According to the Zhitong Finance APP, Huachuang Securities released a research report stating that the rush to install will drive a doubling of installed capacity in the first half of 2025. The growth rate of installed capacity is expected to slow in the second half of the year, but overall, the annual growth is expected to continue under a high base. Currently, the fundamentals of the photovoltaic industry are gradually bottoming out, and with expectations of policy adjustments and supply-demand improvements, market risk appetite has somewhat rebounded. It is recommended to pay attention to leading companies with profit recovery and stable operations. On the other hand, attention should be given to segments where the industrialization of new technologies is progressing smoothly, with the potential for both volume and profit growth. Recommended companies include Tongwei Co., Ltd (600438.SH), LONGi Green Energy (601012.SH), First (603806.SH), Aiko Solar (600732.SH), and Sungrow Power Supply (300274.SZ).
<h2>The main points of Huachuang Securities are as follows:</h2>
Domestic rush to install drives high growth in installed capacity, and global installations are expected to continue to grow.
Domestically, the rush to install will lead to a doubling of installed capacity in the first half of 2025, while the growth rate of installed capacity is expected to slow in the second half of the year. Overall, the annual growth is expected to continue under a high base. According to data from the National Energy Administration, from January to July 2025, the newly installed photovoltaic capacity in China reached 223.25GW, a year-on-year increase of 81%. According to CPIA forecasts, the newly installed photovoltaic capacity in China in 2025 is expected to reach 270-300GW, a year-on-year increase of about 3%. Overseas, traditional markets in Europe and the United States are entering a mature development stage, while demand in emerging markets such as India, the Middle East, and Latin America is growing rapidly. According to CPIA, the newly installed photovoltaic capacity overseas in 2025 is expected to exceed 300GW, a year-on-year increase of about 25%. The global newly installed photovoltaic capacity in 2025 is expected to reach around 570-630GW, a year-on-year increase of about 13%.
Performance under pressure, industry fundamentals bottoming out.
(1) Revenue: In the first half of 2025, the core companies in the photovoltaic sector achieved revenue of 391.99 billion yuan, a year-on-year decrease of 9.7%; in Q2 2025, revenue was 217.44 billion yuan, a year-on-year decrease of 8.5%, but a quarter-on-quarter increase of 24.6%. Against the backdrop of intense competition in the photovoltaic industry chain, prices are running at low levels, leading to a slowdown in overall revenue growth in the sector year-on-year; however, driven by domestic rush demand, the operating rate improved quarter-on-quarter in Q2, leading to a certain degree of revenue recovery in the sector.
(2) Net profit attributable to shareholders: In H1 2025, the core companies in the photovoltaic sector reported a net profit attributable to shareholders of -7.34 billion yuan, a year-on-year increase in losses; in Q2 2025, the net profit attributable to shareholders was -3.20 billion yuan, a year-on-year reduction in losses and a quarter-on-quarter reduction in losses. On one hand, the main industry chain prices in the photovoltaic sector are running at low levels, affecting profit levels across various segments; on the other hand, the combination of price declines and technological iterations has led some companies to recognize impairment losses, significantly impacting industry profits. After adding back the impairments (asset impairments and credit impairments), the overall net profit attributable to shareholders in Q2 2025 was 3.89 billion yuan, a year-on-year decrease of 44%, but a quarter-on-quarter turnaround to profitability.
(3) Gross margin: The gross margins of main material segments are under pressure, with the gross margin of silicon wafers in Q2 being negative. There is significant differentiation in the gross margins of auxiliary material segments, with the gross margin of inverters maintaining a high level, while the gross margins of brackets, encapsulants, silver paste, and other segments remain stable, and the gross margin of photovoltaic glass continues to recover quarter-on-quarter
(4) Expense Ratio: The overall revenue scale in the second quarter increased, leading to a quarter-on-quarter decrease in the expense ratio of the photovoltaic sector; among them, financial expenses saw a significant decline, mainly due to increased interest income and foreign exchange gains for some companies.
