Photovoltaic Industry Weekly Report: Sector Rebounds as Policy Tailwinds Strengthen; Maintaining "Overweight" Rating

Date: October 9, 2025
Source: Guoxin Securities Market Research Department
Analyst: Zhang Xinyi (S1490522090001)
Rating: Overweight (Sector Outlook)

Executive Summary

The Chinese photovoltaic (PV) sector demonstrated robust resilience and strong momentum during the week of September 22–26, 2025. The Shenwan Photovoltaic Equipment Index surged by 5.43%, significantly outperforming the broader market and leading the gains within the Power Equipment sector. This performance was underpinned by a combination of technical bottoming signals, stabilizing supply chain prices, and favorable policy developments aimed at accelerating green infrastructure integration.

Our analysis indicates that the sector has likely traversed the deepest phase of its cyclical adjustment. With main-chain prices holding steady and policy frameworks increasingly supporting distributed energy and industrial park decarbonization, we maintain an "Overweight" rating on the PV industry. We anticipate that the next six months will see the industry index outperform the broader market benchmark by more than 5%.

Investors are advised to focus on two primary alpha-generating themes:
1. Technological Leadership in N-Type Products: Companies with high production ratios of N-type cells and modules, which offer superior efficiency and diminishing cost premiums.
2. Next-Generation Technology Pioneers: Firms with advanced layouts in perovskite and other emerging technologies, positioning them for long-term competitive advantage.

While the outlook is positive, investors must remain vigilant regarding potential headwinds, including raw material price volatility, delays in project commencement, and escalating international trade friction.

Key Takeaways

1. Market Performance: PV Leads Power Equipment Sector Rally

The week ended September 26, 2025, marked a significant rebound for the renewable energy complex. The broader A-share market showed modest gains, with the CSI 300 Index rising by 1.07%. However, the divergence in sector performance was stark, highlighting a rotation of capital into high-growth infrastructure and clean energy assets.

• Sector Dominance: Among the 31 Shenwan industry indices, only seven recorded positive returns. The Power Equipment (Shenwan) index emerged as the top performer, climbing 3.86% and outperforming the CSI 300 by 2.79 percentage points (pct).
• PV Outperformance: Within the Power Equipment secondary industries, the Photovoltaic Equipment index led the charge with a substantial gain of 5.43%. This was followed by Wind Power Equipment (+6.00%), Battery (+4.14%), Other Power Equipment II (+2.95%), Grid Equipment (+1.85%), and Motor II (+0.24%). The broad-based rise across secondary sub-sectors suggests a systemic confidence boost in the electrical equipment landscape rather than isolated stock-specific news.

Data Source: Wind, Guoxin Securities Research

• Individual Stock Dynamics:
  • Top Performers: The rally was driven by leaders in materials and integrated manufacturing. Polymer Materials (Juhe Material), Mubang High-Tech, Jingsheng Mechanical & Electrical, Sungrow Power Supply, and TCL Zhonghuan recorded the highest gains. These companies represent key nodes in the supply chain, from silicon crystal growth (Jingsheng, TCL) to inverters (Sungrow) and specialized materials (Mubang, Juhe).
  • Laggards: Conversely, Gaoce Shares, Jinbo Shares, Lianhong New Material, Tongxiang Technology, and Ancai Hi-Tech experienced declines. The underperformance of auxiliary material providers like Jinbo (carbon composites) and Gaoce (cutting wires/services) may reflect specific concerns regarding margin compression or inventory adjustments in niche segments, despite the overall sector buoyancy.

2. Supply Chain Price Analysis: Stabilization Signals Bottoming

A critical indicator for the health of the PV industry is the pricing trend across the main value chain. Data from Datayes as of September 24, 2025, reveals a pattern of stabilization, suggesting that the intense price wars of previous quarters may be abating. This price stability is crucial for restoring manufacturer margins and encouraging downstream installation demand.

A. Main Chain Prices Hold Steady

• Polysilicon: The transaction price reached 51 RMB/kg, representing a slight increase of 1 RMB/kg week-over-week (WoW). This marginal uptick is significant as it halts the downward trajectory that has plagued polysilicon producers, indicating that supply and demand are finding a new equilibrium.
• Silicon Wafers: Prices remained flat at 1.40 RMB/piece. Stability here is vital for wafer manufacturers who have faced severe pressure from oversupply.
• Solar Cells: Transaction prices held steady at 0.29 RMB/W.
• Modules: Module prices also remained unchanged at 0.69 RMB/W.

The flattening of prices across wafers, cells, and modules suggests that manufacturers are no longer engaging in aggressive discounting to clear inventory. Instead, the market is transitioning towards a volume-driven recovery where price stability supports healthier cash flows.

