Equity Research: Junda Shares (002865.SZ / 9696.HK)

Date: August 25, 2025
Sector: Renewable Energy / Photovoltaics (PV)
Analyst: Institutional Research Team
Current Price (CNY): 49.68
Rating: BUY
Target Price: Implied Upside >15% (Based on "Buy" Rating Definition)

Executive Summary

Performance In Line with Expectations Amidst Sectoral Headwinds; Strategic Pivot to Globalization and Supply-Side Discipline Drives Long-Term Value.

Junda Shares released its interim results for the first half of 2025 (1H25) on August 25, 2025. The company reported revenue of CNY 3.66 billion, a year-over-year (YoY) decline of 42.5%, and a net loss attributable to shareholders of CNY 260 million, representing a YoY deterioration of 58.5%. Specifically, in the second quarter (2Q25), revenue stood at CNY 1.79 billion with a net loss of CNY 160 million. While the top-line contraction and profitability pressure are significant, these figures align with our prior expectations, reflecting the broader industry-wide challenges of price wars and inventory adjustments.

Despite the near-term financial headwinds, we maintain a BUY rating on Junda Shares. Our conviction is underpinned by two structural shifts in the photovoltaic landscape that favor market leaders like Junda:

1. The End of "Involution" (Hyper-competition): The Chinese government has elevated the governance of low-price, disorderly competition to a national strategic level. Recent regulatory actions, including the drafting of amendments to the Price Law to criminalize below-cost sales, are catalyzing a supply-side correction. We observe early signs of price stabilization, with 183N battery cell prices recovering from a low of CNY 0.24/W to CNY 0.29/W by late August 2025. As the industry leader in independent battery cell supply, Junda is poised to benefit disproportionately from this margin restoration.
2. Accelerated Internationalization: Junda is successfully executing its global expansion strategy. The overseas revenue share surged to 51.87% in 1H25 (up from 23.85% in FY24). Furthermore, the company’s recent H-share listing on the Hong Kong Stock Exchange (May 2025) establishes it as the industry’s first A+H listed entity, providing a robust platform for international financing. Strategic partnerships, such as the joint venture in Turkey, signal the beginning of localized overseas capacity deployment, which is expected to scale significantly in 2026, unlocking higher-margin revenue streams.

We have adjusted our earnings forecasts for 2025-2027 to reflect the transitional nature of the current cycle but maintain a positive long-term outlook. We project net profits of CNY -385 million, CNY 619 million, and CNY 1.681 billion for 2025, 2026, and 2027, respectively. The anticipated turnaround in 2026 is driven by the normalization of domestic pricing and the volume release of high-value overseas operations.

Key Takeaways

1. Financial Performance: Navigating the Trough

1H25 Results Overview:
The first half of 2025 was characterized by intense pressure on both revenue and margins, consistent with the broader PV sector's struggle with oversupply and rapid technological iteration.

• Revenue: CNY 3.66 billion (-42.5% YoY).
• Net Profit (Attributable): CNY -260 million (-58.5% YoY change in profit/loss magnitude).
• 2Q25 Specifics: Revenue of CNY 1.79 billion; Net Loss of CNY 160 million.

Analysis of Profitability Pressure:
The deterioration in 2Q25 profitability was driven by a "scissors effect" of falling product prices and rising input costs:
* Price Decline: As the rush for distributed PV installations wound down, the price of 183N TOPCon battery cells dropped sharply by 23% to CNY 0.24/W.
* Cost Surge: Concurrently, the price of silver (Shanghai Silver Futures) climbed, pushing silver paste costs above CNY 8,500/kg. Given that silver paste is a critical non-silicon cost component in TOPCon technology, this significantly eroded gross margins.

However, it is crucial to note that the market had largely priced in these challenges. The fact that results were "in line with expectations" suggests that the worst of the operational shock may have been absorbed, setting the stage for a potential inflection point in the second half of the year.

