Photovoltaic Industry 3Q2025 Performance Review: Narrowing Losses in Main Chain, Significant Cash Flow Improvement in Polysilicon

Date: November 25, 2025
Source: Hualong Securities Research Institute
Analysts: Yang Yang (SAC: S0230523110001), Xu Zijing (SAC: S0230524080001)
Rating: Recommended (Maintained)

Executive Summary

The photovoltaic (PV) industry is exhibiting clear signs of bottoming out in the third quarter of 2025, characterized by a divergence in performance across the value chain. While the broader Power Equipment sector demonstrated robust growth with a 20.87% year-over-year (YoY) increase in net profit, the PV equipment sub-sector continued to report aggregate net losses. However, critical metrics indicate a stabilization trend: net profit margins and Return on Equity (ROE) have improved sequentially despite the negative earnings backdrop.

Our analysis of 41 representative companies reveals that while the main production chain (polysilicon, wafers, cells, and modules) remained unprofitable in 3Q2025, the magnitude of losses has narrowed significantly, particularly in the polysilicon and cell segments. Notably, the polysilicon segment has shown marked improvement in operating cash flow, suggesting enhanced liquidity management and potential early stages of supply-side clearance. In stark contrast, the inverter segment continues to be the primary profit driver, maintaining high double-digit growth in both revenue and net profit, supported by strong overseas demand and favorable product mix shifts.

Looking ahead to 2026, we anticipate a continuation of positive trends driven by the gradual clearance of excess capacity on the supply side and technological upgrades in battery efficiency. We maintain a "Recommended" rating for the industry. Investment focus should shift towards main chain leaders with superior cash reserves and technological moats, auxiliary material providers benefiting from specific structural trends (such as copper-replacing-silver), and inverter manufacturers with strong shipment momentum.

Key Takeaways

1. Sector Overview: Divergence Between Power Equipment and PV Sub-sector

The broader Power Equipment sector (Shenwan Index) delivered solid performance in the first three quarters of 2025, underscoring the resilience of the electrical new energy landscape. However, the PV segment remains in a corrective phase, grappling with the aftermath of intense competition and overcapacity.

Power Equipment Sector Performance (1Q-3Q 2025):
* Revenue: RMB 2.547 trillion, up 5.72% YoY.
* Net Profit Attributable to Shareholders: RMB 116.9 billion, up 20.87% YoY.
* Profitability Metrics: Gross margin stood at 16.45% (+0.1 pct YoY); Net margin at 4.96% (+2.1 pct YoY); ROE at 4.89% (+1.1 pct YoY).

PV Equipment Sector Performance (1Q-3Q 2025):
* Revenue: RMB 618.9 billion, down 11.05% YoY.
* Net Profit Attributable to Shareholders: -RMB 6.8 billion, a decline of 158.82% YoY (turning from profit to loss).
* Profitability Metrics: Gross margin at 10.76% (-1.1 pct YoY); Net margin at -1.42% (improved by +1.8 pct YoY); ROE at -1.20% (improved by +3.3 pct YoY).

Analyst Note: The improvement in net margin and ROE despite negative absolute profits indicates that the rate of loss generation is slowing. The industry is transitioning from a phase of aggressive price wars to one of survival and consolidation, where cost control and operational efficiency are beginning to yield marginal benefits.

2. Main Production Chain: Losses Narrow, Cash Flow Stabilizes

The core manufacturing segments—polysilicon, wafers, cells, and modules—continued to report net losses in 3Q2025. However, the trajectory of these losses is improving, with significant heterogeneity observed across sub-segments.

2.1 Financial Performance by Segment (1Q-3Q 2025 vs. 3Q 2025)

*Note: Positive YoY change in net profit for loss-making segments indicates a reduction in the magnitude of losses.

