Photovoltaic Industry Monthly Report: October 2025 Review

Date: December 4, 2025
Sector: Solar Energy / Renewables
Rating: In-Line with Market (Maintained)
Risk Rating: A (Volatility ≤ Benchmark)

Executive Summary

The Chinese photovoltaic (PV) industry exhibited a mixed performance in October 2025, characterized by a significant contraction in domestic new installations despite robust year-to-date (YTD) growth, while export metrics for modules and inverters demonstrated resilience through modest year-over-year (YoY) gains amid sequential declines.

Domestically, new PV installations totaled 12.6 GW in October, representing a 38.3% YoY decline, although this figure marked a 30.4% month-over-month (MoM) recovery. The cumulative installed capacity from January to October reached 252.87 GW, up 39.5% YoY, indicating that the broader annual growth trajectory remains intact despite recent monthly volatility. On the supply side, module exports maintained positive momentum with a 4.9% YoY increase in value (RMB 16.08 billion), albeit with a 19.5% MoM decrease. Similarly, inverter exports grew 3.4% YoY to RMB 4.82 billion, though they slipped 5.2% MoM. Notably, regional divergence in inverter exports was stark, with substantial growth in Africa (+34.0% YoY) and Oceania (+214.1% YoY) offsetting declines in Europe and North America.

From a generation perspective, solar power output continued its steady expansion, rising 5.9% YoY to 39.37 billion kWh, accounting for 4.77% of total industrial power generation. This underscores the increasing structural importance of solar energy within China’s power mix, even as wind generation faced headwinds (-11.9% YoY).

We maintain our "In-Line with Market" rating for the sector. While short-term demand fluctuations and policy uncertainties persist, the long-term fundamentals of energy transition and technological iteration remain strong. We recommend investors focus on companies with competitive advantages in BC (Back Contact) technology, supply-side consolidation beneficiaries, integrated storage solutions, and overseas layout diversification. Key top picks include Aiko Solar (600732.SH), LONGi Green Energy (601012.SH), Daqo New Energy (688303.SH), and Sungrow Power Supply (300274.SZ).

Key Takeaways

1. Domestic Installations: Short-Term Volatility vs. Long-Term Resilience

October’s domestic installation data presents a nuanced picture. The 38.3% YoY decline in new additions to 12.6 GW may raise concerns regarding immediate downstream demand. However, two critical factors mitigate bearish interpretations:

• Sequential Recovery: The 30.4% MoM increase suggests that the market is stabilizing after potential seasonal or policy-induced lulls in previous months.
• Strong YTD Performance: The cumulative installation of 252.87 GW (Jan-Oct) represents a 39.5% YoY growth. This robust YTD figure implies that the annual installation targets are likely being met, and the October dip may be an anomaly rather than a trend reversal.

Implication: Investors should view the October dip as a temporary fluctuation rather than a structural demand collapse. The focus should shift to Q4 completion rates and 2026 guidance from major utility-scale developers.

Source: National Energy Administration (NEA), National Bureau of Statistics (NBS)

2. Module Exports: Value Growth Amidst Volume Pressure

Module exports continue to serve as a critical outlet for Chinese manufacturing capacity. In October, the export value reached RMB 16.08 billion, achieving a 4.9% YoY growth. However, the 19.5% MoM decline indicates some cooling in immediate overseas procurement activity.

• Volume Trends: According to SMM (Shanghai Metals Market) incomplete statistics, export volume stood at 19.4 GW in October, up 3.3% YoY but down 24.3% MoM.
• Cumulative Context: From January to October, cumulative export value fell 11.8% YoY to RMB 168.26 billion, while cumulative volume rose 4.4% YoY to 223.7 GW.

Analysis: The divergence between volume growth (+4.4%) and value decline (-11.8%) in the YTD data highlights the persistent pressure on module prices due to intense competition and oversupply in the global market. While volumes are expanding, revenue recognition per watt remains under pressure. The recent MoM drop in both value and volume suggests that inventory digestion in key markets (particularly Europe) may be slowing down heading into the winter season.

