Equity Research: Power Equipment & New Energy Sector

Date: February 8, 2026
Rating: Overweight (Stronger than Market)
Source: BOCI Securities

Title: Structural Optimization in Photovoltaics and Acceleration in Sodium-Ion Applications; Maintaining "Overweight" Rating on the Sector

Executive Summary

In this weekly report for the first week of February 2026, we maintain an "Overweight" (Stronger than Market) rating on the Power Equipment and New Energy sector. The industry is currently navigating a complex landscape characterized by technological inflection points, policy-driven structural adjustments, and evolving global supply chain dynamics. Our analysis highlights two primary investment themes for 2026: the "anti-involution" (consolidation and rationalization of competition) in the photovoltaic (PV) sector and the accelerating commercialization of next-generation battery technologies, particularly sodium-ion and solid-state batteries.

The PV sector is undergoing a critical phase of supply-side reform. Driven by rising silver prices and regulatory pressure from the Ministry of Industry and Information Technology (MIIT) to curb irrational competition, the industry is witnessing a faster adoption of base metal alternatives and a optimization of the cell manufacturing landscape. Concurrently, high-power module demand is emerging as a key differentiator, allowing leading manufacturers to pass through cost increases and improve margins. We observe heightened interest from international tech leaders, notably Elon Musk’s team, in Chinese PV supply chains, signaling potential long-term export opportunities for premium materials and equipment.

In the lithium-ion battery sector, while material prices exhibit volatility, the fundamental demand trajectory remains robust, supported by projected strong growth in global new energy vehicle (NEV) sales for 2026. The commercialization timeline for sodium-ion batteries has accelerated, with Changan Automobile and CATL launching the first mass-produced sodium-ion passenger vehicle, expected to hit the market in mid-2026. Furthermore, solid-state batteries are entering a crucial engineering validation phase, presenting significant opportunities for upstream material and equipment suppliers.

The energy storage sector continues to demonstrate high景气度 (prosperity), underpinned by record-high bidding volumes in January 2026 and the implementation of new capacity pricing mechanisms by the National Development and Reform Commission (NDRC). These policy changes are expected to stabilize revenue streams for independent storage projects, enhancing their bankability. Meanwhile, the wind power sector benefits from explicit government commitments to expand capacity within the Shanghai Cooperation Organization (SCO) framework, while emerging sectors like green hydrogen and nuclear fusion offer long-term strategic optionality.

Despite short-term headwinds such as inventory pressures in the PV supply chain and geopolitical trade frictions, the structural improvements in industry competition, technological breakthroughs, and supportive policy frameworks provide a solid foundation for sustained growth. We recommend investors focus on companies with strong competitive moats in PV modules, inverters, and materials, as well as leaders in energy storage integration and next-generation battery technologies.

Key Takeaways

1. Market Performance: Sector Resilience Amidst Broad Market Correction

During the reporting week (early February 2026), the Power Equipment and New Energy sector demonstrated relative strength against the broader A-share market corrections.

• Sector Index Performance: The Power Equipment and New Energy index rose by 2.2%, outperforming the Shanghai Composite Index, which declined by 1.27% to close at 4,065.58 points. The Shenzhen Component Index fell by 2.11%, and the ChiNext Index dropped by 3.28%.
• Sub-Sector Divergence:
  • Photovoltaics (PV): Led the gains with a 3.43% increase, driven by optimism around supply-side consolidation and technology upgrades.
  • Lithium Batteries: Rose by 0.77%, supported by steady demand expectations and technological news flow.
  • Power Generation Equipment: Increased by 0.37%.
  • Industrial Automation: Remained flat with a marginal gain of 0.02%.
  • Wind Power: Declined slightly by 0.01%.
  • New Energy Vehicles (NEV): Fell by 0.12%.
  • Nuclear Power: Experienced the largest decline among sub-sectors, dropping by 0.35%.