Key Observations:
* Polysilicon: This segment has seen the most dramatic improvement in loss reduction. In 3Q2025, the net loss narrowed to just RMB 241 million, an 81% improvement YoY. This suggests that high-cost产能 (capacity) is being idled or exited, allowing prices to stabilize slightly above cash costs for leading players.
* Wafers: Despite a 32% YoY revenue increase in 3Q2025, losses widened sequentially due to persistent inventory write-downs and low utilization rates. The gross margin of -10.12% in 3Q indicates severe pricing pressure.
* Cells: Revenue growth outpaced other main chain segments (+7.33% YTD, +13.30% in Q3), reflecting strong demand for high-efficiency cells. However, profitability remains elusive as module makers exert pressure on cell prices.
* Modules: As the largest segment by revenue, modules continue to bear the brunt of channel inventory adjustments and global trade barriers. The net loss of RMB 3.9 billion in 3Q2025 reflects ongoing competitive intensity, although the net margin improved slightly to -4.55%.

2.2 Cash Flow Analysis: The Polysilicon Turnaround

A critical development in 3Q2025 is the improvement in cash flows, particularly within the polysilicon segment. This is a leading indicator of financial health and sustainability during the downturn.

Main Chain Cash Flow Highlights (3Q 2025):
* Cash & Equivalents Balance: RMB 157.4 billion, a slight sequential decrease of RMB 1.9 billion. The module segment faced the most pressure on cash reserves.
* Financing Activities: Net financing inflow increased by RMB 5.4 billion sequentially. Industry leaders are actively raising capital to weather the bottoming-out period, ensuring liquidity for operations and potential M&A activities.
* Operating Cash Flow (OCF): Improved sequentially by RMB 2.7 billion. The polysilicon segment was the primary contributor to this improvement, indicating better working capital management and potentially faster receivable collections or delayed payables.
* Investing Activities: Cash spent on constructing fixed assets, intangible assets, and other long-term assets increased by RMB 2.4 billion sequentially. This uptick suggests that while expansion has slowed, essential maintenance and technological upgrade investments are resuming, signaling confidence in the eventual recovery.

Table: Cash Flow Dynamics of Key Main Chain Companies (3Q 2025)

Data Source: Wind, Hualong Securities Research Institute. Note: OCF and CapEx figures are for 3Q2025 only.

The robust operating cash flow generation by Tongwei (+RMB 4.8 billion) and Jinko (+RMB 2.5 billion) underscores the importance of scale and vertical integration in preserving liquidity. Conversely, the negative financing cash flow for several module makers indicates debt repayment or dividend payouts, which may constrain future flexibility if losses persist.

3. Auxiliary Materials: Mixed Performance with Structural Opportunities

The auxiliary materials segment (glass, film, silver paste, ribbon, mounting structures, etc.) showed overall revenue and profit growth in 3Q2025, but performance varied significantly by sub-segment.

Aggregate Performance (1Q-3Q 2025):
* Revenue: RMB 63.36 billion, down 8.34% YoY.
* Net Profit: RMB 2.15 billion, down 50.21% YoY.
* Gross Margin: 11.29%; Net Margin: 3.40%.

3Q 2025 Performance:
* Revenue: RMB 21.87 billion, flat YoY (-0.37%).
* Net Profit: RMB 691 million, up 11.14% YoY.
* Gross Margin: 4.45%; Net Margin: 3.16%.

Sub-Segment Analysis:

1. Photovoltaic Glass: Marginal Improvement.

   • Flat Glass (601865.SH): 3Q revenue surged 20.95% YoY to RMB 4.73 billion, with net profit jumping 285.47% to RMB 376 million. Gross margin expanded to 16.75%. This recovery is attributed to higher utilization rates and stable raw material costs.
   • Implication: The glass duopoly is leveraging its scale to regain pricing power as downstream demand stabilizes.

2. Mounting Structures (Trackers/Racks): Under Pressure.

   • Arctech Solar (688408.SH): 3Q revenue fell 48.54% YoY, resulting in a net loss of RMB 36 million. This sharp decline reflects project delays in key overseas markets and intense domestic competition.
   • Clenergy (603628.SH): Conversely, Clenergy reported a 5.47% revenue increase and maintained profitability, highlighting the divergence based on geographic exposure and product mix.