3. Inverter Exports: Regional Divergence and Emerging Markets

Inverter exports showed greater resilience in value terms compared to modules, with October exports totaling RMB 4.82 billion (+3.4% YoY, -5.2% MoM). The YTD cumulative export value reached RMB 53.31 billion, up 7.2% YoY.

The most significant insight lies in the regional breakdown, which reveals a strategic shift in demand centers:

• Europe: Exports totaled RMB 1.70 billion, declining 9.8% YoY and 9.9% MoM. This reflects the ongoing inventory correction and slower installation pace in traditional European markets.
• Asia: Exports reached RMB 1.50 billion, growing 7.1% YoY but falling 11.5% MoM. Asia remains a stable growth engine, driven by emerging economies in Southeast Asia and India.
• Africa: A standout performer, with exports surging 34.0% YoY to RMB 440 million, alongside a 17.7% MoM increase. This highlights the rapid adoption of off-grid and hybrid solar solutions in African nations facing energy security challenges.
• Oceania: Exhibited explosive growth of 214.1% YoY to RMB 460 million, albeit with a slight 1.2% MoM rise. This suggests a strong baseline comparison effect or specific large-project commissions in Australia/New Zealand.
• North America: Declined sharply by 41.3% YoY to RMB 180 million, though it recovered 17.6% MoM. Trade barriers and policy uncertainties (e.g., U.S. tariffs) continue to constrain direct exports, forcing manufacturers to rely on localized production or third-country transshipment.
• Latin America: Decreased 9.7% YoY to RMB 550 million but saw a 3.7% MoM uptick, indicating potential stabilization after a period of adjustment.

Strategic Insight: The data validates the investment thesis for companies with diversified global footprints. Reliance solely on the European market is becoming a liability, whereas exposure to high-growth emerging markets (Africa, Oceania, parts of Asia) provides a hedge against developed market saturation.

Source: General Administration of Customs

4. Power Generation Mix: Solar’s Growing Share

In October, China’s total industrial power generation reached 800.2 billion kWh, a 7.9% YoY increase. Solar power generation contributed 39.37 billion kWh, growing 5.9% YoY.

• Market Share: Solar’s share of total generation stood at 4.77%, a slight decrease of 0.86 percentage points MoM. This seasonal dip is typical as solar irradiance decreases in late autumn/winter.
• Comparative Performance:
  • Hydropower: Surged 28.2% YoY, benefiting from favorable hydrological conditions.
  • Thermal Power: Grew 7.3% YoY, remaining the baseload stabilizer.
  • Nuclear Power: Increased 4.2% YoY, showing steady operational efficiency.
  • Wind Power: Declined 11.9% YoY, likely due to lower wind resources in the period.

Observation: Despite the MoM share dip, solar’s consistent YoY growth outpaces the overall grid expansion rate in many contexts, reinforcing its role as a primary driver of new capacity additions. The contrast with wind power highlights the intermittency challenges of renewables, further emphasizing the critical need for energy storage solutions (a key theme in our stock recommendations).

Investment Logic & Sector Outlook

The current market environment favors a selective approach. The era of broad-based beta returns driven by sheer capacity expansion is over. Alpha generation now depends on technological leadership, cost control, global channel depth, and integration capabilities.

Core Investment Themes

1. Technological Iteration: The BC (Back Contact) Advantage

The industry is transitioning from PERC to TOPCon and increasingly towards BC technologies, which offer higher efficiency and aesthetic advantages, particularly in distributed generation and high-end residential markets.
* Logic: Companies leading in BC technology can command premium pricing and maintain healthier margins despite industry-wide price wars.
* Key Beneficiaries:
* Aiko Solar (600732.SH): A pioneer in ABC (All Back Contact) technology with strong manufacturing scalability.
* LONGi Green Energy (601012.SH): Leveraging its massive scale and R&D prowess to drive HPBC (Hybrid Passivated Back Contact) adoption.