2. Macro & Industry Catalyst: The "Anti-Involution" Policy Shift

The most significant development for the PV sector in 2025 is the shift in regulatory stance from passive observation to active intervention against destructive competition.

Policy Timeline & Impact:
* July 2025: The Central Financial and Economic Affairs Commission explicitly directed the "legal and regulated governance of low-price unordered competition among enterprises," emphasizing product quality improvement and the orderly exit of backward capacity.
* Regulatory Action: The National Development and Reform Commission (NDRC) and the State Administration for Market Regulation (SAMR) drafted amendments to the Price Law, formally defining sales below cost as illegal.
* Industry Response: Leading enterprises have actively responded to these guidelines, initiating self-discipline measures regarding pricing and capacity utilization.

Market Evidence of Recovery:
The efficacy of these measures is already visible in pricing data. According to Infolink statistics as of August 20, 2025, the price of 183N battery cells has repaired to CNY 0.29/W, up from the 2Q25 low of CNY 0.24/W. This ~21% recovery indicates that the market is moving towards a new equilibrium where prices cover full costs, including reasonable margins.

Implication for Junda:
As a pure-play battery cell leader with advanced N-type technology, Junda possesses superior cost control and efficiency compared to laggards. In an environment where "below-cost selling" is curtailed, the competitive advantage shifts from "who can lose the most money to gain share" to "who has the best technology and cost structure." Junda is positioned to capture the upside of this margin normalization faster than integrated competitors burdened by legacy P-type assets or inefficient vertical integration.

3. Strategic Pivot: Internationalization as a Growth Engine

Junda’s transition from a domestic-focused supplier to a global player is accelerating, mitigating reliance on the saturated Chinese market.

A. Surge in Overseas Revenue Mix
* 1H25 Overseas Sales Contribution: 51.87%
* FY24 Overseas Sales Contribution: 23.85%

This more than doubling of the overseas revenue share demonstrates the success of Junda’s export strategy. By leveraging its status as a leading independent battery supplier, Junda has effectively penetrated international markets where module manufacturers seek high-efficiency N-type cells to differentiate their products. Overseas markets typically offer better pricing power and margins compared to the hyper-competitive domestic landscape.

B. Capital Markets: The A+H Listing Advantage
In May 2025, Junda successfully listed its H-shares on the Main Board of the Hong Kong Stock Exchange. This milestone makes Junda the first A+H listed company in the PV battery sector.
* Strategic Benefit: This dual-listing structure provides access to international capital pools, enhancing liquidity and financial flexibility. It also elevates the company’s global brand profile, facilitating partnerships with foreign entities who prefer dealing with internationally regulated and transparent entities.

C. Localized Capacity Deployment: The Turkey Project
Moving beyond simple exports, Junda is embedding itself into local supply chains.
* Strategic Partnership: In 1H25, Junda signed a strategic cooperation agreement with a local Turkish module manufacturer to co-build a high-efficiency battery project.
* Significance: Turkey serves as a strategic gateway to both the European and Middle Eastern/North African (MENA) markets. Local production helps circumvent potential trade barriers (such as tariffs or local content requirements) and reduces logistics costs.
* Outlook: We expect overseas capacity to begin releasing in substantial volumes starting in 2026. This will not only diversify revenue geography but also structurally enhance the company’s overall profitability profile by accessing higher-value-added markets.

4. Financial Forecast & Valuation Adjustment

We have updated our financial model to incorporate the 1H25 actuals and the evolving industry dynamics. While we anticipate a loss in 2025 due to the lingering effects of 1H25 and the time lag in policy transmission, we forecast a robust recovery in 2026 and strong growth in 2027.

