TYN(SZ:000591) Goldman Sachs·2025-05-29 14:12Investment Rating - The report maintains a cautious outlook on the solar industry, expecting significant capacity cuts and a decline in capital expenditures, leading to a weaker pricing outlook and flattened profitability curve [4]. Core Insights - The profitability for solar value chain segments is likely to fall below pre-rush installation levels in May, with cash profitability expected to deteriorate to average levels seen in Q1 2025 [2][4]. - A rapid decline in upstream pricing is observed due to weaker demand and aggressive low-pricing strategies by Tier 2-3 players, impacting the overall market dynamics [2][19]. - Proactive price stabilization efforts by leading players are crucial to monitor in June, as inventory pressures are expected to continue increasing [2][14]. Summary by Sections Pricing Trends - As of May 15, 2025, spot prices for Poly/Wafer/Cell/Module/Glass/Film/Inverter in China showed average declines of -2%/-14%/-3%/-3%/-6%/-3% MTD, and -8%/-17%/-7%/-2%/+8%/+1% compared to pre-rush installation levels [2][19][20]. - Glass prices appear more resilient compared to other segments, primarily due to lower inventory days [20]. Profitability Metrics - Spot price implied cash gross profit margins (GPM) for various segments showed significant declines, with Tier 1 cash GPM for Poly/Wafer/Cell/Module/Glass/Film averaging flat/-13pp/+1pp/-4pp/-3pp/flat MTD [10]. - Monthly average cash profitability in May is likely to deteriorate to levels seen in Q1 2025, indicating a challenging environment for the industry [2][7]. Production and Inventory Dynamics - Production volumes are expected to decline by an average of 4% month-over-month in May, with specific declines in Poly/Wafer/Cell/Module [12]. - Inventory days are likely to rebound to an average of 30 days in May from 25 days in April, indicating a higher production-to-demand ratio [13][15]. Future Outlook - The report anticipates deeper solar capital expenditure declines of -55% year-over-year in 2025, with lower capacity utilization rates expected [4]. - Continued supply increases for Glass are projected, which may lead to a rapid inventory restock and a potential price cut to Rmb12/sqm in Q3 2025 [3][14].