losses, Junda’s balance sheet remains manageable, though leverage has increased due to working capital needs and investment activities.

• Assets: Total assets are projected to grow from CNY 16.46 billion in 2024 to CNY 21.12 billion in 2027. This growth is driven by investments in fixed assets (Turkey plant, domestic upgrades) and intangible assets (R&D).
• Liabilities: The debt-to-asset ratio is expected to fluctuate, peaking at 76.38% in 2025 before declining to 66.32% in 2027 as profitability returns and retained earnings rebuild equity.
• Liquidity: Cash and cash equivalents are projected to be tight in 2025 (CNY 2.26 billion) due to operational losses and capex, but are expected to recover to CNY 1.41 billion in 2027. The company may need to rely on short-term financing or equity raises to bridge the gap, which is a risk to monitor.

Note: The decrease in liabilities in 2025E despite losses is due to the repayment of short-term borrowings and reduction in operational payables as the company scales back domestic operations.

Cash Flow Dynamics

Cash flow analysis reveals the capital-intensive nature of Junda’s expansion strategy.

• Operating Cash Flow (OCF): OCF is expected to remain positive but modest in 2025 (CNY 395 million) due to working capital management, despite net losses. A strong rebound to CNY 3.52 billion is projected in 2026 as profits return.
• Investing Cash Flow: Significant negative cash flow from investing activities (CNY -3.75 billion in 2025, CNY -3.48 billion in 2026) reflects heavy capital expenditure on the Turkey plant and other capacity upgrades. This is a necessary investment for future growth but strains liquidity in the short term.
• Financing Cash Flow: The company is expected to raise funds (CNY 1.65 billion in 2025) to support its capex and working capital needs, likely through debt or equity instruments.

Return on Invested Capital (ROIC) and ROE

• ROIC: Expected to be negative in 2025 (-6.18%) due to losses, but improves to 6.70% in 2026 and 11.71% in 2027. This trajectory indicates that the new investments will eventually generate adequate returns.
• ROE: Similarly, ROE will swing from -20.23% in 2025 to 13.37% in 2027. A double-digit ROE in 2027 is a strong indicator of value creation and justifies the premium valuation.

Final Remarks

Junda Shares stands at a pivotal juncture. The pain of 2025 is real, but it is the price of admission for a stronger, more diversified, and globally integrated company in 2026 and beyond. The management’s willingness to take decisive action—both in cleaning up the balance sheet and in pursuing new growth vectors—demonstrates a commitment to long-term value creation.

For institutional investors, the key is to look past the headline loss numbers and focus on the structural improvements in the business model. The combination of overseas expansion, technological leadership, and entry into high-value niche markets creates a compelling narrative for sustained growth. We remain confident in Junda’s ability to navigate the current storm and emerge as a stronger player in the global PV landscape.

Disclaimer: This report is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with financial advisors before making investment decisions. The forecasts and estimates provided are subject to change based on market conditions and company performance.