B. Auxiliary Materials: Mixed Trends

• Photovoltaic Glass: Prices for both standard thicknesses remained stable.
  • 3.2mm glass: 20 RMB/sqm (WoW: Flat)
  • 2.0mm glass: 13.5 RMB/sqm (WoW: Flat)
    Stable glass prices indicate balanced demand from module assembly lines.
• Silver Paste: In contrast to the stability elsewhere, silver paste prices rose notably by 6% WoW to 10,735 RMB/kg. This increase is likely driven by broader precious metal market trends rather than PV-specific demand shocks. However, rising silver paste costs pose a marginal pressure on cell manufacturing margins, particularly for TOPCon and HJT technologies which are silver-intensive. This reinforces the investment thesis favoring companies with advanced metallization techniques (such as silver-coated copper or laser transfer printing) that can mitigate silver consumption.

Data Source: Datayes, Solarzoom, Guoxin Securities Research

3. Policy Catalysts: Structural Support for Demand

Three major policy developments during the reporting period provide strong fundamental support for future PV demand, shifting the narrative from pure manufacturing capacity to integrated energy solutions and regional development.

A. Guangdong Virtual Power Plant (VPP) Operators Unveiled

On September 19, the Guangdong Power Exchange Center announced the first batch of 10 virtual power plant operators. This list includes major state-owned and private entities such as:
* Guangdong Power Grid Energy Investment Co., Ltd.
* Guangdong Yuedian Power Sales Co., Ltd.
* China Southern Power Grid Comprehensive Energy Digital Service (Guangzhou) Co., Ltd.
* CGN Solar (Shenzhen) Co., Ltd.
* Enpower Battery Technology Co., Ltd.

Investment Implication: The formal recognition of VPP operators marks a critical step in monetizing distributed energy resources. For PV companies, this opens new revenue streams beyond simple hardware sales. It integrates rooftop solar, storage, and load management into a tradable asset class. Companies with strong footholds in Guangdong or those providing smart inverters and energy management systems (EMS) stand to benefit directly from this market liberalization.

B. National Guidelines for High-Quality Industrial Park Development

On September 22, the Ministry of Industry and Information Technology (MIIT) and the National Development and Reform Commission (NDRC) jointly issued the "Guidelines for High-Quality Development of Industrial Parks."

Key Provisions:
* Green Infrastructure Acceleration: Explicit mandate to accelerate the development of rooftop PV, distributed wind power, diversified energy storage, and charging piles.
* Microgrid Construction: Exploration of industrial green microgrids and zero-carbon energy supply systems.
* Digital Management: Establishment of park-level digital energy and carbon management centers.
* Circular Economy: Enhanced focus on solid waste utilization and recycling within parks.

Investment Implication: This policy transforms industrial parks into mandatory adoption zones for renewable energy. It creates a structured, policy-driven demand floor for distributed PV and storage solutions. It favors integrated service providers who can offer "PV + Storage + Charging + Digital Management" turnkey solutions rather than just module suppliers.

C. Qinghai Province New Energy Project Management Measures (Draft)

On September 23, the Qinghai Provincial Energy Bureau released a draft for public comment on the "Management Measures for the Development and Construction of New Energy Projects in Qinghai Province."

Key Provisions:
* Scope: Covers wind, PV, and concentrated solar power (CSP).
* Allocation Mechanism: For national large-scale wind/PV bases, national/provincial pilot demonstration projects, and provincial preferred projects, investment entities will be determined through competitive allocation by provincial energy authorities.

Investment Implication: Qinghai is a core hub for China’s large-scale renewable bases. The move towards competitive allocation emphasizes the importance of technological efficiency, cost competitiveness, and local contribution capabilities. Leading enterprises with proven track records in utility-scale projects and advanced technology (higher efficiency modules) will have a distinct advantage in securing these lucrative contracts.

Investment Logic & Strategic Recommendations

Based on the convergence of market performance, price stabilization, and policy tailwinds, we articulate the following investment logic:

1. The "Bottoming Out" Thesis

The PV sector has undergone a prolonged period of valuation compression and margin erosion due to overcapacity. The current data suggests we are at an inflection point:
* Price Floor Established: The stabilization of polysilicon, wafer, and module prices indicates that the market has absorbed excess inventory and that further price declines are unlikely without significant demand destruction.
* Valuation Appeal: After the prior correction, many leading PV stocks are trading at historically low price-to-earnings (P/E) and price-to-book (P/B) multiples, offering a compelling risk-reward ratio for long-term investors.

2. Technology Differentiation as the Key Alpha Driver

As commodity-like products face margin pressure, technological superiority becomes the primary differentiator.
* N-Type Transition: The industry is rapidly shifting from P-type (PERC) to N-type (TOPCon, HJT, BC) technologies. N-type modules offer higher efficiency and lower degradation. Companies with high N-type production ratios will capture premium pricing and maintain better margins.
* Recommendation: Prioritize manufacturers who have successfully scaled N-type capacity and achieved cost parity with older technologies.

