Zhi Tong Cai Jing·2025-11-02 23:40Core Viewpoint - The "14th Five-Year Plan" emphasizes green transformation as a core goal, aiming to consolidate and expand the advantages of the wind and solar industries, with a significant focus on optimizing the competitive landscape and promoting profitability recovery in the solar industry [1][2]. Policy and Technology Drivers - The dual drivers of policy and technology are propelling the solar industry towards high-quality development, with the "14th Five-Year Plan" leading the way and "anti-involution" policies optimizing both supply and demand sides [1]. - Since June 2025, the government has introduced multiple "anti-involution" policies to regulate competition, shifting the industry from chaotic low-price competition to sustainable development [1]. Technological Transformation - The solar industry is undergoing profound changes, with China expected to officially transition away from P-type technology by 2025, and N-type monocrystalline silicon technology projected to capture over 96.9% market share [2]. - Key technological routes such as TOPCon, HJT, and BC are driving improvements in battery efficiency and reductions in cost per kilowatt-hour [2]. Industry Growth - China's solar installation capacity is set to experience significant growth, with an anticipated 45% year-on-year increase in new installations for 2024, marking nearly a 20-fold increase since 2015 [2]. - The industry is showing signs of recovery after adjustments, with "anti-involution" policies expected to enhance the competitive landscape and support profitability recovery [2]. Index Investment Value - The CSI Photovoltaic Industry Index (931151.CSI) covers the entire solar industry chain, focusing on core manufacturing segments, with a weight of 68% in solar equipment and significant representation from key sectors like inverters and battery components [3]. - The index has delivered a cumulative return of 177% since its inception in 2012, with an annualized return of 8.53%, outperforming major market indices [3]. Valuation and Future Outlook - Despite recent adjustments due to supply-demand mismatches, the current valuation of the index is attractive, with a price-to-book ratio of 2.43, indicating a high margin of safety [3]. - Revenue and profitability are expected to gradually recover, with a projected 15.31% growth in total revenue by 2026 and a return on equity (ROE) potentially returning to around 10% [3]. Strategy for Investment - The solar industry index is characterized by concentration, high volatility, and strong elasticity, making it suitable for capturing excess returns through thematic investment strategies [4]. - A core-satellite strategy combining the solar index with broad-based ETFs can enhance returns while managing risk, with the core-satellite approach yielding an annualized return of 30.4% compared to 2.3% for the CSI 500 ETF [4].