2. Supply-Side Consolidation & Material Leaders

As downstream margins compress, upstream material suppliers with low-cost structures and dominant market shares benefit from volume growth and eventual supply-demand rebalancing.
* Logic: The clearance of outdated capacity will favor leaders with superior cost curves. Polysilicon and glass sectors are seeing signs of stabilization.
* Key Beneficiaries:
* Daqo New Energy (688303.SH): Low-cost polysilicon producer with strong cash flow.
* Flat Glass Group (601865.SH): Dominant player in solar glass, benefiting from dual-glass module trends.

3. Integrated Storage & Inverters (Light-Storage Integration)

The mismatch between solar generation peaks and demand necessitates storage. Inverter companies are evolving into "energy management" providers.
* Logic: High exposure to emerging markets (Africa, Asia) and strong brand recognition in residential/storage segments provide defensibility.
* Key Beneficiaries:
* Sungrow Power Supply (300274.SZ): Global leader in inverters and storage systems, with diversified geographic revenue.
* Deye Shares (605117.SH): Strong presence in hybrid inverters for emerging markets.
* Hyperstrong (Haibo Sichuang) (688411.SH): Pure-play energy storage system integrator with rapid growth.

4. Power Market Reform & Digitalization

As China’s electricity market liberalizes, software and service providers that enable virtual power plants (VPPs) and trading optimization will gain value.
* Logic: Regulatory tailwinds support the monetization of flexibility services.
* Key Beneficiary:
* Longshine Technology (300682.SZ): Leader in electric vehicle charging and energy internet services.

5. Import Substitution & Overseas Layout

Geopolitical tensions necessitate self-reliance in critical materials and diversified manufacturing bases.
* Logic: Companies reducing reliance on single markets or substituting imported high-end materials.
* Key Beneficiaries:
* Quartz Shares (603688.SH): High-purity quartz sand supplier, critical for crucibles, reducing import dependence.
* Hengdian Group DMEGC Magnetics (002056.SZ): Strong overseas manufacturing footprint.
* Boway Alloy (601137.SH): Specialized alloy materials for PV applications.

Recommended Portfolio

Based on the above logic, we categorize our top recommendations as follows. Please note that ratings are relative to the A-share benchmark (CSI 300).

Watch List:
Investors should also monitor GCL Technology, Tongwei Co., Xinyi Solar, TCL Zhonghuan, Xinte Energy, DR Laser, Foster, JA Solar, Trina Solar, JinkoSolar, Maxwell Technologies, Jingsheng Mechanical, and Hongyuan Green Energy for potential tactical opportunities based on valuation resets or specific catalysts.

Risks / Headwinds

While the long-term outlook for solar remains positive, several near-to-medium-term risks warrant caution:

1. Domestic Installation Misses Expectations

• Risk: If the October decline signals a broader slowdown in Q4, annual installation targets may be missed.
• Impact: Lower-than-expected demand would exacerbate oversupply, leading to further price erosion across the value chain (silicon, wafers, cells, modules) and compressing gross margins for all manufacturers.
• Trigger: Delays in grid connection approvals, reduction in subsidy payments, or tighter financing conditions for utility-scale projects.

2. Supply Chain Price Volatility

• Risk: The PV industry is currently in a phase of intense price competition. While polysilicon prices have bottomed, downstream module prices remain volatile.
• Impact: Rapid price declines create inventory write-down risks for manufacturers and distributors. Conversely, unexpected raw material spikes (e.g., silver, quartz) could squeeze margins if costs cannot be passed down.
• Trigger: Capacity clearance slower than expected; raw material supply shocks.