3. Emerging Technologies: The Perovskite Optionality

While crystalline silicon dominates today, perovskite technology represents the next frontier in efficiency breakthroughs.
* Strategic Layout: Investors should monitor companies with significant R&D investments and pilot lines in perovskite-silicon tandem cells. These firms possess "optionality value"—if perovskite commercialization accelerates, these early movers will reap disproportionate rewards.

4. Integrated Energy Services

The policy push for VPPs and green industrial parks favors companies that are evolving from pure manufacturers to energy service providers.
* Value Chain Extension: Look for companies integrating hardware (modules/inverters) with software (EMS/VPP platforms) and services (O&M, asset management).

Risks / Headwinds

While the outlook is constructive, institutional investors must account for the following risks which could derail the recovery thesis:

1. Raw Material Price Volatility

• Silver Paste Surge: The recent 6% weekly increase in silver paste prices highlights exposure to precious metal markets. If silver prices continue to rise sharply, it could erode the margins of cell manufacturers, particularly those using silver-intensive HJT technologies, unless they rapidly adopt silver-saving techniques.
• Polysilicon Instability: While currently stable, any unexpected supply disruptions or demand spikes could lead to volatile polysilicon pricing, disrupting cost structures downstream.

2. Project Commencement Delays

• Execution Risk: Despite policy announcements (e.g., in Qinghai and Industrial Parks), the actual pace of project groundbreaking and grid connection may lag due to administrative bottlenecks, financing constraints, or land acquisition issues. If project starts fall short of expectations, the anticipated demand recovery will be delayed, prolonging inventory pressure.

3. Intensifying Trade Friction

• Geopolitical Headwinds: The global PV market remains susceptible to trade barriers. Escalating tariffs or non-tariff barriers in key markets such as the United States, Europe, or India could restrict export volumes for Chinese manufacturers.
• Supply Chain Decoupling: Efforts by Western nations to build domestic PV supply chains could reduce the long-term market share of Chinese exporters, forcing them to rely more heavily on the domestic market where competition is fiercer.

4. Technological Obsolescence

• Rapid Iteration: The PV industry is characterized by rapid technological change. Companies that fail to keep pace with the transition to N-type or next-gen technologies risk stranded assets and loss of market relevance.

Rating / Sector Outlook

Sector Rating: Overweight (Look Bullish)

• Definition: We expect the industry index to outperform the market benchmark by more than 5% over the next 6 months.
• Rationale:
  1. Technical Rebound: The sector has shown strong relative strength, leading the Power Equipment index.
  2. Fundamental Stabilization: Supply chain prices have stabilized, signaling the end of the most aggressive deflationary phase.
  3. Policy Support: Concrete policy measures (VPPs, Green Parks, Competitive Allocation) provide visible demand catalysts.
  4. Valuation: Current valuations reflect much of the negative sentiment, offering upside potential as earnings stabilize.

Investment View

Strategic Allocation Framework

For institutional portfolios, we recommend a barbell strategy within the PV sector:

1. Core Holdings (Stability & Scale):

   • Focus on integrated leaders with strong balance sheets and high N-type capacity. These companies are best positioned to survive consolidation and benefit from volume growth.
   • Examples based on recent performance: Sungrow Power Supply (Inverter/Storage leadership), TCL Zhonghuan (Wafer technology leader), Jingsheng Mechanical & Electrical (Equipment monopoly in crystal growth).

2. Satellite Positions (Growth & Innovation):

   • Allocate to companies with high elasticity to technological shifts or policy niches.
   • Focus Areas:
     • N-Type Specialists: Companies with >80% N-type output.
     • Perovskite Pioneers: Firms with verified pilot efficiencies and partnerships.
     • VPP/Storage Integrators: Companies benefiting from the Guangdong VPP rollout and industrial park microgrid mandates.

Monitoring Metrics for Next Quarter

Investors should closely track the following data points in the coming weeks to validate the thesis:
* Monthly Installation Data: Verify if downstream demand is picking up in Q4 2025.
* Inventory Levels: Monitor channel inventory for modules and inverters to ensure the price stability is not due to forced production cuts alone.
* Silver Price Trends: Assess the impact on cell margins and the adoption rate of silver-saving technologies.
* Policy Implementation Speed: Track the actual bidding and awarding of projects in Qinghai and the operational launch of VPPs in Guangdong.

Conclusion

The week of September 22–26, 2025, served as a confirmation signal that the PV sector is emerging from its trough. The combination of price stabilization, policy-driven demand visibility, and technological maturation creates a favorable environment for equity appreciation. While risks regarding trade and raw materials persist, the risk-reward profile is increasingly skewed to the upside. We advise investors to accumulate positions in high-quality leaders and technology innovators, leveraging the current market volatility to build long-term exposure to the energy transition theme.

Disclaimer: This report is prepared by Guoxin Securities Market Research Department for institutional clients only. The information contained herein is believed to be reliable but is not guaranteed as to accuracy or completeness. This report does 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 views expressed herein.