Power Equipment Sector: Deep Dive Strategy Report

Date: December 08, 2025
Rating: Overweight (Maintained)
Analyst: Shenglu Yin | Hang Zhou
Source: Kaiyuan Securities Research Institute

Executive Summary

The power equipment sector, specifically the photovoltaic (PV) and energy storage segments, is undergoing a structural inflection point as we approach the end of 2025. After a prolonged period of intense competition, capacity oversupply, and margin compression, the industry is witnessing a decisive shift driven by regulatory intervention ("anti-involution") and robust demand fundamentals.

Photovoltaics: The sector has reached a bottoming-out phase. Aggressive policy measures aimed at curbing "involutionary" competition—characterized by below-cost pricing and无序 (disorderly) expansion—are yielding tangible results. Key drivers include the implementation of stricter energy consumption standards for polysilicon, the establishment of silicon material reserve platforms, and the enforcement of prohibitions on sales below cost. These supply-side constraints, coupled with stabilizing demand expectations under the "14th Five-Year Plan" transition, are facilitating a rapid repair of the supply-demand balance. We observe a clear trend of price recovery in upstream materials (polysilicon, wafers, cells), although module price transmission remains gradual due downstream project economics. Companies with technological alpha, particularly in BC (Back Contact) technology and low-silver metallization, are demonstrating superior resilience and profitability.

Energy Storage: The energy storage sector is experiencing a super-cycle of growth, characterized by strong domestic and international demand resonance. The cancellation of mandatory storage configuration for new renewable projects in China has shifted the market towards economic-driven independent storage models, supported by emerging capacity compensation mechanisms. Globally, Europe’s grid-scale storage is accelerating, the US market is seeing record quarterly installations despite policy uncertainties, and emerging markets in Asia, Africa, and Latin America are transitioning storage from an optional add-on to a rigid necessity due to grid instability and cost competitiveness against diesel generation. The industry is moving towards a "volume and price rise" scenario, with tight supply of high-quality cells and strengthening pricing power for leading integrators who offer comprehensive lifecycle services.

Investment Implication: We maintain an Overweight rating on the Power Equipment sector. For PV, we recommend focusing on leaders benefiting from supply-side consolidation and technological premiums (BC tech, low-silver). For Energy Storage, we favor head enterprises with scalable delivery capabilities, technological innovation (e.g., liquid cooling, SiC PCS), and global channel dominance. The convergence of policy support, supply discipline, and demand growth creates a favorable risk-reward profile for institutional investors.

Key Takeaways

1. Photovoltaic Industry: The End of "Involution" and the Dawn of Rationality

1.1. From Chaos to Order: Policy-Driven Supply Side Reform

The PV industry has suffered from severe capacity oversupply since 2020, driven by aggressive local government incentives and a race for scale. By Q2 2025, nominal capacities across polysilicon, wafers, cells, and modules all exceeded 1,200 GW, far surpassing the global demand forecast of 570-630 GW for 2025. This mismatch led to prices crashing below cash costs across the value chain, with polysilicon hitting historic lows of RMB 35,000/ton and N-type 182mm modules falling below RMB 0.7/W.

However, a paradigm shift occurred in mid-2025. Starting with a People's Daily article in June criticizing "involutionary competition," a series of high-level directives were issued:
* July 2025: The Central Financial and Economic Commission and the Ministry of Industry and Information Technology (MIIT) emphasized the governance of disorderly low-price competition and the exit of backward capacity.
* August 2025: Six ministries, including MIIT and the National Development and Reform Commission (NDRC), held a symposium to standardize competition order, explicitly targeting below-cost sales and false marketing.
* September 2025: The Standardization Administration released draft national standards for energy consumption limits in polysilicon production. The new standards significantly tighten energy efficiency requirements (e.g., Grade 3 comprehensive energy consumption for rod silicon lowered to 6.4 kgce/kg from previous higher levels). Existing plants must meet Grade 3, while new expansions must meet Grade 2.