Adjusted Earnings Estimates (CNY Million):

Forecast Logic:
* 2025E: We project a net loss of CNY 385 million. This reflects the heavy losses incurred in 1H25 and assumes that while 2H25 will see margin improvement due to price repairs, it may not be sufficient to fully offset the first-half deficit and ongoing restructuring costs. Revenue is expected to contract further as the company optimizes its product mix and exits lower-margin domestic contracts.
* 2026E: We forecast a return to profitability with CNY 619 million in net profit. This is driven by:
1. Full-year benefit of stabilized domestic battery prices (CNY 0.29/W+).
2. Initial contribution from overseas capacity (e.g., Turkey project).
3. Operating leverage as revenue grows 25% YoY while fixed costs remain relatively stable.
* 2027E: Strong growth continues with CNY 1.681 billion in net profit. By this period, overseas capacity should be fully ramped up, contributing significantly to the bottom line. The higher margin profile of international sales will drive disproportionate profit growth relative to revenue growth (Revenue +6.2% vs. Profit +171%).

Valuation Metrics:

Note: The 2026E P/E of 23.46x and 2027E P/E of 8.65x suggest that the stock is currently valued attractively relative to its future earnings power, assuming the turnaround thesis holds. The high P/B in 2025E is an artifact of the negative earnings reducing book value temporarily.

Risks / Headwinds

While the investment thesis is compelling, investors must consider the following risks that could impede the projected recovery:

1. Supply Chain Price Volatility

• Silver Prices: The cost of silver paste remains a critical variable. If silver prices continue to climb due to macroeconomic factors or industrial demand (e.g., from the EV sector), it could compress margins even if battery selling prices stabilize.
• Silicon Wafer Prices: Fluctuations in upstream silicon wafer prices can impact inventory valuation and short-term margins. While Junda passes some costs downstream, rapid fluctuations can create temporary mismatches.

2. Technology Iteration Risk

• TOPCon vs. Next-Gen: Junda’s current leadership is based on N-type TOPCon technology. However, the PV industry is known for rapid technological disruption. If Heterojunction (HJT) or Back Contact (BC) technologies achieve cost parity and efficiency gains faster than anticipated, Junda’s existing TOPCon capacity could face obsolescence risk or require significant capex for upgrades.
• R&D Execution: The company must continue to invest heavily in R&D (forecasted at ~1.2-1.3% of sales) to maintain its efficiency edge. Any slip in technical performance relative to competitors like LONGi or Aiko could erode its premium positioning.

3. Intensified Industry Competition

• Policy Enforcement Lag: While the "anti-involution" policies are promising, their enforcement across thousands of PV manufacturers may be uneven. If smaller players continue to dump inventory below cost despite regulations, price recovery could be delayed or capped.
• Integrated Competitors: Large integrated module makers (who also produce cells) may prioritize their internal supply chains, potentially squeezing independent suppliers like Junda on volume or price during periods of soft demand.

4. Overseas Trade & Geopolitical Risks

• Trade Barriers: As Junda expands its overseas footprint, it becomes more exposed to geopolitical tensions. Tariffs, anti-dumping duties, or local content requirements in key markets (EU, US, India, Turkey) could impact the profitability of its export business or overseas projects.
• Execution Risk: Building and operating facilities in new jurisdictions (like Turkey) involves regulatory, cultural, and operational challenges. Delays in construction or permitting could push back the expected revenue contributions from 2026 to later years.

5. Financial Leverage & Liquidity

• Debt Levels: The balance sheet shows a relatively high asset-liability ratio (79.11% in 2025E). While the H-share listing provides equity funding, the company still relies on debt financing. Rising interest rates or tighter credit conditions could increase financial expenses, which are already projected to be significant (CNY 95 million in 2025E).
• Cash Flow: Operating cash flow in 2025E is projected to be thin (CNY 191 million). Any unexpected working capital buildup could strain liquidity, although the net cash position remains manageable due to existing cash reserves (CNY 2.3 billion in 2025E).

Rating / Sector Outlook

Sector Outlook: From "Clearing" to "Consolidation"

The global photovoltaic sector is transitioning from a phase of chaotic expansion and price wars to a phase of structured consolidation and quality-driven growth.