Top Performers:
The strongest individual stock performances were observed in:
1. Hangdian Shares: +51.66%
2. GCL Integration: +39.21%
3. Jinko Solar: +31.60%
4. Sanbian Sci-Tech: +29.25%
5. Tongguang Cable: +27.82%

Underperformers:
The most significant declines were seen in:
1. Haili Wind Power: -17.41%
2. Sinoma Science & Technology: -12.06%
3. Jingjin Electric: -10.21%
4. Megmeet: -9.44%
5. Zhongji United: -9.16%

This performance divergence underscores the market's preference for companies benefiting from immediate policy tailwinds (PV) and technological validation (Battery tech), while penalizing those exposed to near-term margin compression or specific project delays.

2. Photovoltaic Industry: "Anti-Involution" and Technological Upgrades Drive Structural Change

The PV sector is currently defined by two overarching themes: regulatory-induced supply discipline ("anti-involution") and the rapid iteration of high-efficiency technologies.

2.1 Policy and Supply Side Dynamics

The Chinese Ministry of Industry and Information Technology (MIIT) has reiterated its stance against "involutionary" competition, urging industry participants to prioritize quality and sustainable profitability over sheer volume expansion. This regulatory environment, combined with rising raw material costs (specifically silver), is forcing a reshaping of the competitive landscape.

• Silver Price Impact: The recent surge in silver prices has increased the production cost of traditional silver-paste-based cells. This economic pressure is accelerating the adoption of base metal alternatives (such as copper plating) and driving faster technological iteration. Manufacturers that can successfully transition to low-silver or no-silver processes will gain a significant cost advantage.
• Capacity Utilization: Leading silicon material manufacturers have confirmed production stops or reductions, and industry-wide consensus is forming around controlling Q1 2026 output. Global monthly production is expected to fluctuate at a low level of approximately 80,000–100,000 tons. This disciplined approach aims to prevent excessive inventory accumulation during the traditional off-season.

2.2 Price Trends and Market Analysis

Silicon Material (Polysilicon):
* Domestic Prices: Transaction prices for new orders remain at lower levels, primarily involving medium-sized manufacturers. Leading manufacturers are maintaining higher quoted prices (around RMB 63/kg for dense material), while medium-sized firms are slowly raising quotes.
* Dense/Repolymerized Material: RMB 45–59/kg.
* Dense Mixed Package: RMB 42–49/kg.
* Granular Silicon: RMB 50–52/kg.
* International Prices: Overseas silicon averages around USD 18/kg. Malaysian origin prices have risen slightly. Inventory material is priced around USD 16/kg. In the US, long-term contract prices for local silicon range from USD 22–23/kg, with spot prices in January reaching USD 24–26/kg due to Section 232 tariff risks.
* Outlook: Despite production controls, weak demand and high inventory levels persist. We expect prices to remain under pressure in Q1, with limited transaction volumes.

Silicon Wafers:
* Price Trend: Wafer prices continue to weaken, with market centers shifting downward due to weak demand momentum and accumulating inventory.
* Specific Sizes:
* 183N Wafers: Transaction range RMB 1.20–1.25/piece; average price moved down to RMB 1.25/piece. Some trades are approaching RMB 1.20/piece.
* 210RN Wafers: Transaction range RMB 1.25–1.35/piece; average price RMB 1.35/piece. Some transactions have dipped to RMB 1.25–1.30/piece.
* 210N Wafers: Transaction range RMB 1.45–1.55/piece; average price RMB 1.55/piece. Low-price transactions at RMB 1.45/piece are evident.
* Inventory Pressure: Silicon wafer inventories are building up significantly. With battery cell production schedules for February revised downward, inventory relief is unlikely in the short term. Prices are expected to remain weak with minor fluctuations.

