The Zhitong Finance App learned that Guosheng Securities released a research report saying that from the perspective of sector sentiment, the PV sector has been valued less than 10 times and has bottomed out. Since 2020, the PV sector's performance for that year corresponds to the highest valuation point PE, which is close to 50 times. The current valuation level is 8-9 times, breaking through the seven-year low. The overall valuation of the photovoltaic industry is in a state of excessive decline, and it is expected that it will usher in valuation repair after major conflicts are mitigated in the future.

▍ The main views of Guosheng Securities are as follows:

Demand: Interest rate cycle is declining, and interest rate cuts are expected to become an important demand-side catalyst next year.

Demand surpassed expectations in 2023:1) China is still the world's main PV market, but domestic consumption problems are gradually rising, and next year we need to focus on the progress of implementation of consumer solutions. 2) The judgment on high overseas growth remains unchanged. Stimulated by the IRA Act, new PV installations in the US are expected to increase by 55% in 2023. There is still a certain time window for the 2024 anti-evasion exemption period to expire. The US market is expected to maintain its popularity in the first half of next year. Europe is affected by short-term inventories. Long-term energy transition and safety issues are still a priority. The EU has introduced a number of policies to guarantee the installation of renewable energy. The energy cycle will not change next year, and changes in the interest rate cycle will become a key factor affecting PV demand.

Looking ahead to 2024, against the backdrop of monetary easing, fiscal strength, and economic recovery, it is judged that domestic and foreign interest rate policies are improving. Interest rates are expected to decline, and the IRR of photovoltaic terminals will continue to rise to stimulate a further rise in demand.

Supply: High-quality production capacity in all sectors is the most competitive asset at the bottom of the industry, and supply and demand issues in all sectors have become the main conflict.

In 2024, the main contradictions faced by PV are still oversupply and uncertain demand. The entire industrial chain is currently in a downward channel, and prices at all links are close to the bottom. Next year 1) A steady recovery in component prices will accelerate the recovery of sector demand. 2) Production capacity clearance is a key factor in reversing the supply and demand relationship. High-quality production capacity in all sectors is the most competitive asset at the bottom of the industry.

2024 PV Investment Proposal: Sublink opportunities that can be tapped under N-type iteration.

1) Silicon materials are expected to be the first to be cleared. N-type silicon barriers are high and supply and demand are tight. Compared to the three parts of silicon wafers/batteries/modules in the partial manufacturing industry, the polycrystalline silicon production capacity utilization rate in the polarization industry must be full, leading to capacity withdrawal that may occur first. In addition, N-type silicon is difficult to produce, and needs to have both dense and low impurity characteristics. It is recommended to focus on the silicon process, which is expected to be the first to reach the bottom of the price, and recommend Tongwei Co., Ltd., a leading supplier of high-quality silicon materials.

2) The increase in the penetration rate of N-type Topcon drives the acceleration of new auxiliary materials technology, and leading costs and technical advantages are expected to cross the cycle. Next year, N-type TopCon is expected to accelerate the pace of market share growth, so there is room for significant space in the new 1.6mm thin glass and EPE film technologies brought. The thin and light glass process is very difficult, and the gap in corporate soft power is expected to be highlighted. It is recommended to focus on leading companies such as Follett. The penetration of beta EPE in the photovoltaic industry will further highlight the know-how value of leading companies to lay out ahead of time. It is recommended to focus on investment opportunities for film companies such as Foster.

3) New technology is changing rapidly, and HJT and BC batteries are progressing steadily on the eve of mass production of perovskite. The finalization of the lamination process route in the perovskite industry and the reduction in the cost of localization of perovskite equipment are still the two most noteworthy perovskite catalytic points. Currently, single-junction perovskite generally uses a solution coating method. The gas phase deposition and evaporation method is more advantageous in the preparation of laminated perovskite. Domestic replacement of wet and dry equipment is being carried out simultaneously. It is recommended to focus on equipment companies such as Olaide and Longji Green Energy, which has an in-depth layout of perovskite technology routes.

HJT continues to cut costs. It is recommended to focus on 1) Dongfang Risheng, which is steadily advancing in the direction of HJT's silver reduction, and laser direct writing and projection mask lithography technology routes are equipped with chipboard plans laid out in advance. BC Battery may become a new choice for the industry in the future, and the accelerated penetration of technology is expected to drive laser equipment procurement demand. It is recommended to focus on BC Battery's leading battery company, Longji shares.

4) The leading Matthew effect is reflected, and profits from integrated components are expected to bottom out and rebound. At present, prices in the industrial chain have entered the cost testing stage, and products from leading manufacturers are still highly competitive due to their cost and technical advantages. Next year, integrated manufacturers will continue to maintain the strategy of “steadily improving component efficiency under continuous technological innovation and developing overseas channels to guarantee profits for their own units”. After a steady recovery in component prices, they are expected to achieve a sharp rise in volume and price, leading to an improvement in sentiment.

Risk warning:

There is a risk that PV installed demand will fall short of expectations in 2024, there is a risk of bottlenecks in the development of new technology, the risk that the competitive pattern in the PV industry chain will deteriorate, and there is a risk that industry demand estimates will be distorted.