1. Supply Side: The era of unrestricted capacity expansion is ending. Government interventions in China, coupled with the natural bankruptcy of inefficient players, are reducing effective supply growth. This is a bullish signal for remaining survivors with strong balance sheets and technology leads.
2. Demand Side: Global demand for renewable energy remains robust, supported by climate commitments and energy security concerns. However, the nature of demand is shifting towards high-efficiency modules (N-type) that offer better Levelized Cost of Electricity (LCOE). This favors specialized leaders like Junda.
3. Profitability Cycle: We believe the sector has passed the trough of profitability. With prices stabilizing above cash costs and moving towards full cost recovery, the industry is entering the "right side" of the profit cycle. The next 12-24 months should witness a steady restoration of margins.

Company Rating: BUY

We reiterate our BUY rating on Junda Shares.

• Relative Strength: Junda is outperforming peers in terms of strategic agility. Its decision to pivot aggressively to overseas markets and secure an H-share listing gives it a financial and operational edge over domestically constrained competitors.
• Valuation Appeal: At current levels, the stock prices in the 2025 losses but offers significant upside optionality on the 2026-2027 recovery. A 2027 P/E of 8.65x is attractive for a company with a projected 32% ROE and dominant market position in a critical supply chain segment.
• Catalysts:
  • Continued monthly evidence of battery price stability/increase.
  • Announcement of concrete progress/timeline for the Turkey overseas plant.
  • Quarterly improvement in gross margins in 2H25 and 1Q26.

Investment View

Core Investment Logic

1. The "Alpha" of Independent Specialization
In a vertically integrated industry, independent specialists often suffer during downturns due to lack of captive demand. However, during the recovery phase, they offer "Alpha" through flexibility and technological focus. Junda does not carry the baggage of legacy P-type module inventory or inefficient upstream silicon assets. It can pivot its production lines faster to meet the specific high-efficiency needs of global module makers. As the market rewards efficiency over sheer scale, Junda’s pure-play model becomes a premium asset.

2. Geographic Arbitrage
Junda is effectively executing a geographic arbitrage strategy. By shifting sales from the low-margin, hyper-competitive Chinese domestic market to higher-margin international markets (now >50% of sales), it is structurally improving its average realized price. The upcoming localized production in Turkey further enhances this by reducing logistics costs and tariff exposure, locking in higher margins for the long term.

3. Policy-Driven Margin Floor
The Chinese government’s intervention creates a de facto "margin floor" for the industry. By outlawing below-cost sales, regulators are ensuring that no player can sustainably undercut the market to gain share. This protects the margins of efficient producers like Junda. Investors should view this not just as a temporary fix, but as a structural change in how the Chinese PV industry operates—moving from a "wild west" growth model to a mature, regulated utility-like model.

Detailed Financial Analysis & Trends

Revenue Trajectory: The U-Shaped Recovery

The revenue forecast depicts a classic U-shaped recovery typical of cyclical industries undergoing supply-side reform.

• 2024-2025 Contraction: The decline from CNY 18.6 billion (2023) to an estimated CNY 7.98 billion (2025) reflects two factors:
  1. Price Deflation: The unit price of battery cells has dropped significantly. Even if volumes remained flat, revenue would fall.
  2. Strategic Volume Management: Junda has likely curtailed shipments of low-margin products to protect cash flow and brand value, intentionally sacrificing top-line growth for sustainability.
• 2026-2027 Expansion: The projected growth to CNY 9.97 billion (2026) and CNY 10.6 billion (2027) is driven by:
  1. Price Normalization: Higher average selling prices (ASPs) due to the end of price wars.
  2. Volume Growth from Overseas: New capacity in Turkey and other regions coming online.
  3. Technology Premium: N-type TOPCon cells commanding a persistent premium over older technologies as the global fleet upgrades.

Profitability Margins: From Distress to Health

The margin expansion story is the core of the bull case.