3. Silver Paste & Powder: Benefiting from "Copper-Replacing-Silver" Trend.

   • DKEM (300842.SZ): Despite a net loss in 3Q, revenue grew 11.76% YoY. The company is heavily invested in next-generation metallization technologies.
   • Polymer Material (688503.SH): Revenue grew 37.38% YoY in 3Q, demonstrating strong market share gains in top-con silver paste.
   • Boqian New Material (605376.SH): Positioned to benefit from the transition to copper plating and low-silver consumption technologies.

4. Encapsulant Film: Stable but Competitive.

   • First (603806.SH): 3Q revenue declined 13.18%, and net profit fell 41.79%. The film market remains highly fragmented, limiting pricing power despite volume growth.

4. PV Equipment: Profitability Under Pressure

The PV equipment sector faces headwinds as downstream capex slows. Manufacturers are experiencing order delays and cancellations, leading to revenue and profit contractions.

Aggregate Performance (1Q-3Q 2025):
* Revenue: RMB 35.99 billion, down 19.75% YoY.
* Net Profit: RMB 5.19 billion, down 29.48% YoY.
* Gross Margin: 29.95%; Net Margin: 14.42%.

3Q 2025 Performance:
* Revenue: RMB 11.74 billion, down 29.49% YoY.
* Net Profit: RMB 1.65 billion, down 34.33% YoY.
* Gross Margin: 13.71%; Net Margin: 14.09%.

Company-Level Divergence:
* DR Laser (300776.SZ): Outperformed peers with 3Q revenue up 14.35% and net profit up 14.99%. Its leadership in laser ablation and SE (Selective Emitter) technology provides a defensive moat.
* Jiejia Weichuang (300724.SZ): Maintained profitability with RMB 858 million net profit in 3Q, though revenue declined 17.26%. Its diverse product portfolio in TOPCon and HJT equipment offers some resilience.
* Autowell (688516.SH) & Crystal Machine (300316.SZ): Suffered significant declines (>60% drop in net profit) due to their heavy exposure to wafer and ingot equipment, which are the first to be cut in capex cycles.

Strategic Insight: The equipment sector is shifting from a "volume-driven" growth model to a "technology-driven" one. Investors should prioritize companies with exposure to next-generation battery technologies (e.g., BC, HJT, Perovskite) rather than traditional PERC or TOPCon expansion lines.

5. Inverters: The Bright Spot with High Growth

The inverter segment remains the most profitable and fastest-growing part of the PV value chain, driven by strong international demand, energy storage integration, and favorable currency effects.

Aggregate Performance (1Q-3Q 2025):
* Revenue: RMB 98.76 billion, up 25.11% YoY.
* Net Profit: RMB 16.22 billion, up 36.94% YoY.
* Gross Margin: 33.79%; Net Margin: 16.42%.

3Q 2025 Performance:
* Revenue: RMB 34.45 billion, up 16.31% YoY.
* Net Profit: RMB 5.66 billion, up 26.39% YoY.
* Gross Margin: 18.47%; Net Margin: 16.44%.

Key Drivers:
1. Overseas Market Penetration: Leading inverters like Sungrow and Ginlong continue to gain share in Europe, the Middle East, and Asia-Pacific, where margins are significantly higher than in China.
2. Energy Storage Synergy: The bundling of inverters with battery storage systems (ESS) has created a new high-margin revenue stream. Sungrow’s dominance in large-scale storage is a prime example.
3. Product Mix Shift: A move towards string inverters and microinverters for residential and C&I segments has boosted average selling prices (ASPs) and margins.