Solar Cells:
* Domestic N-Type Cells: Prices for 183N, 210RN, and 210N cells remained stable at an average of RMB 0.45/W. The trading range is RMB 0.43–0.45/W.
* Cost Dynamics: Although silver prices have retreated from their peaks, physical supply remains tight, requiring manufacturers to pay premiums for spot silver. Consequently, top-tier manufacturers maintain quotes at RMB 0.45/W.
* Production Schedule: February production schedules are generally pessimistic compared to January, although some leading manufacturers have adjusted plans upward early in the month to secure silver supplies. Market stability is expected to return in March.
* Export Prices:
* P-Type 182: Average export price rose to USD 0.05/W.
* N-Type 183N: Average export price held at USD 0.059/W.
* US-Destined Cells (Southeast Asia Origin): Prices remain high at USD 0.12/W (range USD 0.11–0.14/W) due to the use of overseas silicon and tariff considerations.

Modules:
* Domestic Prices:
* Distributed PV Modules: Quoted at RMB 0.80–0.88/W; actual transaction prices at RMB 0.75–0.80/W.
* TOPCon Modules: Domestic average price at RMB 0.739/W. Distributed transaction average at RMB 0.76/W.
* International Prices:
* Overseas TOPCon average price increased to USD 0.096/W.
* Due to changes in export tax rebates, overseas project orders are being renegotiated, pushing distribution and project quotes to USD 0.10–0.13/W.
* Demand Outlook: Domestic ground-mounted project execution is slowing, and new order visibility is limited. Overseas shipments are expected to dominate Q1 deliveries. However, procurement attitudes are cautious due to seasonal weakness and rising module prices, resulting in low visibility for Q1 orders.

2.3 Strategic Developments: Musk’s Team and High-Power Modules

A significant development this week was the report that Elon Musk’s team conducted due diligence visits to major Chinese PV manufacturers, including GCL Group and Jinko Solar. Additionally, Tesla is expanding its solar cell manufacturing footprint across multiple US states.

• Implication 1: Validation of Chinese Technology: The interest from Tesla, a global leader in manufacturing efficiency and technology, validates the technological superiority and cost competitiveness of Chinese PV supply chains. It suggests potential future collaborations or supply agreements, particularly for high-efficiency cells and modules.
• Implication 2: Equipment Boom: The expansion of Tesla’s solar manufacturing and the general trend towards higher efficiency cells (TOPCon, HJT, BC) will drive demand for advanced PV equipment. We expect incremental orders for equipment manufacturers in the short term.
• Implication 3: Material Export Opportunities: Long-term, we anticipate that Chinese manufacturers with superior material technologies (e.g., high-purity silicon, specialized films) will capture incremental profits from overseas markets, especially if trade barriers allow for specific high-tech exemptions or local partnerships.

Furthermore, the domestic market is seeing a rise in demand for high-power modules. As downstream developers prioritize Levelized Cost of Energy (LCOE) reduction, high-efficiency modules are becoming the standard. This shift allows module manufacturers with strong R&D capabilities to raise prices and improve margins, facilitating market clearance through efficiency rather than just price wars. We recommend focusing on segments with favorable competitive landscapes, including encapsulant films, polysilicon, battery/modules, perovskite, and Back Contact (BC) technologies.

3. Lithium Battery and NEV Sector: Sodium-Ion Commercialization and Solid-State Progress

The NEV and battery sectors are transitioning from a phase of pure capacity expansion to one of technological differentiation and cost optimization.

3.1 Market Overview and Sales Data

• NEV Sales: According to the China Passenger Car Association (CPCA), the estimated wholesale volume of new energy passenger vehicles in January 2026 was 900,000 units, representing a 1% year-over-year growth. While growth has moderated compared to previous hyper-growth years, the absolute volume remains robust, supporting steady demand for batteries and materials.
• Global Outlook: We project that global NEV sales in 2026 will maintain a relatively fast growth rate, continuing to drive demand for battery cells and upstream materials.

3.2 Material Price Volatility and Pass-Through Mechanisms

Recent weeks have seen significant fluctuations in lithium battery material prices, particularly for lithium carbonate and cathode materials.

