Photovoltaic Industry Weekly Report: Policy Tailwinds and Supply-Side Rationalization Drive Long-Term Value

Date: March 30, 2026
Sector: Power Equipment / Photovoltaics (PV)
Rating: Overweight (Positive)
Analyst: Zhang Xinyi (S1490522090001)
Source: Guoxin Securities Market Research Department

Executive Summary

The Chinese photovoltaic (PV) sector is currently navigating a critical transition phase characterized by intense price competition, regulatory intervention, and technological iteration. For the week ended March 27, 2026, the PV equipment index underperformed the broader market, declining by 4.40%, while the broader Power Equipment index slightly outperformed the CSI 300. This divergence highlights ongoing market skepticism regarding short-term profitability amidst falling upstream prices, despite emerging long-term structural positives.

Our analysis indicates that the industry is approaching an inflection point driven by three core factors:
1. Supply-Side Reform & Anti-Involution Policies: The State Administration for Market Regulation (SAMR) has explicitly targeted "involutionary" (destructive) competition in the PV sector, signaling a top-down effort to stabilize pricing and restore healthy profit margins.
2. Regional Strategic Planning: Key provinces such as Sichuan and Anhui have released "15th Five-Year Plan" outlines, emphasizing distributed PV expansion and next-generation battery technologies, providing clear visibility into future demand drivers.
3. Price Stabilization Signals: While upstream material prices (polysilicon, wafers, cells) continued their downward trajectory this week, module prices held steady, suggesting that downstream resistance to further price cuts is strengthening.

We maintain an Overweight rating on the sector. We advise institutional investors to shift focus from broad beta exposure to alpha opportunities driven by technological leadership and supply-side consolidation. Specifically, we recommend focusing on polysilicon leaders with cost advantages, module integrators with strong brand channels, and companies pioneering high-efficiency cell technologies. Short-term volatility should be viewed as a entry opportunity for long-term holders, contingent on the effective implementation of anti-unfair competition regulations.

Key Takeaways

1. Market Performance: Sector Divergence and Stock Selection Opportunities

During the reporting period (March 23–27, 2026), the broader A-share market exhibited mixed performance. The CSI 300 Index declined by 1.41%. Within the Shenwan (SW) industry classification, only 9 out of 31 sectors recorded gains. The Power Equipment index demonstrated resilience, rising by 0.05% and ranking 9th among all sectors, thereby outperforming the CSI 300 by 1.47 percentage points.

However, internal divergence within the Power Equipment sector was significant. The PV Equipment sub-index fell by 4.40%, reflecting investor caution regarding margin compression. In contrast, the Battery sub-index surged by 3.01%, and the Motor II sub-index rose by 0.91%. Wind Power Equipment (-4.63%) and Other Power Equipment II (-1.64%) also declined, indicating that the pressure is not uniform across all renewable energy segments but is particularly acute in solar manufacturing.

Top Performers vs. Laggards:
Stock performance was highly fragmented, underscoring the importance of individual company fundamentals over sector-wide trends.

Note: The outperformance of Ancai Hi-Tech and Clenergy suggests that investors are favoring companies with exposure to stable auxiliary materials (glass, mounting structures) or those less exposed to the brutal price wars in core silicon value chains.

2. Upstream Price Dynamics: Continued Deflation with Module Floor Support

The pricing trend across the PV supply chain remains deflationary, though the rate of decline varies by segment. Data from Datayes as of March 25, 2026, reveals the following movements:

A. Polysilicon and Wafers: Persistent Downward Pressure

• Polysilicon: The transaction price settled at 42 RMB/kg, a decrease of 1 RMB/kg week-on-week (WoW). This continues the trend of oversupply in the raw material segment. At this price level, many high-cost producers are likely operating below cash cost, accelerating the need for capacity exit or consolidation.
• Wafers: The transaction price dropped to 1.13 RMB/wafer, down 0.02 RMB/wafer WoW. The decline in wafer prices lags slightly behind polysilicon but reflects the weak demand from cell manufacturers who are cautious about inventory buildup.

B. Cells and Modules: Margin Compression vs. Price Floor

• Cells: The transaction price fell to 0.40 RMB/W, a decline of 0.01 RMB/W WoW. This segment faces the most intense competition due to rapid technological iteration (e.g., TOPCon vs. HJT vs. BC). Manufacturers are forced to cut prices to clear inventory of older efficiency tiers.
• Modules: Crucially, the module transaction price remained flat at 0.84 RMB/W. This stability is a significant signal. It suggests that downstream developers and EPC contractors are resisting further price reductions, possibly due to the belief that current prices are near the sustainable cost floor for high-quality manufacturers. It may also indicate that module makers are prioritizing margin preservation over volume growth in response to regulatory warnings against predatory pricing.

C. Auxiliary Materials: Stability Prevails

• Photovoltaic Glass: Prices for 3.2mm and 2mm glass remained unchanged at 17 RMB/sqm and 10 RMB/sqm, respectively. The glass sector, having undergone significant capacity rationalization in previous cycles, shows better pricing power than the silicon chain.
• Silver Paste: The price held steady at 18,920 RMB/kg. Given the high silver content in high-efficiency cells (like TOPCon and HJT), stable silver prices help manufacturers forecast costs more accurately, although the absolute level remains a cost burden.

