Investment Rating - The report maintains a "Recommendation" rating for the photovoltaic industry, indicating an expectation of high-quality development driven by recent policy changes [1][11][12]. Core Insights - The report highlights the need to eliminate "involution" in the photovoltaic industry, emphasizing the importance of improving product quality and promoting the orderly exit of outdated production capacity [1][11]. - Recent government meetings and discussions among industry leaders suggest a focus on sustainable development and self-regulation within the industry, which is expected to improve supply and demand dynamics, leading to price and profit recovery [2][12]. - The photovoltaic sector is currently experiencing low price levels and profitability, with expectations for a rebound as supply-side policies are implemented [2][12]. Summary by Sections Industry Investment Rating - The report maintains a "Recommendation" rating for the photovoltaic industry, anticipating that the industry index will outperform the benchmark index by over 5% in the next 3-6 months [1][63]. Market Overview - The report notes a 2.82% increase in the comprehensive index and a 1.99% increase in the electric power equipment industry index for the week [13][14]. - The photovoltaic equipment sector saw a significant increase of 5.76% during the same period [17]. Photovoltaic Industry Chain Prices - The average price for polysilicon dense material and granular material remained stable at 35.0 and 34.0 RMB/kg respectively [3][37]. - The average price for monocrystalline N-type silicon wafers (182-183.75mm) decreased by 2.2% to 0.88 RMB/piece [3][37]. - The price for TOPCon battery cells (182-183.75mm) was reported at 0.230 RMB/W, reflecting a decrease of 2.1% [3][37]. - The price for 3.2mm coated photovoltaic glass decreased by 2.6% to 18-19 RMB/m² [4][43]. Industry Valuation - As of July 4, the industry PE (TTM) for photovoltaic equipment is reported at 18x, with a valuation percentile of 13.8% [25][33]. - The report indicates that the electric power equipment industry has a PE (TTM) of 26x, with a valuation percentile of 24.9% [25][31].

Core Viewpoint - The photovoltaic industry is experiencing severe challenges, with many companies facing bankruptcy and an oversupply of production capacity, leading to continuous price declines and financial losses across the sector [4][5][6][8]. Group 1: Industry Status - As of 2024, at least 70 photovoltaic companies have filed for bankruptcy, primarily affecting small and medium-sized enterprises, with 40% of these bankruptcies occurring in the battery and module segments [8]. - The "installation rush" in the first half of the year led to a record high of 198 GW of new installations from January to May, yet prices across the photovoltaic supply chain continue to decline [6][9]. - The industry is in a prolonged "hell" phase, with companies bleeding cash while waiting for a balance between supply and demand [6][12]. Group 2: Financial Performance - In 2024, 40% of the 138 listed photovoltaic companies reported losses, with the top 10 loss-making companies collectively losing over 53 billion yuan [19][21]. - Major companies like Longi Green Energy and JinkoSolar reported significant losses in the first quarter of 2025, with combined losses nearing 8.4 billion yuan [20][21]. Group 3: Capacity and Market Dynamics - As of the end of 2024, the production capacity for key segments in the photovoltaic supply chain is significantly higher than the projected global installation capacity, indicating a severe oversupply [15]. - The expansion of production capacity has not ceased, with numerous projects initiated in 2024, leading to further potential oversupply issues [15][16]. - The presence of state-owned enterprises acquiring struggling companies has hindered the necessary market corrections, allowing many non-competitive firms to remain operational [16][17]. Group 4: Future Outlook and Recommendations - Industry experts suggest that without strong regulatory measures, the current cycle of overcapacity and price wars will continue, potentially leading to the exit of major players [21][22]. - Proposed solutions include market-driven mergers and acquisitions, technological elimination mechanisms, and policy enforcement to manage capacity effectively [22].