Top Performers:
* Sungrow (300274.SZ): 3Q net profit surged 57.04% YoY to RMB 4.15 billion. Its global brand equity and comprehensive product lineup allow it to command premium pricing.
* GoodWe (688390.SH): Turned around with an 837% YoY profit increase in 1Q-3Q, driven by inventory normalization and renewed demand in distributed generation markets.
* Deye (605117.SH): Maintained strong profitability with a 24.89% net margin in 3Q, benefiting from its hybrid inverter leadership in emerging markets.

Risks / Headwinds

While the industry shows signs of stabilization, several risks remain that could derail the recovery trajectory:

1. Macroeconomic Downturn: A global economic slowdown could reduce capital expenditure budgets for utility-scale projects and dampen consumer spending on residential solar, particularly in key markets like Europe and the US.
2. Policy Uncertainty: Delays or reductions in subsidy programs, feed-in tariffs, or tax credits in major markets (e.g., changes to the US Inflation Reduction Act implementation or EU Green Deal adjustments) could negatively impact demand.
3. Raw Material Price Volatility: Fluctuations in the prices of polysilicon, silver, copper, and aluminum can squeeze margins for manufacturers who cannot pass costs downstream. Specifically, a sudden spike in silver prices could accelerate the need for copper substitution, disrupting current supply chains.
4. Technological Disruption: The rapid evolution of battery technologies (e.g., from TOPCon to HJT to Perovskite) carries execution risk. Companies that fail to transition quickly may face stranded assets and obsolete inventory. Conversely, slower-than-expected adoption of new technologies can delay efficiency gains.
5. Trade Protectionism: Increasing trade barriers, such as anti-dumping duties, countervailing duties, or local content requirements in the US, India, and potentially the EU, pose a significant threat to Chinese exporters. Geopolitical tensions could lead to further decoupling of supply chains.
6. Intensified Competition: Despite capacity clearance efforts, the sheer volume of existing capacity means price wars could reignite if demand does not keep pace. This could prolong the period of negative profitability for the main chain.
7. Data Accuracy Risks: Reliance on third-party data for industry tracking (shipments, installations, prices) introduces the risk of misinterpretation if the underlying data is flawed or lagged.
8. Company-Specific Execution Risks: Individual companies may face operational issues, management turnover, or financial distress that deviate from industry averages.

Rating / Sector Outlook

Industry Rating: Recommended (Maintained)

Outlook for 2026:
We project a cautiously optimistic outlook for the PV industry in 2026. The primary thesis rests on two pillars:
1. Supply-Side Clearance: The prolonged period of losses is forcing inefficient capacity to exit the market. We expect this consolidation to accelerate in late 2025 and early 2026, leading to a healthier supply-demand balance and improved pricing power for survivors.
2. Technological Upgrades: The transition to higher-efficiency battery technologies (BC, HJT, and tandem cells) will create differentiation. Companies that lead in these technologies will capture disproportionate value, moving the industry away from pure commodity competition.

Sector Rotation Strategy:
* Overweight: Inverters and Energy Storage Systems (due to high growth and margins).
* Neutral: Auxiliary Materials (selective opportunities in glass and silver paste).
* Underweight/Selective: Main Chain Manufacturing (only top-tier leaders with strong balance sheets; avoid high-cost producers).

Investment View

Based on our analysis, we recommend a barbell strategy: investing in high-growth, high-margin segments (inverters) while selectively picking survivors in the consolidating main chain.

1. Main Chain Leaders: Cash is King, Technology is Queen

In a downturn, financial strength is the ultimate competitive advantage. Companies with low debt, high cash reserves, and proprietary technology will survive the clearance phase and emerge stronger.

• Tongwei Co., Ltd. (600438.SH):

  • Logic: As the global polysilicon leader, Tongwei has the lowest cash cost of production. Its 3Q2025 operating cash flow improvement signals resilience. Vertical integration into modules provides a hedge against polysilicon price volatility.
  • Valuation: Trading at a forward P/E of ~19x for 2027E, it offers attractive upside as profits normalize.
  • Risk: Continued polysilicon price depression.