Implication: The decoupling of module prices from upstream declines indicates a potential bottoming process. If module prices hold while polysilicon and wafer costs continue to drift lower, module integrators with locked-in low-cost supply contracts could see marginal improvement in gross margins in the coming quarters. However, if upstream prices stabilize, the benefit to module makers will be neutralized.

3. Policy Catalysts: Regulatory Intervention and Strategic Planning

Two major policy developments this week provide a constructive framework for the medium-to-long-term outlook of the PV industry.

A. SAMR’s Crackdown on "Involutionary" Competition

The State Administration for Market Regulation (SAMR) issued a notice on further implementing the Anti-Unfair Competition Law, explicitly targeting "involutionary" competition in key sectors, including photovoltaics, lithium batteries, and new energy vehicles.

Key Provisions & Impact:
* Prohibition of Below-Cost Sales: The SAMR will strictly investigate and punish platform operators and manufacturers that force sales below cost through algorithms, traffic restrictions, or mandatory subsidies. This directly addresses the root cause of the current price war.
* Platform Responsibility: E-commerce and B2B platforms are required to establish mechanisms to detect and report unfair competition. This reduces the ability of distressed players to dump excess capacity anonymously or through opaque channels.
* Holistic Assessment: Enforcement will consider production scale, technical efficiency, and product quality. This favors high-efficiency, low-cost leaders over inefficient capacity that relies solely on price dumping.

Investment View: This is a pivotal regulatory shift. Historically, the PV sector has suffered from cyclical overcapacity driven by local government subsidies and aggressive expansion. By legally curbing below-cost selling, the SAMR is effectively putting a "floor" under industry profitability. This accelerates the clearance of outdated capacity and protects the margins of technologically advanced leaders. We expect this to reduce earnings volatility and improve the return on invested capital (ROIC) for top-tier firms.

B. Regional "15th Five-Year Plan" Outlines: Demand Visibility

Chengdu, Sichuan Province:
On March 25, the Chengdu Economy and Information Technology Bureau released a draft of the 15th Five-Year Energy Development Plan.
* Target: Distributed PV installed capacity to exceed 2 GW by 2030.
* Strategy: Implementation of "PV+" comprehensive development projects. Focus on industrial parks, public buildings, and Building-Integrated Photovoltaics (BIPV) such as PV curtains, shading boards, and skylights. Integration with urban functions like "park communities" and PV-storage-charging parking sheds.
* Significance: Chengdu’s focus on BIPV and urban integration creates a high-value niche for specialized module and mounting system providers. It shifts demand from utility-scale (price-sensitive) to distributed/commercial (quality/aesthetic-sensitive), which typically commands higher margins.

Anhui Province:
On March 26, the Anhui Provincial Government published its 15th Five-Year Plan Outline.
* Technological Focus: Accelerate breakthroughs in high-efficiency PV cells and next-generation batteries.
* Diversification: Promote sodium-ion and flow batteries, standardize lithium battery recycling, and develop mechanical energy storage.
* Integration: Advance the integration of wind, solar, storage, hydrogen, ammonia, and alcohol.
* Significance: Anhui is a major hub for PV manufacturing (home to several leading inverter and module firms). Its emphasis on "high-efficiency cells" validates the industry’s shift toward N-type technologies (TOPCon, HJT, BC). Furthermore, the push for "Wind-Solar-Storage-Hydrogen" integration creates new demand scenarios for PV beyond simple grid injection, requiring smarter inverters and hybrid systems.

Risks / Headwinds

While the long-term outlook is supported by policy and energy transition trends, several near-term risks persist:

1. Raw Material Price Volatility:
   Although prices are currently falling, extreme volatility can disrupt supply chain planning. If polysilicon prices drop too sharply, it may trigger inventory write-downs for manufacturers holding high-cost stock. Conversely, any unexpected supply disruption could spike costs again. The current deflationary environment squeezes revenues, even if margins eventually stabilize.

2. Project Commencement Delays:
   The realization of demand depends on the actual construction pace of downstream projects. If economic conditions slow down investment in infrastructure, or if grid connection approvals are delayed, the anticipated demand from plans like Chengdu’s 2 GW target may be pushed out. "Paper capacity" does not equate to immediate revenue.

3. Intensified Trade Frictions:
   The global trade environment remains hostile to Chinese PV exports. Potential tariffs or non-tariff barriers from the US, EU, or India could restrict access to high-margin overseas markets. If domestic competition intensifies due to blocked exports, the effectiveness of SAMR’s anti-involution policies may be undermined by sheer volume pressure.

4. Technology Iteration Risk:
   The rapid shift from P-type to N-type cells, and potentially to perovskite or other next-gen technologies, carries execution risk. Companies that fail to keep up with efficiency gains or yield improvements will face obsolescence. The capital expenditure required for new lines is substantial, posing a financial risk to highly leveraged firms.