• Gross Margin Recovery:

  • 2024 Gross Margin was negligible (0.7%).
  • 2025E is estimated at a breakeven 0.1%.
  • 2026E is projected to jump to 7.5%.
  • 2027E is projected to reach 16.4%.
  • Driver: This massive expansion is primarily due to the stabilization of battery prices (from 0.24/W to 0.29/W+) and the higher margin profile of overseas sales. Additionally, economies of scale in the new overseas factories and learning curve effects in TOPCon production will reduce unit costs.

• Operating Expense Control:

  • Selling, General, and Administrative (SG&A) expenses as a percentage of sales are trending downwards (from 3.0% in 2024 to 2.3% in 2027E). This indicates disciplined management and operating leverage as revenue scales.
  • R&D spending remains robust in absolute terms but declines as a % of sales, suggesting efficient innovation rather than wasteful spending.

Balance Sheet Strength & Cash Flow

• Liquidity Position: Despite losses, Junda maintains a healthy cash position. Cash and equivalents are projected to be CNY 2.3 billion in 2025E. This provides a crucial buffer to survive the trough and fund the initial capex for overseas expansion without excessive dilution.

• Working Capital Management:

  • Inventory Days: Decreasing from 23.6 days (2024) to 21.0 days (2026E), indicating efficient inventory turnover and reduced risk of obsolescence.
  • Receivables Days: Stable at ~1.8 days, reflecting strong bargaining power and quick collection cycles, likely due to the high demand for its premium N-type cells.
  • Payables Days: Normalizing from 105.8 days (2024) to 62-70 days, suggesting a return to normal supplier relationships after a period of stretching payables during cash crunches.

• Capex Cycle:

  • Capital expenditures are moderate (CNY 300-400 million annually in 2026-2027). This suggests that the heavy lifting of capacity building is mostly done, and future spending is focused on optimization and targeted overseas expansion rather than blind domestic expansion. This free-cash-flow-friendly capex profile supports the potential for future dividends once profitability is restored (Dividend per share forecasted at CNY 0.70 in 2026 and CNY 1.20 in 2027).

Comparative Advantage: Why Junda?

In the context of the broader PV sector, why is Junda a preferred pick over integrated giants or other cell suppliers?

1. Pure-Play Focus: Unlike integrated firms (e.g., JA Solar, Trina) that have conflicting interests between their cell and module divisions, Junda is agnostic. It sells to everyone. This allows it to capture the maximum market share of the best module makers globally, regardless of their brand.
2. Technology Leadership: Junda was an early adopter of TOPCon. Its yield rates and efficiency metrics are among the best in the industry. In a market where every 0.1% efficiency gain translates to significant LCOE savings for customers, Junda’s product commands a loyalty premium.
3. First-Mover in Globalization: Being the first A+H listed battery company gives it a unique access to capital and credibility. The Turkey project is a tangible example of this advantage. Competitors are still largely export-dependent, which is vulnerable to tariffs. Junda is becoming a local producer in key markets.

Scenario Analysis

To provide a balanced view, we consider three scenarios for the 2026-2027 period:

Even in the Bear Case, the company is likely to remain profitable due to its cost leadership, though the upside would be capped. The Base Case offers a compelling risk-reward ratio given the current valuation.

Conclusion

Junda Shares stands at a pivotal juncture. The painful adjustments of 2024 and 1H25 are the price paid for a more sustainable, profitable future. The convergence of supportive government policy ("anti-involution"), a recovering price environment, and a successful strategic pivot to globalization creates a powerful tailwind for the company.

For institutional investors, the key takeaway is that the worst is behind us. The losses of 2025 are transitional, not structural. The structural story is one of margin expansion, global market share gain, and technological leadership. We recommend accumulating positions on weakness, with a target horizon of 12-18 months to capture the full realization of the 2026-2027 earnings recovery.

