Summary of the China Solar Sector Conference Call Industry Overview - The conference call focused on the **China Solar Sector**, particularly the implications of the **Draft Amendment to the Price Law** issued by the NDRC and the State Administration for Market Regulation on July 24, 2025, which aims to regulate "involutionary" competition in the market [1][2]. Key Points and Arguments 1. **Revised Low-Price Dumping Definition**: - The Draft Amendment clarifies that business operators are prohibited from engaging in dumping sales below cost prices to gain market dominance [2]. - This change is expected to standardize market pricing and prevent unfair competition, which has been prevalent in the solar sector [1]. 2. **Simplified Law Enforcement Procedure**: - The amendment simplifies the process for identifying illegal low-price dumping, allowing for more effective enforcement of the Price Law [3]. - This is anticipated to enhance the regulatory environment for solar companies, potentially stabilizing prices in the sector [1]. 3. **Positive Impact on Solar Sector**: - The amendment is viewed positively for the solar sector, as many solar products have been sold below cost since the second half of 2024 [1]. - Companies like **GCL Technology**, **Tongwei**, and **Daqo Energy** are expected to benefit from higher average selling prices (ASP) and potential capacity consolidation [1]. 4. **Downstream Segments**: - Downstream segments such as solar glass, wafers, and solar cell manufacturers are also likely to benefit from the regulatory changes [1]. - The focus is on cost leaders within each segment to capitalize on the improved pricing environment [1]. Company Valuations and Risks 1. **Daqo New Energy**: - Target price set at **US$27.00** based on DCF valuation, with a WACC of **11.7%** [9]. - Risks include slower-than-expected polysilicon capacity reduction and higher power costs [10]. 2. **GCL Technology**: - Target price set at **HK$1.70**, with a WACC of **9.1%** [11]. - Similar risks as Daqo, including polysilicon demand fluctuations [12]. 3. **Tongwei**: - Target price set at **Rmb25.00/share**, with a WACC of **9.7%** [13]. - Risks include potential government support for less efficient solar equipment makers [14]. Additional Insights - The conference highlighted the importance of regulatory changes in shaping the competitive landscape of the solar industry in China. - The focus on preventing dumping practices is expected to lead to a healthier market environment, benefiting both upstream and downstream players in the solar supply chain [1][2][3].