Impact: These measures are expected to reduce effective domestic polysilicon capacity by approximately 16.4% to 240 million tons/year, fundamentally improving the supply-demand格局 (landscape). The era of unrestricted expansion is over; the industry is entering a phase of quality-over-quantity growth.

1.2. Price Recovery and Profitability Turnaround

Since July 2025, upstream prices have rebounded sharply due to production cuts and the enforcement of minimum pricing guidelines.
* Polysilicon: Prices rose by ~48.6% from July lows to RMB 52/kg by late October.
* Wafers & Cells: N-type 182mm wafers increased by ~53.4% to RMB 1.35/piece; cells rose by ~37% to RMB 0.315/W.
* Modules: TOPCon module prices saw a modest increase of ~1.9% to RMB 0.693/W. Transmission to module prices has been slower due to resistance from downstream developers facing uncertain electricity market revenues post-"Document 136."

Financial Inflection: Q3 2025 marked a turning point for upstream profits.
* GCL Technology: Reported a profit of ~RMB 320 million in its PV material segment (excluding asset disposal gains).
* Daqo New Energy: Achieved a net profit of RMB 73 million, turning profitable as average selling prices (RMB 41.49/kg) approached unit costs (RMB 46.04/kg).
* Tongwei Co.: Significantly reduced losses to RMB -315 million, benefiting from higher utilization rates during the wet season and cost optimizations.

1.3. Technological Alpha: BC Technology and Low-Silver Metallization

In a commoditized market, technological differentiation is key to maintaining margins.

A. Back Contact (BC) Technology Premium
BC modules, known for superior aesthetics and higher conversion efficiency, command significant premiums, especially in distributed and overseas markets.
* Pricing: As of October 2025, domestic BC modules averaged RMB 0.76/W, a premium of RMB 0.06-0.08/W over TOPCon. In Europe, BC modules for residential use averaged $0.168/W, nearly double the $0.086/W for standard TOPCon.
* Performance: Aiko Solar turned profitable in Q2 2025 (Net Profit: RMB 63 million) driven by BC exports. Despite Q3 seasonality, the long-term trajectory for BC remains strong as costs decline and overseas acceptance grows. Leading players like LONGi Green Energy and Aiko are heavily invested in this route.

B. Low-Silver/No-Silver Metallization (Base Metal Substitution)
With silver prices exceeding RMB 11,000/kg in H2 2025, silver paste accounts for over 50% of non-silicon battery costs. The industry is urgently pivoting towards copper-based alternatives.
* Technologies: Silver-coated copper, pure copper paste, and copper plating are being accelerated by firms like DKEM (Dike Shares), Polymer Materials, and Boqian New Material.
* Economics: Copper reserves are ~4,500 times larger than silver, and its price (~RMB 88/kg) is less than 1% of silver’s. With comparable conductivity (Cu: 1.68 μΩ·cm vs. Ag: 1.59 μΩ·cm), copper substitution is not just an option but a necessity for cost reduction. This trend benefits upstream material suppliers and equipment makers enabling these new processes.

2. Energy Storage: A Global Supercycle Driven by Policy and Economics

2.1. China: Transition to Market-Driven Independent Storage

The release of "Document 136" in February 2025 abolished the mandatory storage configuration requirement for new renewable projects, ending the era of inefficient "forced pairing." The focus has shifted to Independent Energy Storage and Shared Storage, which participate directly in electricity and ancillary service markets.

Policy Catalysts:
* Capacity Compensation Mechanisms: Multiple provinces (Inner Mongolia, Gansu, Ningxia, Hebei, etc.) have introduced or drafted capacity电价 (tariff) policies. For instance, Inner Mongolia offers RMB 0.35/kWh based on discharge volume, while Gansu proposes a capacity payment of RMB 330/kW for fire-storage integrated projects, incentivizing longer-duration storage (4-6 hours).
* Scale Targets: The "Action Plan for Large-Scale Construction of New Energy Storage (2025-2027)" targets over 180 GW of new storage capacity by 2027. With 94.91 GW installed by H1 2025, the sector is poised for doubling in the next two years.