Corporate inventory pressure remains, expansion slows as they await clearance.
(1) Corporate Inventory: From the financial statements, most segments of the photovoltaic sector saw a quarter-on-quarter decrease in inventory amounts in the second quarter. However, considering the price decline in the industry chain, all segments still face significant inventory pressure. In the main material segment, silicon material inventory remained high in Q2 2025, while battery segment inventory amounts decreased; in the auxiliary material segment, photovoltaic glass inventory increased significantly quarter-on-quarter in Q2 2025.
(2) Fixed Assets: By segment, in the second quarter, the majority of fixed asset growth rates for main and auxiliary materials were below 10%, indicating that recent new capacity additions in the industry were limited. The fixed assets in the photovoltaic silver paste segment grew by 22% quarter-on-quarter, mainly due to upstream layout by paste companies and the completion of new silver powder capacity.
(3) Construction in Progress: As of the end of the second quarter, the growth rate of construction in progress in most segments significantly slowed, indicating that expansion has basically come to a halt. The growth rate of construction in progress in the photovoltaic silver paste segment was relatively high, mainly due to silver paste companies gradually starting capacity construction in upstream silver nitrate and silver powder segments.
(4) Operating Cash Flow: The operating cash flow of the photovoltaic sector is seasonal, typically at a low level during the off-peak first quarter. Driven by domestic rush installation demand, the operating cash flow of core targets in the photovoltaic sector for Q2 2025 was CNY 16.89 billion, a year-on-year increase of 122%, and a quarter-on-quarter turnaround from negative to positive; among them, the improvement was particularly noticeable in segments such as modules and inverters.
Investment Recommendations: Currently, the industry fundamentals are gradually bottoming out. With expectations of policy regulation and supply-demand improvement, market risk appetite has somewhat rebounded. It is recommended to focus on leading companies with profit recovery and stable operations. On the other hand, attention should be paid to segments where new technology industrialization is progressing smoothly, with the potential for simultaneous volume and profit growth.
(1) Under the expectations of supply-demand improvement and policy regulation, profitability is expected to improve for leading companies in silicon materials, integrated modules, and auxiliary materials. Recommended companies include: in the silicon material segment, Tongwei Co., Ltd, Xiexin Technology, Daqo New Energy; in integrated modules, LONGi, JinkoSolar, JA Solar, Trina Solar, Canadian Solar; in auxiliary material leaders, First, Flat Glass, Xinyi Solar, Meichang Co., Ltd, etc.
(2) Segments with leading new technology layouts that are expected to achieve simultaneous volume and profit growth. Recommended companies include: related to BC mass production, LONGi, Aiko Solar, Dier Laser, etc.; related to low-cost metal pastes, Juhua Materials, Dike Co., Ltd, Boqian New Materials.
(3) Inverter segments benefiting from high growth in emerging market demand and layouts in high-profit areas. Recommended companies include: Sungrow Power Supply, Deye, Airo Energy, SangNeng Electric.
Risk Warning: Terminal demand may fall short of expectations, intensified market competition, fluctuations in upstream raw material prices, trade friction factors, changes in industry policies, etc

600438

605117

601012

603806

Huachuang Securities released a research report indicating that the fundamentals of the photovoltaic industry are gradually bottoming out, and profit recovery is expected. The installed capacity is expected to double in the first half of 2025. Although the growth rate may slow down in the second half of the year, an overall increase is still anticipated for the year. It is recommended to pay attention to leading companies with profit recovery and stable operations, such as Tongwei Co., Ltd and LONGi. At the same time, demand in overseas markets is growing rapidly, and global photovoltaic installed capacity is expected to continue to rise

Zhitong

Tongwei Co.,Ltd

Deye

LONGi

First

HuaChuang Securities: The fundamentals of the photovoltaic industry are bottoming out, and profit recovery is expected