• Lithium Carbonate: After hitting highs, prices have corrected.
  • Battery-Grade Lithium Carbonate: Spot prices averaged RMB 137,000/ton as of February 6, a 9.0% week-over-week decline. Futures prices experienced limit-down drops in late January/early February before stabilizing.
  • Spodumene Concentrate (SC6): CIF prices averaged USD 1,800/ton, down 7.9%.
• Cathode Materials:
  • NCM523: Averaged RMB 185,500/ton, down 4.13% week-over-week.
  • NCM811: Averaged RMB 202,500/ton, down 3.34% week-over-week.
  • LFP (Power Type): Prices have stabilized after recent adjustments.
• Electrolyte:
  • LiPF6 (Domestic): Averaged RMB 130,000/ton, down 5.80%.
  • LFP Electrolyte: Averaged RMB 31,750/ton, down 6.62%.

Analysis: The volatility in lithium prices creates uncertainty for mid-stream manufacturers. When lithium prices exceed RMB 150,000/ton, profit margins for EV makers and energy storage projects are squeezed, reducing spot purchasing willingness. The recent correction helps alleviate this pressure. However, the key investment focus should be on the price pass-through capability of the supply chain. Companies with long-term contracts and strong bargaining power can better manage input cost volatility.

3.3 Technological Breakthroughs: Sodium-Ion and Solid-State

Sodium-Ion Batteries:
* Milestone Launch: Changan Automobile and CATL jointly unveiled the world’s first mass-produced passenger vehicle equipped with a sodium-ion battery. The vehicle is scheduled for market launch in mid-2026.
* Significance: This marks the transition of sodium-ion technology from laboratory/pilot stages to commercial application. Sodium-ion batteries offer advantages in cost (abundant raw materials), low-temperature performance, and safety, making them ideal for entry-level EVs and energy storage applications. This acceleration reduces reliance on lithium and diversifies the battery supply chain.

Solid-State Batteries:
* Engineering Validation: QuantumScape (QS) announced the activation of its pilot production line, marking the beginning of pilot production for solid-state batteries.
* Tesla’s Dry Electrode: Elon Musk confirmed on social media that Tesla has achieved scaled production of dry electrode technology. This process is critical for the efficient manufacturing of solid-state and high-energy-density lithium-ion batteries, as it eliminates the need for toxic solvents and reduces energy consumption.
* Investment Implication: The sector is entering a critical period of engineering verification. Investors should closely monitor the progress of material suppliers (solid electrolytes, lithium metal anodes) and equipment manufacturers (dry electrode coating machines) involved in these pilot lines. Successful scaling will unlock significant value for early movers.

CATL’s Perovskite Progress:
* CATL announced that it has resolved key scientific issues in perovskite solar cells and is committed to scaling this technology from the lab to industrial application. This cross-over into PV technology highlights the convergence of energy storage and generation technologies among leading battery firms.

4. Energy Storage: High Prosperity and Policy Support

The energy storage sector remains one of the most vibrant segments within the new energy landscape, driven by strong bidding activity and supportive policy frameworks.

4.1 Bidding Activity and Demand

• January 2026 Bidding: According to Xunshang Institute, domestic energy storage bidding volume reached 36.3 GWh in January 2026.
• Independent Storage: Independent energy storage projects accounted for 34.2 GWh of this total, highlighting the shift towards grid-side and standalone storage solutions.
• Regional Highlights: Ningxia, Hebei, and Xinjiang emerged as key regions with substantial bidding scales, reflecting the ongoing need for renewable energy integration in these resource-rich provinces.

4.2 Price Trends

Energy Storage Cells:
* Price Increase: Contrary to the decline in raw lithium prices, energy storage cell prices have continued to rise due to tight supply from leading manufacturers and high production schedules in Q1.
* 100Ah LFP Cell: Average price RMB 0.443/Wh, up 2.9% week-over-week.
* 280Ah LFP Cell: Average price RMB 0.360/Wh, up 5.1% week-over-week.
* 314Ah LFP Cell: Average price RMB 0.360/Wh, up 5.1% week-over-week.
* Drivers: The rise is attributed to high saturation in production lines of top-tier cell makers, leading to tight delivery resources. Buyers are prioritizing delivery certainty over price, enhancing the bargaining power of cell manufacturers. Additionally, the lag in passing through previous high raw material costs supports higher cell prices. Some bids for 314Ah cells exceeded RMB 0.40/Wh in late January.