Market Structure: Independent and shared storage now account for the majority of new installations, surpassing renewable-paired storage. This shift improves asset utilization and revenue visibility through arbitrage and capacity payments.

2.2. International Markets: Resonant Demand Growth

Europe: Grid-Scale Boom
* Market Shift: The center of gravity is shifting from residential to utility-scale storage. Utility-scale installations are expected to grow by >180% in 2025, accounting for nearly 60% of total additions.
* Drivers: High renewable penetration necessitates grid stability. Countries like Germany are implementing dynamic electricity pricing, creating wide peak-valley spreads (3-4x) that enhance the economics of commercial & industrial (C&I) storage. Virtual Power Plant (VPP) participation further boosts yields.
* Outlook: EUPD forecasts 35.3 GWh of new installations in the top 19 European markets in 2025 (+75% YoY). Long-term targets aim for 500-780 GWh by 2030.

United States: Record Installations Amidst Policy Uncertainty
* Performance: Q2 2025 saw record additions of 5.6 GW / 15.78 GWh, driven by utility-scale projects (4.9 GW). Residential storage also surged (+132% YoY).
* Policy Landscape: While the Investment Tax Credit (ITC) remains under the "One Big Beautiful Bill Act," uncertainties around Foreign Entity of Concern (FEOC) regulations and stricter battery sourcing rules are prompting a "rush to install" before potential restrictions tighten. This front-loading supports near-term volumes but poses medium-term supply chain challenges.

Emerging Markets: From Optional to Essential
* Drivers: Chronic power shortages, high diesel costs, and falling PV+Storage LCOE are making storage a rigid demand in Asia, Africa, and Latin America.
* Key Markets:
* India: Mandatory 10%/2h storage for new renewable tenders; VGF subsidies covering up to 40% of costs. Target: 47 GW/236 GWh by 2032.
* Indonesia: Massive rural electrification program targeting 100 GW PV + 320 GWh storage across 80,000 villages.
* Australia: Strong policy support (Capacity Investment Scheme) and grid instability driving large-scale projects like the Waratah Super Battery (850 MW/1.6 GWh).
* Saudi Arabia & Vietnam: Ambitious national targets integrating storage into their energy transition plans.

2.3. Competitive Landscape: The Rise of Comprehensive Service Providers

The energy storage system (ESS) integration market remains fragmented, but consolidation is underway. The competitive core is shifting from simple hardware assembly to comprehensive energy service capabilities.

Three Pillars of Leadership:
1. Scale & Delivery: Ability to fulfill large global orders reliably. Sungrow Power Supply has cumulatively shipped 70 GWh by mid-2025.
2. Technological Innovation: Adoption of advanced technologies like all-liquid cooling and Silicon Carbide (SiC) PCS. Sungrow’s PowerTitan 3.0 platform achieves 99.3% efficiency.
3. Lifecycle Management: AI-driven O&M and safety management. Hyperstrong (Haibochuang) utilizes AI algorithms for predictive maintenance, enhancing asset longevity and bankability.

Leading firms like Sungrow, Tesla, BYD, CRRC Zhuzhou Institute, and Hyperstrong are capturing the majority of high-value contracts. Integrators lacking these capabilities face margin pressure and exclusion from premium markets.