• LONGi Green Energy (601012.SH):

  • Logic: LONGi is pivoting towards BC (Back Contact) technology, aiming for premium differentiation. Its strong brand and global distribution network provide stability. The narrowing losses in 3Q suggest its cost-cutting measures are taking effect.
  • Valuation: Forward P/E of ~27x for 2027E.
  • Risk: Slower adoption of BC technology compared to TOPCon.

• Aiko Solar (600732.SH):

  • Logic: A pure-play ABC (All Back Contact) cell and module manufacturer. Its technology offers higher efficiency, appealing to high-end residential and commercial markets.
  • Valuation: High volatility expected; forward P/E of ~13.7x for 2027E reflects growth expectations.
  • Risk: Niche market size; scaling challenges.

• Canadian Solar (688472.SH):

  • Logic: Strong presence in overseas utility-scale projects provides higher margins. Its integrated model (modules + storage + development) diversifies revenue streams.
  • Valuation: Forward P/E of ~15.6x for 2027E.
  • Risk: Exposure to project development risks and foreign exchange fluctuations.

2. Auxiliary Materials: Structural Trends

• Arctech Solar (688408.SH):

  • Logic: Despite recent weakness, Arctech is a global leader in solar trackers. As utility-scale projects recover, demand for trackers will rebound. The company’s international footprint mitigates domestic competition.
  • Valuation: Forward P/E of ~10.1x for 2027E.
  • Risk: Project delays in key markets.

• DKEM (300842.SZ) & Polymer Material (688503.SH):

  • Logic: Both companies are positioned to benefit from the "copper-replacing-silver" trend and the increasing use of silver paste in high-efficiency cells. DKEM’s focus on front-side silver paste for TOPCon/HJT gives it a technological edge.
  • Valuation: DKEM at ~12.9x 2027E P/E; Polymer at ~19.4x 2027E P/E.
  • Risk: Raw material price volatility; technological substitution.

• Boqian New Material (605376.SH):

  • Logic: A key supplier of nickel powder for MLCCs and copper powder for photovoltaic applications. As copper plating technology matures, Boqian stands to gain from increased demand for high-quality copper powders.
  • Rating: Overweight (Increase).
  • Valuation: Forward P/E of ~18.7x for 2027E.

3. PV Equipment: Technology Leaders

• DR Laser (300776.SZ):

  • Logic: Leader in laser processing equipment for PV cells. Its technology is critical for SE, LECO, and BC cell production. High barriers to entry protect its margins.
  • Valuation: Forward P/E of ~18.3x for 2027E.
  • Risk: Capex slowdown by cell manufacturers.

• Jiejia Weichuang (300724.SZ):

  • Logic: Comprehensive provider of wet chemistry equipment for TOPCon and HJT. Its broad product line reduces dependency on any single technology path.
  • Valuation: Forward P/E of ~20.0x for 2027E.
  • Risk: Competition in the HJT equipment space.

4. Inverters: High Growth Momentum

• Sungrow Power Supply (300274.SZ):

  • Logic: The global leader in solar inverters and energy storage systems. Its scale, brand, and R&D capabilities create a wide moat. Strong growth in overseas markets and storage drives earnings.
  • Valuation: Forward P/E of ~17.9x for 2027E.
  • Risk: Geopolitical tensions affecting overseas sales.

• Deye Shares (605117.SH):

  • Logic: Dominant in hybrid inverters for residential markets, particularly in emerging economies (South Africa, Southeast Asia). High margins and strong cash flow.
  • Valuation: Forward P/E of ~14.3x for 2027E.
  • Risk: Competition in the residential segment; inventory levels in distribution channels.

• Ginlong Technologies (300763.SZ):

  • Logic: Strong presence in European residential markets. Recovery in European demand and expansion into new geographies support growth.
  • Valuation: Forward P/E of ~16.3x for 2027E.
  • Risk: European policy changes; currency fluctuations.

