The Zhitong Finance App learned that Galaxy Securities released a research report saying that due to factors such as rising demand and boosting confidence at the end of Q1, the PV sector experienced a good rebound. At the same time, it suggests that policy expectations continue to improve, and that the subsequent development of the photovoltaic industry in the short, medium and long term should be viewed positively.
Incidents:
On March 8, the photovoltaic sector continued to rise: According to Wind statistics, the CITIC Solar Index closed at 9716 points, with a daily increase of 4.8%; auxiliary materials in the sector, such as Follett and Haiyou New Materials, all led the daily increase by more than 10%. Since February 5, the solar index has risen 23%.
▍ The main views of Galaxy Securities are as follows:
We are determined to vigorously develop new energy, and policy expectations have been significantly strengthened.
In 2023, China's new PV installed capacity reached a record high of 219 GW (+148%), but some regions have already experienced problems of connecting to the grid and difficulties in consumption. In 2024, against the backdrop of declining demand growth and oversupply, industry development expectations are pessimistic. However, recent marginal changes: On February 29, 2024, the Political Bureau of the CPC Central Committee conducted the 12th collective study on new energy technology and China's energy security. The general secretary clearly stated the need to “vigorously develop new energy” and put forward a series of measures to support “high-quality development of new energy sources.”
On February 28, experts from the Ministry of Industry and Information Technology, the Energy Administration and various departments clearly proposed at a seminar held by the Photovoltaic Association to accelerate the upgrading of distributed photovoltaics grid-connected capacity, electricity spot market construction, and consumption assessment reform to ensure the long-term development of photovoltaics. On March 1, the Development and Reform Commission and the Energy Administration issued the “Guiding Opinions on the High-Quality Development of Distribution Grids under the New Situation”, setting a clear target of “distribution grids with about 500 million kilowatts of distributed new energy access capacity by 2025.”
The position of the new energy industry in economic development continues to be strengthened, and policy expectations have been significantly strengthened. Power grid support, operation mechanisms, etc. have been improved at an accelerated pace. At the same time, the dividends of low-cost modules are still there, so there is no need to be too pessimistic about the development of the industry: it is expected that the new domestic PV installed capacity will reach 300GW+ in 2024, with a growth rate of 30% +. From a global perspective, according to the previous COP28 conference and the Sino-US Sunshine Statement, the installed capacity of photovoltaics in 22-30 was tripled +, with an average of more than 550 GW of new installed capacity per year, and the medium- to long-term photovoltaic space is vast.
The demand situation has improved, and production schedules have increased dramatically.
According to research by SMM, PVinfLink, etc., the resumption of production and work after the Spring Festival, the start of domestic projects led to a recovery in demand. At the same time, India's postponement of the ALMM Act was beneficial. The European side is nearing completion. Land/household demand is considerable. The ongoing impact of the Red Sea incident has also catalyzed the demand for stocking. According to PVInfoLink, the March industrial chain production schedule exceeded expectations. Silicon/silicon wafer/cell/module production schedule was +4%/+20%/+32%/+62% month-on-month, and some companies doubled. The upward trend in demand is expected to continue.
Profit recovery awaits a steady recovery in prices.
According to Solarzoom, the gross profit of the entire industry chain was -0.01 yuan/W on March 7. Profit margins continued to be under pressure, and production capacity was cleared faster. According to PVInfoLink, in a situation where demand is improving, components and some auxiliary materials are preparing to increase prices. Negative margin conditions are difficult to maintain for a long time. Simultaneous adjustments on both sides of supply and demand are expected to lead prices to rise in 24H1, and industry profits will be repaired.
Risk warning:
The risk that the effects of policies will fall short of expectations; the risk that new technology will not advance as expected; the risk of declining profitability due to increased competition in the industry; the risk that the overseas policy environment will deteriorate.