Risks / Headwinds

While the outlook is positive, investors must monitor the following risks:

1. Policy Execution Risk: The effectiveness of "anti-involution" measures depends on strict enforcement. If local governments continue to subsidize inefficient capacity or if price monitoring fails to prevent underground discounting, the supply-side correction could be delayed. Similarly, the rollout of capacity compensation mechanisms in China varies by province; slower-than-expected implementation could dampen independent storage IRRs.
2. Capacity Clearance Pace: Although policy directs the exit of backward capacity, the actual financial distress and bankruptcy proceedings take time. If high-cost产能 (capacity) persists longer than anticipated, price recovery may stall, prolonging the period of thin margins for mid-tier players.
3. Technology Iteration Uncertainty: The PV industry is in a rapid tech transition phase (TOPCon vs. BC vs. HJT). If BC technology fails to achieve expected cost reductions or if alternative technologies (e.g., perovskite tandem cells) accelerate unexpectedly, current capex commitments could face stranded asset risks. In storage, safety incidents or failures in new chemistries could impact market confidence.
4. Geopolitical and Trade Barriers: For both PV and Storage, export markets are critical. Escalating trade barriers in the US (FEOC rules, tariffs) and potential anti-subsidy investigations in Europe could disrupt supply chains and erode margins for Chinese manufacturers.
5. Raw Material Volatility: While silver substitution is a trend, short-term spikes in silver or copper prices can squeeze margins for cell manufacturers before cost-pass-through mechanisms adjust. Similarly, lithium carbonate price fluctuations impact storage cell costs, though the current trend is upward due to tight supply.

Rating / Sector Outlook

Sector Rating: Overweight (Maintained)

We believe the Power Equipment sector is at a pivotal juncture where fundamental improvements align with policy support. The "bottoming out" of PV prices and the "acceleration" of storage demand create a dual-engine growth narrative.

• Photovoltaics: The sector is transitioning from a beta-driven volume game to an alpha-driven quality game. We expect valuation multiples to expand as earnings visibility improves in H2 2025 and 2026. The removal of inefficient capacity will restore healthy ROIC for leaders.
• Energy Storage: The sector enjoys high visibility and strong growth certainty. The shift towards market-based revenue models in China and robust global demand supports a "volume and price rise" thesis. Leaders with global branding and technical moats will command premium valuations.

Investment Strategy:
1. PV: Focus on upstream leaders benefiting from supply consolidation (Polysilicon) and technology leaders with pricing power (BC, Low-Silver). Avoid pure-play module assemblers with no technological differentiation.
2. Storage: Overweight leading integrators with proven global track records and vertical integration in cells/PCS. Favor companies with strong exposure to high-margin overseas markets and emerging domestic capacity compensation revenues.

Investment View & Beneficiary Analysis

1. Photovoltaic Chain: Selective Opportunities in a Recovering Market

The recovery is uneven. Upstream materials benefit first from supply cuts, while downstream modules face lingering margin pressure. Technology leaders outperform commoditized players.

A. Polysilicon: First Movers in Profit Recovery

The high concentration of the polysilicon sector facilitates coordinated production cuts. As prices stabilize above cash costs, leading firms will see dramatic earnings improvement.

B. BC Technology: Capturing the Premium Segment

BC technology offers a clear differentiation path in the distributed and high-end residential markets.

C. Low-Silver/Metallization: The Cost Reduction Frontier

As silver prices soar, companies enabling copper substitution or efficient silver usage gain strategic importance.

D. Integrated Module & Cell Leaders

Consolidation favors large-scale integrated players with balanced portfolios and technological versatility.

E. Auxiliary Materials: Glass, Frames, Films

Demand recovery drives volume growth for auxiliary suppliers. Consolidation in glass and frames improves pricing power.

2. Energy Storage Chain: Volume and Price Rise for Leaders

The storage sector offers higher growth visibility than PV. The key is to identify companies with global reach, technological superiority, and the ability to navigate complex regulatory environments.

A. Utility-Scale Storage (Big Storage): System Integrators

The market is consolidating around players who can offer bankable, safe, and efficient systems.

B. C&I and Residential Storage: Inverter & System Specialists

European and emerging market demand drives this segment. Dynamic pricing and VPP participation enhance economics.

C. Battery Cells: The Core Component

Supply is tight for high-quality, long-cycle life cells. Leading battery makers have pricing power.