• Sineng Electric (300827.SZ):

  • Logic: Growing presence in utility-scale inverters and energy storage in China and overseas. Beneficiary of domestic large-base project tenders.
  • Valuation: Forward P/E of ~19.9x for 2027E.
  • Risk: Intense domestic bidding competition.

Summary Table: Key Recommendations & Valuations

Source: Wind, Hualong Securities Research Institute. Note: EPS and PE for unrated companies are based on Wind consensus estimates.

Detailed Financial Analysis & Operational Trends

To provide a deeper understanding for institutional investors, we delve into the operational nuances driving the financial results observed in 3Q2025.

1. The Polysilicon Cycle: From Glut to Equilibrium?

Polysilicon prices have fallen from highs of over RMB 300/kg in 2022 to below RMB 50/kg in 2025. This collapse was driven by massive capacity additions in 2023-2024. However, 3Q2025 data suggests the bottom may be in sight.

• Cost Curve Analysis: The industry cash cost curve is steep. Leading players like Tongwei and Daqo operate at the lower end (estimated RMB 60/kg. At current prices, high-cost producers are bleeding cash every day they operate.
• Capacity Utilization: We observe a decline in industry-wide utilization rates, with some older Siemens-method plants shutting down permanently. This supply contraction is the primary driver behind the narrowing losses.
• Inventory Levels: Polysilicon inventories have stabilized, indicating that production is better aligned with downstream wafer demand.
• Cash Flow Significance: The positive operating cash flow for Tongwei in 3Q is a pivotal signal. It implies that even at low prices, the leader can generate cash, likely through rigorous cost control and efficient working capital management. This financial resilience allows Tongwei to withstand the downturn longer than competitors, potentially gaining market share as others exit.

2. Wafer Segment: The Bottleneck of Profitability

The wafer segment remains the weakest link in the value chain. Despite being a critical component, wafer makers have little pricing power because:
1. High Capital Intensity: Wafer factories require massive upfront investment, leading to high fixed costs. To cover these, companies must run at high utilization, even if it means selling at a loss.
2. Technological Transition: The shift from P-type to N-type wafers has rendered some older capacity obsolete. Write-downs of these assets have hurt profitability.
3. Downstream Pressure: Cell and module makers are demanding lower wafer prices to improve their own margins.

TCL Zhonghuan’s continued losses highlight these challenges. However, the 32% YoY revenue growth in 3Q suggests that volume is recovering. The key for wafer makers is to reduce non-N-type capacity and improve the yield of N-type wafers.

3. Cell & Module: Differentiation via Technology

The cell and module segments are seeing a bifurcation based on technology.
* TOPCon: Now the mainstream technology, TOPCon cells are seeing intense competition. Margins are thin as many manufacturers have converted their PERC lines to TOPCon.
* BC (Back Contact): Companies like LONGi and Aiko are betting on BC technology, which offers higher efficiency and aesthetic appeal. BC modules command a premium price, protecting margins. However, the market size for BC is currently smaller than TOPCon.
* HJT (Heterojunction): HJT offers high efficiency but requires expensive equipment and silver paste. Cost reduction efforts (e.g., silver-coated copper, thinner wafers) are ongoing. Jiejia Weichuang and others are providing the equipment for this transition.

For module makers, the key to profitability lies in:
1. Brand Premium: Established brands like LONGi, Jinko, and Trina can charge more in overseas markets.
2. Channel Control: Direct sales to utilities and distributors yield better margins than spot market sales.
3. Integrated Solutions: Offering storage and EPC services alongside modules creates stickier customer relationships.

4. Inverter Dynamics: Beyond Solar

The inverter sector’s success is not solely tied to solar PV growth. Two additional factors are driving performance:
1. Energy Storage Systems (ESS): Inverters are the "brain" of storage systems. As renewable penetration increases, grid instability necessitates storage. Sungrow and Huawei are leaders in this space. The margin profile for storage inverters is often higher than for solar-only inverters.
2. Grid-Forming Technology: New regulations in Europe and Australia require inverters to support grid stability (grid-forming capability). This technical barrier favors established players with strong R&D, excluding smaller, low-cost competitors.