Energy Storage Systems (ESS):
* System Prices: System prices have risen moderately, reflecting the increase in cell costs but dampened by intense competition among integrators.
* DC Side Liquid-Cooled (2h): Average price RMB 0.48/Wh, up 3.3%.
* AC Side Liquid-Cooled (2h): Average price RMB 0.55/Wh, up 2.4%.
* AC Side Liquid-Cooled (4h): Average price RMB 0.49/Wh, flat week-over-week.
* Tender Requirements: Bidding documents are increasingly stringent, emphasizing performance metrics such as warranty duration, availability rates, response times, and maintenance services. This shifts the competitive focus from lowest price to lifecycle value and reliability, benefiting high-quality integrators.

4.3 Policy Catalyst: Capacity Pricing Mechanism

On January 27, 2026, the NDRC and National Energy Administration (NEA) issued the "Notice on Improving the Capacity Pricing Mechanism for Power Generation."

• Key Provisions:
  • Establishes a capacity pricing mechanism for grid-side independent new energy storage.
  • Capacity prices will be determined based on discharge duration and peak-shaving contributions.
  • Plans to establish a reliable capacity compensation mechanism for the generation side once the electricity spot market is fully operational.
• Investment Implication: This policy institutionalizes revenue streams for energy storage assets beyond energy arbitrage and ancillary services. By providing a stable capacity payment, it significantly improves the cash flow visibility and bankability of storage projects. This is a critical step towards unlocking large-scale investment in grid-side storage, as it mitigates revenue volatility risks. We expect this to drive sustained growth in independent storage installations in 2026.

5. Wind Power: International Cooperation and Domestic Growth

The wind power sector is benefiting from both domestic policy support and international cooperation initiatives.

• SCO Cooperation: Premier Li Qiang stated that China is willing to work with Shanghai Cooperation Organization (SCO) members to vigorously advance the addition of "10 million kilowatts of PV" and "10 million kilowatts of wind power" projects over the next five years.
• Implication: This commitment provides a clear visibility pipeline for wind power equipment manufacturers, particularly for exports to SCO countries. It reinforces the long-term growth trajectory for the wind sector.
• Recommendation: We suggest focusing on wind turbine manufacturers and offshore wind supply chains, which are poised to benefit from both domestic offshore developments and international expansion.

6. Emerging Technologies: Hydrogen and Nuclear Fusion

While still in earlier stages of commercialization, hydrogen and nuclear fusion represent significant long-term growth vectors.

Green Hydrogen:
* Policy Support: The MIIT has identified hydrogen energy as a key area for breakthroughs, alongside 6G and quantum technology.
* Industry Development: The coupling of green hydrogen with coal chemical industries and green methanol production is in the introduction phase. The relationship between "Green Power – Green Hydrogen – Green Fuel" is being streamlined.
* Investment Logic: In the early stages of industrial development, green fuels may enjoy a premium. We recommend monitoring the penetration rate of hydrogen-based energy applications and focusing on hydrogen equipment manufacturers and green fuel operators.

Nuclear Fusion:
* Technical Milestone: Shanghai’s "Artificial Sun" (HL-70) successfully achieved thousand-second long-pulse plasma operation. This is a significant scientific breakthrough demonstrating the feasibility of sustained fusion reactions.
* Corporate Activity: Shanghai Electric held talks with the ITER organization, indicating active corporate participation in the global fusion ecosystem.
* Investment Logic: Nuclear fusion offers a long-term catalytic theme for the energy sector. We suggest paying attention to core suppliers in the fusion power supply and related high-end equipment sectors.

7. Corporate Updates and Financial Implications

Several key corporate announcements this week have implications for individual stock performance and sector trends.

Risks / Headwinds

While the outlook for the Power Equipment and New Energy sector is positive, investors must remain aware of several key risks that could impact performance.