Detailed Industry Analysis: Photovoltaics

1.1. The Anatomy of the "Involution" Crisis

To understand the magnitude of the turnaround, one must appreciate the depth of the crisis. The PV industry's expansion from 2020 to 2024 was fueled by a confluence of factors:
1. Carbon Neutrality Goals: Global commitments created a perceived infinite demand horizon.
2. Local Government Competition: Provincial and municipal governments offered land, tax breaks, and cheap energy to attract PV manufacturing, viewing it as a strategic emerging industry. This led to redundant construction and fragmented capacity.
3. Technological Deflation: Rapid efficiency gains (PERC to TOPCon) lowered the barrier to entry for new players who could buy turnkey lines, ignoring the learning curve of yield management.

By mid-2025, the result was a catastrophic imbalance. With 1,200 GW of capacity chasing <600 GW of demand, prices collapsed.
* Silicon: Fell from >RMB 300/kg in 2022 to RMB 2.0/W to <RMB 0.7/W.

Most companies were selling below cash cost. This is unsustainable. The "anti-involution" policy is not merely a suggestion; it is a survival mechanism for the industry. The involvement of six central ministries signals that this is a national strategic priority to preserve the health of a key export and green energy pillar.

1.2. The Mechanics of Supply-Side Correction

The correction is happening through three channels:

1. Administrative Constraints (Energy Standards): The new GB standards for polysilicon energy consumption are a "hard constraint." Older, less efficient plants (often using older Siemens process variants with high electricity usage) cannot meet Grade 3 standards without costly retrofits. Many will choose to shut down rather than invest. This effectively caps supply growth.
2. Market Discipline (Price Floors): The industry associations, backed by the NDRC, are monitoring prices. Selling below cost is now flagged as "unfair competition." While difficult to enforce perfectly, it changes the psychological anchor. Buyers can no longer expect endless price drops, encouraging them to lock in contracts at sustainable levels.
3. Financial Pressure: Banks and investors are becoming cautious. Financing for new PV capacity has dried up for non-leaders. This starves out the weakest players, accelerating exit.

1.3. Demand Side: The "14th Five-Year Plan" Transition and Document 136

Domestic demand in China experienced a volatile H1 2025.
* The Rush: Anticipation of "Document 136" (which changed electricity pricing mechanisms) caused a massive rush to install in March-May 2025, with monthly installations hitting record highs (>90 GW in May).
* The Hangover: Post-June, uncertainty about future electricity market revenues (spot market exposure) caused developers to pause. Installations dropped by ~50% YoY in June-September.

However, this pause is temporary. The "14th Five-Year Plan" ends in 2025, and the "15th Five-Year Plan" (2026-2030) will likely set even more ambitious renewable targets. Furthermore, the clarification of electricity market rules and the introduction of capacity compensation for storage (which helps absorb solar peaks) will stabilize developer ROI models. Export demand remains robust, particularly from Europe (energy security) and emerging markets (cost parity).

1.4. Technology Deep Dive: Why BC and Low-Silver?

BC (Back Contact):
Traditional PERC and TOPCon have front-side busbars that block light and require more silver. BC moves all contacts to the back, maximizing front-side light absorption and aesthetic appeal (all-black look).
* Efficiency: BC modules routinely exceed 24.5% efficiency, compared to ~22.5-23% for mainstream TOPCon.
* Yield: Higher efficiency means lower BOS (Balance of System) costs per Watt, crucial for rooftop applications where space is limited.
* Premium: In Europe, homeowners are willing to pay a significant premium for the aesthetics and performance. This margin buffer protects BC manufacturers from the brutal price wars seen in standard modules.

Low-Silver Metallization:
Silver is the single largest non-silicon cost. As PV scales to TW levels, global silver supply becomes a bottleneck.
* Silver-Coated Copper: Replaces the silver core with copper, coated with a thin layer of silver to prevent oxidation and ensure solderability. This reduces silver usage by 50-70%.
* Copper Plating: Eliminates screen printing entirely, using electroplating to deposit copper. This is the "holy grail" but faces challenges in throughput and environmental compliance.
* Investment Angle: Companies that master these processes (like Dike and Boqian) become indispensable suppliers. They sell the "shovel" in the gold rush of cost reduction.