Furthermore, the geographic mix is crucial. Companies with high exposure to Europe, the Middle East, and Australia enjoy higher ASPs and margins compared to those reliant on the domestic Chinese market. Sungrow’s 3Q results reflect this optimal mix.

5. Auxiliary Materials: The Impact of Metallization Changes

The push for higher cell efficiency is changing the material requirements:
* Silver Consumption: TOPCon cells use more silver paste than PERC. This initially boosted demand for silver paste makers like DKEM and Polymer. However, the high cost of silver is driving research into silver reduction techniques.
* Copper Plating: Electroplated copper is a potential replacement for silver screen printing. This technology is still in early commercialization but poses a long-term threat to traditional silver paste makers. Companies like Boqian New Material, which produce copper powder, are positioned to benefit if this technology scales.
* Glass Thickness: The trend towards thinner glass (to reduce weight and cost) favors manufacturers with advanced production capabilities, such as Flat Glass.

Strategic Implications for Institutional Investors

1. Timing the Cycle

The PV industry is cyclical. Historically, the best time to invest is when the industry is deeply unprofitable, and capacity clearance is underway. 3Q2025 fits this description for the main chain. However, investors must distinguish between companies that will survive and those that will go bankrupt.
* Buy Signal: For main chain leaders, the narrowing losses and improving cash flow are early buy signals. The stock price often bottoms before profits turn positive.
* Hold/Sell Signal: For high-cost producers with weak balance sheets, the risk of bankruptcy or dilutive equity raises remains high. Avoid these names.

2. Quality over Quantity

In a growth phase, revenue growth is the primary metric. In a consolidation phase, cash flow and balance sheet strength are paramount.
* Focus on companies with net cash positions or low debt-to-equity ratios.
* Prioritize companies with proven technological leadership (e.g., Tongwei in polysilicon, Sungrow in inverters, DR Laser in equipment).

3. Geographic Diversification

Companies with significant overseas revenue are less exposed to domestic price wars and benefit from higher margins.
* Inverters: Sungrow, Ginlong, Deye.
* Modules: Canadian Solar, Trina, Jinko.
* Equipment: Companies exporting to India, Southeast Asia, and the Middle East.

4. Technological Bets

Invest in the enablers of the next technology cycle.
* BC Technology: LONGi, Aiko.
* HJT Equipment: Jiejia Weichuang, Maxwell (Maiwei).
* Metallization Innovation: DKEM, Polymer, Boqian.

Conclusion

The 3Q2025 performance review of the PV industry reveals a sector in transition. The pain of overcapacity is still evident in the negative profits of the main chain, but the healing process has begun. Polysilicon cash flows are improving, losses are narrowing, and the inverter segment continues to thrive.

For institutional investors, the strategy should be selective. Avoid the "middle of the pack" manufacturers who lack scale or technological differentiation. Instead, concentrate capital in:
1. Resilient Leaders: Tongwei, LONGi, Sungrow.
2. High-Growth Niches: Inverters with storage exposure (Deye, Sineng).
3. Technology Enablers: DR Laser, DKEM, Boqian.

As we look towards 2026, the clearance of excess capacity and the adoption of advanced battery technologies will likely restore profitability to the main chain. The current valuation levels for many quality names reflect the pessimism of the downturn, offering an attractive entry point for long-term investors willing to endure short-term volatility.

Final Recommendation: Maintain Recommended rating for the PV industry. Overweight Inverters and Select Main Chain Leaders. Neutral on Auxiliary Materials. Underweight on Non-Leading Wafer and Module Makers.

Disclaimer: This report is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with financial advisors before making investment decisions. The views expressed herein are subject to change without notice. Hualong Securities Research Institute assumes no liability for any losses arising from the use of this report.