3. Geopolitical and Trade Policy Uncertainty

• Risk: The EU, US, and other markets are increasingly scrutinizing Chinese PV imports. Potential anti-subsidy investigations, tariff hikes, or local content requirements pose significant threats.
• Impact: Direct exports to key markets like the US and Europe could face abrupt declines. Companies without overseas manufacturing bases (e.g., in Southeast Asia, Middle East, or US) are most vulnerable.
• Trigger: New trade legislation in the US Inflation Reduction Act (IRA) updates; EU Carbon Border Adjustment Mechanism (CBAM) implementation details; anti-dumping rulings.

4. Grid Curtailment and Integration Challenges

• Risk: As solar penetration increases, grid stability issues arise. Without adequate storage or grid upgrades, curtailment rates may rise.
• Impact: Reduced utilization hours for solar assets, lowering the internal rate of return (IRR) for project developers and potentially dampening future CAPEX.
• Trigger: Slowdown in energy storage deployment; lagging grid infrastructure investment.

Rating / Sector Outlook

Sector Rating: In-Line with Market (Maintained)

We maintain a neutral stance on the broader sector index due to the conflicting signals of strong YTD growth versus recent monthly softness in domestic installations and export volumes. The market is currently pricing in the reality of overcapacity and margin compression. However, the structural growth story remains intact.

• Valuation Perspective: Many leading PV stocks are trading at historically low P/E ratios, reflecting pessimistic earnings expectations. For long-term investors, this offers an attractive entry point for high-quality names with technological moats.
• Catalysts for Upgrade:
  1. Clear evidence of supply-side capacity exit (bankruptcies or production cuts by tier-2/3 players).
  2. Stabilization or rebound in module prices.
  3. Stronger-than-expected Q4 installation data.
  4. Favorable policy shifts in key export markets (e.g., resolution of trade disputes).

Investment Strategy:
Adopt a "Barbell Strategy":
1. Defensive End: Hold cash-rich, low-cost leaders in mature segments (Polysilicon, Glass) that can survive price wars and pay dividends (e.g., Daqo, Flat Glass).
2. Offensive End: Invest in high-growth, technology-driven innovators (BC Tech, Storage) that offer alpha through product differentiation and new market expansion (e.g., Aiko, Sungrow, Hyperstrong).

Avoid pure-play module assemblers with no technological differentiation or excessive leverage, as they are most exposed to margin compression.

Investment View

The October 2025 data confirms that the Chinese PV industry is in a transitional phase. The "gold rush" of unlimited demand is over, replaced by a mature, competitive landscape where efficiency, cost, and globalization are the key differentiators.

For institutional investors, the current dislocation between stock prices and long-term industry potential presents a strategic opportunity. While short-term volatility is inevitable due to seasonal factors and trade noise, the global energy transition is irreversible. China’s dominance in the PV supply chain is not just about cost but also about speed of innovation and scale.

Key Actionable Insights:
1. Focus on Quality: Prioritize companies with strong balance sheets and positive operating cash flows. In a consolidating market, survival is the first step to gaining market share.
2. Bet on Technology: BC technology is not just a hype cycle; it represents a tangible efficiency gain that translates to higher value per watt. Companies like Aiko and LONGi are well-positioned to capture this premium.
3. Storage is the Enabler: The future of solar is inseparable from storage. Sungrow and Hyperstrong are not just solar plays; they are energy infrastructure plays. Their growth trajectories are less tied to pure module volumes and more to the broader electrification and grid modernization trends.
4. Geographic Diversification Matters: Companies like Deye and Hengdian DMEGC that have successfully penetrated non-traditional markets (Africa, Latin America, Oceania) are demonstrating resilience against Western trade barriers.

Conclusion:
We advise investors to look past the headline YoY decline in October installations and focus on the underlying structural strengths of the recommended companies. The sector is moving from a volume-driven growth model to a quality-and-technology-driven value model. Our selected portfolio reflects this shift, offering a balanced exposure to technological leaders, supply-side stalwarts, and global growth engines.

Disclaimer: This report is based on information available as of December 4, 2025. The views expressed are those of the analysts and do not constitute investment advice. Investors should conduct their own due diligence and consult with financial advisors before making investment decisions. Past performance is not indicative of future results.