Detailed Industry Analysis: Energy Storage

2.1. The Policy Pivot in China: From Mandate to Market

For years, China's storage market was distorted by "mandatory pairing." Renewable developers were required to build 10-20% storage capacity to get grid approval. However, without a revenue model, these assets sat idle ("built but not used"). They were a cost center, not a profit center.

Document 136 and the Action Plan (2025-2027) change this:
1. Decoupling: Storage is no longer a permit requirement. It must stand on its own economic merits.
2. Market Access: Independent storage plants can now bid into electricity spot markets and ancillary service markets (frequency regulation, peak shaving).
3. Capacity Compensation: This is the game-changer. Provinces are paying storage providers just for being available (capacity payment), similar to gas peaker plants. This provides a baseline revenue stream, de-risking the investment.

Example: Gansu Province
Gansu’s draft policy offers RMB 330/kW/year for capacity. For a 100 MW/400 MWh plant, this is RMB 33 million/year in fixed revenue. Combined with arbitrage profits, this pushes IRRs into attractive territory (8-10%+). This policy model is spreading to Ningxia, Inner Mongolia, and Hebei.

2.2. Global Demand Drivers

Europe:
* Grid Congestion: As wind and solar penetration exceeds 40-50% in countries like Germany and Spain, grid congestion costs skyrocket. Storage is the cheapest solution to defer grid upgrades.
* Dynamic Pricing: Retail electricity tariffs are becoming dynamic. Consumers and businesses save money by charging storage when prices are negative/low and discharging when prices spike. This creates a organic, subsidy-free demand for C&I and residential storage.

USA:
* IRA Tailwinds: The Inflation Reduction Act’s ITC (30-50% tax credit) makes storage economically viable even without high electricity prices.
* AI/Data Center Load: The surge in power demand from AI data centers is straining the US grid. Utilities are fast-tracking storage projects to manage peak loads and ensure reliability.

Emerging Markets:
* Diesel Replacement: In parts of Africa and Southeast Asia, diesel generation costs $0.20-0.30/kWh. Solar+Storage can now deliver power at $0.08-0.12/kWh. This is a pure economic arbitrage, driving rapid adoption in telecom towers, mines, and microgrids.

2.3. Competitive Moats in Storage Integration

Why do leaders like Sungrow and Hyperstrong dominate?
1. Safety Record: Storage fires are catastrophic for reputation. Leaders have superior thermal management (liquid cooling) and BMS (Battery Management Systems) algorithms.
2. Grid Forming Capability: As grids become weaker (more renewables), inverters must provide "grid-forming" services (voltage and frequency stability). This requires advanced software and hardware, a barrier for smaller players.
3. Global Service Network: Storage assets need maintenance for 15-20 years. Companies with local service teams in Europe, the US, and Middle East win contracts because they offer long-term reliability guarantees.

Valuation and Financial Analysis

Photovoltaics: Valuation Reset and Recovery

The PV sector has undergone a significant valuation compression. Many stocks trade at historical lows in terms of PB (Price-to-Book) and forward PE.
* Current State: Most leaders are priced for stagnation or decline.
* Future State: As Q3/Q4 2025 earnings show loss narrowing and 2026 earnings show profit recovery, multiples will expand.
* Key Metric: Watch for ROIC (Return on Invested Capital) improvement. The elimination of low-ROI capacity will boost aggregate sector ROIC.

Valuation Benchmarks (2026E PE):
* Polysilicon Leaders: 15-25x. Reflects cyclical recovery.
* BC Tech Leaders: 20-30x. Reflects growth premium.
* Integrated Module Makers: 10-15x. Reflects continued competition but improved stability.