Appendix: Detailed Financial Statements & Ratios

Income Statement Summary (CNY Million)

Cash Flow Statement Summary (CNY Million)

Note: The negative investing cash flow in 2025E reflects continued investment in overseas capacity and technology upgrades, funded by a mix of operating cash and financing activities (including the H-share IPO proceeds).

Balance Sheet Highlights (CNY Million)

*Note: Negative net debt/equity ratios indicate net cash positions exceeding equity in certain years due to high cash reserves relative to debt.

Key Financial Ratios

Analysis of Ratios:
* ROE Volatility: The swing from 68% (2022) to -15% (2024) and back to 32% (2027E) highlights the cyclicality of the business. The 2027E ROE of 32% is exceptionally strong, indicating high capital efficiency in the mature phase of the new cycle.
* Liquidity Improvement: The Current Ratio improving from 0.99 (2024) to 1.35 (2027E) suggests a strengthening balance sheet, reducing solvency risk.

Market Sentiment & Analyst Consensus

Recent Analyst Ratings:

Scoring Methodology: 1=Buy, 2=Overweight, 3=Hold, 4=Underweight, 5=Sell. Lower score indicates more bullish sentiment.

Interpretation:
The consensus among analysts covering Junda Shares is overwhelmingly positive ("Buy"). Over the past six months, 27 analysts have issued "Buy" ratings, with no neutral or negative ratings recorded in the recent periods. This strong consensus reflects confidence in the company’s ability to navigate the industry downturn and emerge stronger. The lack of "Hold" or "Sell" ratings suggests that the market views the current dip as a buying opportunity rather than a structural decline.

Final Investment Recommendation

Action: BUY

Target Horizon: 12-18 Months

Key Monitoring Indicators for Investors:
1. Monthly Battery Cell Prices (Infolink Data): Watch for sustained trading above CNY 0.28/W. A drop below CNY 0.25/W would be a negative signal.
2. Overseas Project Milestones: Groundbreaking and commissioning dates for the Turkey facility. Any delays here could push back the 2026 earnings recovery.
3. Quarterly Gross Margins: Look for sequential improvement in 2H25 and 1Q26. A gross margin exceeding 5% in any quarter would confirm the turnaround thesis.
4. Silver Paste Costs: Monitor Shanghai Silver Futures. A sharp spike could temporarily disrupt margin recovery.

Disclaimer:
This report is based on information available as of August 25, 2025. Forecasts are subject to change based on market conditions, regulatory changes, and company-specific developments. Investors should conduct their own due diligence and consult with financial advisors before making investment decisions. Past performance is not indicative of future results.

Strategic Deep Dive: The "Anti-Involution" Framework

To provide additional context for institutional investors unfamiliar with the specific Chinese policy terminology, we elaborate on the "Anti-Involution" (Fan Neijuan) concept.

What is "Involution" in the PV Context?
In the Chinese PV sector, "involution" referred to a state of diminishing returns where companies engaged in cutthroat competition, primarily through price wars, to maintain market share. This led to:
* Selling products below cash cost.
* Erosion of R&D budgets as survival took precedence.
* Accumulation of low-quality, inefficient capacity.
* Systemic financial risk across the supply chain.

Why is the Policy Shift Structural?
The government’s intervention is not merely a temporary price fix. It represents a philosophical shift in industrial policy:
1. Quality over Quantity: The focus is now on "high-quality development." Companies are encouraged to compete on technology and efficiency, not just price.
2. Exit Mechanisms: The policy supports the orderly exit of "zombie companies" and backward capacity. This reduces the total supply overhang, benefiting efficient players like Junda.
3. Legal Precedent: By amending the Price Law, the government is creating a legal framework to punish predatory pricing. This raises the cost of aggressive competition, effectively raising the "floor" for industry profitability.

Implication for Junda’s Moat:
Junda’s moat is no longer just its cost structure; it is now reinforced by the regulatory environment. In a free-for-all, a cheaper, less efficient competitor could steal share by losing money. In a regulated environment, that competitor is legally constrained. Junda, with its superior efficiency, can operate profitably at the new price floor, while laggards struggle to break even. This widens the competitive gap.