1. Intensified Price Competition

• PV Sector: Despite "anti-involution" policies, the risk of excessive price competition remains, particularly in the mid-stream manufacturing links (cells and modules). If demand fails to recover as expected in Q2 2026, manufacturers may revert to price wars to clear inventory, compressing margins.
• Battery Sector: The lithium battery supply chain still faces overcapacity concerns. If NEV sales growth slows, battery and material prices could fall further, impacting profitability for mid-tier players.

2. International Trade Frictions

• Tariffs and Investigations: The EU’s investigation into Goldwind under the Foreign Subsidies Regulation (FSR) is a notable example of increasing trade barriers. Similar actions could be taken against PV and battery exporters.
• US Policies: The Section 232 tariffs and potential changes in US trade policy under the new administration pose risks to Chinese companies exporting to the US or operating in third countries (like Southeast Asia) for US-bound goods.
• Impact: Trade friction can reduce export volumes, force localization of production (increasing CAPEX), or lead to margin erosion due to tariffs.

3. Slower-than-Expected Investment Growth

• Power Grid Investment: The demand for power equipment and renewable energy integration is heavily dependent on grid investment. If state-owned grid companies slow down capital expenditure due to budget constraints or policy shifts, the demand for transformers, switchgear, and EPC services could decline.
• Renewable Project Delays: Regulatory hurdles, land acquisition issues, or financing constraints could delay the commissioning of PV and wind projects, affecting equipment recognition of revenue.

4. Policy Uncertainty

• Subsidy Withdrawal: While subsidies are largely phased out, other policy supports (such as feed-in tariffs, tax credits, or mandatory storage quotas) are critical for industry economics. Any unexpected reduction or delay in policy implementation could negatively impact project IRRs and demand.
• Carbon Markets: The development of carbon trading markets influences the economics of green energy. Slow progress in carbon pricing could reduce the competitive advantage of renewables over fossil fuels.

5. Raw Material Price Volatility

• Lithium and Silver: As seen in recent weeks, lithium and silver prices are highly volatile. Sharp increases can squeeze downstream margins, while sharp decreases can lead to inventory write-downs for manufacturers holding high-cost stock.
• Other Materials: Prices of copper, aluminum, and polysilicon also fluctuate. Since raw materials constitute a significant portion of COGS for manufacturing firms, unfavorable price movements can significantly impact profitability.

6. Technology Iteration Risks

• Disruptive Technologies: The rapid pace of technological change in batteries (e.g., solid-state, sodium-ion) and PV (e.g., perovskite, BC, HJT) poses a risk to incumbent technologies. Companies heavily invested in older technologies (e.g., PERC in PV, standard LFP in batteries) may face asset stranding if newer technologies achieve cost parity or superior performance faster than expected.
• R&D Failure: Significant R&D investments are required to stay competitive. Failure to achieve technical breakthroughs or scale-up successes can lead to loss of market share.

Rating / Sector Outlook

Sector Rating: Overweight (Stronger than Market)

We maintain our Overweight rating on the Power Equipment and New Energy sector. The combination of policy support, technological innovation, and structural optimization in key sub-sectors provides a compelling investment case for 2026.

Sub-Sector Outlooks

Investment View

Based on our analysis, we identify the following key investment themes and specific recommendations for institutional investors.

1. Core Investment Logic: Quality and Technology Leadership

In a market characterized by capacity oversupply in certain segments and rapid technological change, quality and technology leadership are the primary determinants of long-term value. Investors should prioritize companies that:
* Possess cost advantages through scale, vertical integration, or proprietary technology (e.g., low-silver cell tech, dry electrode).
* Have strong balance sheets to withstand price volatility and fund R&D.
* Are positioned in high-growth niches such as energy storage, offshore wind, and next-gen batteries.
* Benefit from policy tailwinds such as the capacity pricing mechanism for storage and the "anti-involution" drive in PV.