Energy Storage: Growth Premium Justified

Storage companies command higher valuations due to higher growth rates (30-50% CAGR) and better margin visibility.
* Sungrow: Trading at ~23x 2025E PE. Given its 20%+ earnings growth and dominant market position, this is reasonable. It acts as a "blue chip" in the sector.
* CATL: Trading at ~26x 2025E PE. As a monopoly-like player in batteries, it deserves a premium. Its energy storage battery segment is growing faster than its EV segment.
* Integrators (Hyperstrong, Sineng): Trading at 20-30x. High growth expectations are priced in. Success depends on executing overseas orders and maintaining margins amidst competition.

Strategic Recommendations for Institutional Investors

1. Portfolio Allocation

• Overweight Power Equipment: Increase exposure relative to the broader market index. The sector offers a rare combination of policy support, cyclical recovery, and secular growth.
• Barbell Strategy:
  • Core Holdings: Large-cap leaders with strong balance sheets and global diversification (e.g., CATL, Sungrow, LONGi, Tongwei). These provide stability and beta exposure to the sector recovery.
  • Satellite Holdings: High-alpha technology plays (e.g., Aiko Solar for BC, Dike/Boqian for low-silver, Hyperstrong for AI-driven storage). These offer higher volatility but superior upside potential.

2. Timing

• PV: The bottom is in. Q3 2025 earnings confirm the turnaround. Accumulate on dips. The next catalyst will be Q4 2025/Q1 2026 data showing sustained price stability and capacity exit announcements.
• Storage: Continue to hold. The growth trajectory is multi-year. Buy on any short-term pullbacks caused by geopolitical noise (e.g., US tariff headlines).

3. Monitoring Indicators

• PV Prices: Weekly updates from InfoLink on polysilicon and module prices. Stability is key.
• Policy Implementation: Track the finalization of capacity compensation rules in key Chinese provinces (Shandong, Guangdong, Gansu).
• Export Data: Monthly customs data for PV modules and battery exports. Look for resilience in Europe and growth in emerging markets.
• Inventory Levels: Declining inventory in the European channel would signal a healthy restocking cycle for 2026.

Conclusion

The Power Equipment sector is emerging from a painful but necessary cleansing process. The "anti-involution" policies in PV are working, restoring pricing power and profitability to disciplined leaders. Simultaneously, the Energy Storage sector is entering a golden age of global demand, driven by the economic necessity of grid flexibility.

For institutional investors, the current environment offers a compelling entry point. The risks are manageable and largely priced in, while the upside from earnings recovery (PV) and volume growth (Storage) is substantial. We recommend a strategic overweight position, focusing on companies with technological moats, global scale, and financial resilience. The future of energy is electric, flexible, and efficient—and these companies are building it.

Appendix: Detailed Financial Tables

Table 1: Photovoltaic Sector Beneficiaries - Earnings Forecast

Source: Wind, Kaiyuan Securities Research Institute. Note: NR = Not Rated. Profit forecasts for unrated companies are Wind consensus estimates.

Table 2: Energy Storage Sector Beneficiaries - Earnings Forecast

Source: Wind, Kaiyuan Securities Research Institute. Note: NR = Not Rated. Profit forecasts for Sungrow, GoodWe, and Pylontech are from Kaiyuan Securities; others are Wind consensus estimates.

Disclaimer and Legal Notice

Risk Rating: R4 (Medium-High Risk). This report is intended for professional investors and ordinary investors with a risk tolerance of C4 or C5.

Analyst Certification: The analysts responsible for this report certify that the views expressed herein accurately reflect their personal views about the subject securities and issuers. No part of the analysts' compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this report.

Important Disclosures: Kaiyuan Securities may have investment banking relationships with the companies mentioned in this report. Investors should assume that Kaiyuan Securities seeks or has sought compensation for investment banking services from these companies.

Investment Risks: Past performance is not indicative of future results. The securities discussed in this report may not be suitable for all investors. Investors should make their own investment decisions based on their own objectives and financial situation.

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End of Report