Global Expansion Strategy: Beyond Turkey

While Turkey is the highlighted project, Junda’s global strategy is broader.

Why Turkey?
* Customs Union with EU: Goods produced in Turkey can often access the European market with favorable tariff treatment, bypassing potential direct tariffs on Chinese goods.
* Regional Hub: Proximity to MENA (Middle East and North Africa) and Central Asia, emerging markets for solar energy.
* Local Incentives: The Turkish government offers incentives for local renewable energy manufacturing.

Future Potential Markets:
Investors should watch for announcements in:
* Southeast Asia (Vietnam/Thailand/Malaysia): Traditional hubs for PV manufacturing, though facing increasing US scrutiny.
* Middle East (Saudi Arabia/UAE): Massive solar ambitions under Vision 2030, with strong incentives for local content. Junda’s technology aligns well with the large-scale utility projects in these regions.
* United States: While challenging due to the IRA (Inflation Reduction Act) and trade barriers, partnerships with US firms or local assembly could be a long-term possibility, though likely further out than 2027.

Capital Efficiency of Global Expansion:
The H-share listing is critical here. Overseas expansion is capital intensive. By accessing Hong Kong capital markets, Junda can fund this growth without over-leveraging its balance sheet or diluting A-share holders excessively. This financial prudence is a key differentiator from peers who may have expanded too aggressively using debt.

Technological Roadmap: Maintaining the Edge

TOPCon Dominance:
Junda is a leader in N-type TOPCon (Tunnel Oxide Passivated Contact) technology.
* Efficiency: Mass production efficiency exceeds 26%, among the highest in the industry.
* Yield: High yield rates (>98%) contribute to lower unit costs.

Next-Gen Preparation:
* HJT (Heterojunction): Junda maintains R&D capabilities in HJT. While TOPCon is the current workhorse, HJT offers higher theoretical efficiency limits. Junda’s strategy appears to be "lead with TOPCon, prepare for HJT/BC."
* BC (Back Contact): Another high-efficiency technology. Junda monitors this closely.
* Perovskite Tandem: Long-term R&D focus. Tandem cells (Silicon + Perovskite) could break the 30% efficiency barrier. Junda’s early involvement in this space ensures it won’t be left behind in the next technological leap.

R&D Spend Analysis:
* R&D expense as % of sales: ~1.2-1.5%.
* While this percentage seems low compared to tech firms, in the capital-intensive manufacturing sector, it is substantial in absolute terms (CNY 120-130 million annually). This level of spend is sufficient to maintain process improvements and incremental efficiency gains, which are the primary drivers of cost reduction in mature PV technologies.

ESG Considerations

Environmental:
* Product Impact: Junda’s high-efficiency cells contribute to lower LCOE and faster carbon payback times for solar projects globally.
* Manufacturing: The company is increasingly focused on reducing energy consumption in its production processes and utilizing renewable energy in its factories, aligning with global ESG standards required by international customers.

Social:
* Labor Practices: As a global supplier, Junda adheres to international labor standards, which is critical for maintaining contracts with Western module makers who are scrutinized for supply chain ethics.

Governance:
* A+H Listing: The dual listing enhances corporate governance transparency, requiring adherence to both mainland Chinese and Hong Kong regulatory standards. This is a positive signal for international institutional investors who prioritize governance quality.

Conclusion Reiteration

Junda Shares presents a compelling investment opportunity for institutions seeking exposure to the renewable energy sector with a focus on quality, resilience, and global growth. The company has successfully navigated the industry’s most difficult period and is now positioned to capitalize on the emerging upcycle. The combination of policy support, technological leadership, and strategic internationalization creates a robust foundation for sustained earnings growth from 2026 onwards.

We recommend a BUY rating, with a conviction that the market will re-rate the stock as the earnings turnaround becomes evident in quarterly reports throughout late 2025 and 2026.