5. Policy Implementation Lag:
   While the SAMR’s notice is positive, the actual enforcement timeline and strictness remain to be seen. If local governments continue to subsidize inefficient local champions to protect jobs, the national-level anti-unfair competition measures may face resistance, prolonging the supply glut.

Rating / Sector Outlook

Rating: Overweight (Positive)

We maintain an Overweight rating on the Photovoltaic sector. Our confidence is based on the convergence of policy support for market rationalization and the inevitable clearing of inefficient capacity.

Sector Outlook:
* Short-Term (1-3 Months): Expect continued volatility as the market digests the impact of falling upstream prices and tests the resolve of regulatory bodies. Module prices are expected to remain stable around 0.84 RMB/W, providing a earnings floor for integrators.
* Medium-Term (6-12 Months): As the "15th Five-Year Plan" details solidify and SAMR enforcement takes effect, we anticipate a stabilization of industry profits. Leaders with superior cost structures and technological edges will begin to regain market share and pricing power.
* Long-Term (1-3 Years): The sector will likely emerge more consolidated, with fewer but stronger players. The integration of PV with storage, hydrogen, and smart grids (as highlighted in Anhui’s plan) will open new revenue streams beyond simple module sales.

Valuation Perspective:
Current valuations for many PV stocks reflect pessimistic assumptions about perpetual price wars. As evidence of supply-side discipline emerges, multiple expansion is likely. Investors should look for companies trading below their historical average Price-to-Earnings (P/E) or Price-to-Book (P/B) ratios, provided they have strong balance sheets.

Investment View

Based on the weekly data and policy landscape, we propose a three-pronged investment strategy for institutional clients:

1. Focus on Supply-Side Reform Beneficiaries (Alpha via Consolidation)

The SAMR’s crackdown on "involutionary" competition is the most significant catalyst for margin repair. Companies that have historically maintained disciplined pricing and high operational efficiency will benefit most as predatory competitors are forced to exit or reduce output.
* Action: Overweight Polysilicon Leaders and Module Integrators with strong brand recognition. These entities are best positioned to enforce price discipline and benefit from the removal of low-quality, below-cost supply.
* Logic: As the "price floor" becomes enforced by regulation rather than just market forces, the earnings visibility of top-tier firms improves.

2. Technological Leadership (Alpha via Innovation)

The Anhui Provincial Plan’s emphasis on "high-efficiency cells" underscores that technology is the primary driver of survival. The industry is moving away from homogeneous competition toward differentiated efficiency.
* Action: Invest in companies leading in N-type TOPCon, HJT (Heterojunction), and BC (Back Contact) technologies. Also, monitor firms involved in next-generation batteries (sodium-ion, flow) as mentioned in regional plans, as these complement PV storage needs.
* Logic: Higher efficiency translates to lower Levelized Cost of Electricity (LCOE) for end-users, allowing tech leaders to command a premium even in a competitive market. Companies like those driving the gains in Ancai Hi-Tech or those lagging like Junda Shares illustrate the divergence between those adapting and those struggling.

3. Demand-Side Beta via Distributed and BIPV Growth

The Chengdu Plan’s specific target for distributed PV (2 GW by 2030) and BIPV applications offers a clearer, less cyclical demand stream compared to utility-scale projects.
* Action: Consider exposure to Distributed PV Developers, BIPV Component Suppliers (glass, specialized frames), and Micro-inverter/Optimizer Manufacturers.
* Logic: Distributed projects are less sensitive to grid curtailment issues and often have faster payback periods. The "PV+" model (integrating with buildings, agriculture, and charging stations) creates sticky customer relationships and higher barriers to entry for pure-play commodity manufacturers.

Specific Stock Watchlist (Based on Weekly Movers & Fundamentals)

Conclusion

The week of March 23-27, 2026, marked a subtle but important shift in the narrative surrounding the Chinese PV sector. While price declines in upstream materials continue to weigh on sentiment, the regulatory stance against destructive competition and the concrete demand targets set by provincial governments provide a robust foundation for recovery.

Investors should not be deterred by the weekly index decline of 4.40%. Instead, this dip offers a strategic entry point into high-quality assets that are poised to benefit from the impending supply-side rationalization. The era of blind capacity expansion is ending; the era of technological superiority and compliant, profitable growth is beginning. We recommend accumulating positions in leaders with strong balance sheets, advanced technology portfolios, and exposure to the growing distributed PV market.

Disclaimer:
This report is prepared by Guoxin Securities Market Research Department. The information contained herein is derived from sources believed to be reliable, including Wind and Datayes, but Guoxin Securities does not guarantee its accuracy or completeness. The views expressed are those of the analyst, Zhang Xinyi, and do not constitute an offer to sell or a solicitation of an offer to buy any securities. Investors should conduct their own independent assessment and consult with financial advisors before making investment decisions. Guoxin Securities and its affiliates may hold positions in the securities mentioned and may engage in transactions inconsistent with the recommendations herein.