2. Key Investment Themes

Theme A: PV Supply Chain Rationalization and Tech Upgrade

The PV sector is moving away from pure price competition towards technology-driven differentiation.
* High-Power Modules: Companies producing TOPCon, HJT, and BC modules with high efficiency and reliability will command premium pricing. Jinko Solar, Trina Solar, and Aiko Shares (benefiting from the TCL Zhonghuan patent deal) are well-positioned.
* Encapsulant Films: As module power increases, the demand for high-performance encapsulants (POE/EPE) grows. Foster is a dominant player with strong pricing power. Its investment in GaAs also adds a futuristic optionality.
* Equipment: The shift to new technologies requires new equipment. Microinverters and tracking systems also benefit from distributed PV growth.

Theme B: Energy Storage Profitability Inflection

The introduction of capacity pricing mechanisms fundamentally improves the economics of independent storage.
* Cell Makers: With tight supply and rising prices, leading cell manufacturers like CATL and BYD (and listed peers like Gotion High-Tech) will see margin expansion.
* Integrators: Companies with strong grid relationships and ability to meet stringent technical requirements will win bids. Sungrow and Huawei (unlisted) are leaders, but listed integrators with strong tech capabilities should be monitored.

Theme C: Next-Gen Battery Commercialization

The transition to sodium-ion and solid-state batteries is accelerating.
* Sodium-Ion: Look for companies involved in the supply chain for hard carbon anodes and Prussian blue cathodes. CATL’s partnership with Changan is a key catalyst.
* Solid-State: Equipment makers for dry electrode processes and suppliers of solid electrolytes are key beneficiaries. Tesla’s progress validates the dry electrode path.

Theme D: International Expansion and Geopolitical Hedging

Companies with successful overseas manufacturing footprints or strong brand presence in non-US markets (Europe, Middle East, SCO countries) can mitigate domestic competition and trade risks.
* Wind: Goldwind faces EU scrutiny but has strong presence in emerging markets.
* PV: Companies with factories in the US or Middle East may benefit from local content requirements.

3. Specific Stock Recommendations

Based on the valuation table and our analysis, we highlight the following companies:

(Note: Valuations are based on iFinD consensus estimates as of Feb 6, 2026. P/E for TCL Zhonghuan is not applicable due to expected losses in 2024/2025.)

4. Strategic Allocation Advice

• Overweight PV Leaders: Allocate to top-tier module and material companies that have demonstrated resilience during the downturn and are poised to benefit from supply-side consolidation.
• Overweight Energy Storage: Increase exposure to energy storage cell makers and integrators, driven by the new capacity pricing policy and strong demand.
• Selective Battery Exposure: Focus on battery makers with clear technological advantages (Sodium/Solid-state) and strong customer ties. Avoid mid-tier players with high debt and outdated technology.
• Monitor Wind and Hydrogen: Maintain a watchlist for wind power exporters and hydrogen pioneers. Increase positions as visibility on international projects and domestic policy support improves.
• Risk Management: Hedge against trade policy risks by diversifying across companies with different geographic exposures. Monitor lithium and silver prices closely as indicators of margin pressure.

5. Conclusion

The Power Equipment and New Energy sector in early 2026 is at a pivotal juncture. The era of unchecked expansion is giving way to a phase of technological refinement, policy-guided consolidation, and global strategic positioning. While short-term volatility in prices and trade relations persists, the long-term trends of electrification, decarbonization, and energy security remain intact.

Investors who focus on high-quality companies with technological moats, strong balance sheets, and exposure to high-growth sub-segments like energy storage and next-gen batteries are well-positioned to capture value in this evolving landscape. The "Overweight" rating reflects our confidence in the sector’s ability to navigate current challenges and deliver sustainable growth in 2026 and beyond.

Appendix: Detailed Data Tables

Table 1: Recent Lithium Battery Material Price Trends

Source: Xinba Lithium, BOCI Securities

Table 2: PV Main Supply Chain Product Prices

Source: InfoLink Consulting, BOCI Securities

Table 3: Energy Storage Product Prices

Source: InfoLink Consulting, BOCI Securities

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