A c t i o n | 22 Sep 2025 03:45:06 ET │ 49 pages China Solar Power More Upbeat on Global ESS Demand; TPs Rise for PRC Key ESS Makers CITI'S TAKE We raise our global energy storage system (ESS) demand forecast, expecting it to be more than double from 177.8GWh in 2024 to 360.2GWh in 2027E, translating to a 26.5% 3-year CAGR, including +37% yoy to 243.7GWh in 2025E and +20.1% yoy to 292.6GWh in 2026E. Supporting our estimates are four regions: China with market-driven demand; the US amid accelerated electrici ...

Equity Research Report | 22 September 2025 China Energy Storage Equities Pace picking up with new policies We raise our 2026/27 global energy storage system (ESS) installation forecasts from 399/483GWh to 401/487GWh to reflect stronger-than-expected global ESS battery shipments in 1H25 (up 109% y-o-y per PV Infolink), which we believe bodes well for ESS installation in 2H25-2026. New policies issued by NDRC on 12 September 2025 encourage power users to reduce their dependence on the grid for back-up power; ...

Summary of Trina Solar (688599.SS) Conference Call Company Overview - **Company**: Trina Solar - **Industry**: Solar Energy Key Financial Highlights - **Net Loss**: Rmb2,918 million in 1H25 compared to Rmb526 million profit in 1H24, with a net loss of Rmb1,598 million in 2Q25 [1][9] - **Operating Cash Inflow**: Rmb1,843 million in 1H25, including Rmb2,679 million in 2Q25 [1] - **Revenue**: Decreased by 27.7% YoY to Rmb31,056 million in 1H25 [9] - **Module Shipment Volumes**: 32GW in 1H25, with 17GW in 2Q25, reflecting a 5.9% YoY decline [2][9] - **Gross Profit Margin**: Dropped to 4.9% in 1H25 from 13.4% in 1H24 [9] Core Insights - **Anti-involution Policy**: Trina Solar emphasized the importance of the Chinese government's anti-involution policy, which aims to prevent selling solar products below cost. This policy is expected to benefit polysilicon makers more than module manufacturers [1][8] - **Module Sales Losses**: The company reported losses of Rmb0.08/W on module sales in the first half of the year, while distributed systems generated a profit of Rmb0.2/W [2] - **Technology Outlook**: Trina Solar downplayed advancements in solar cell technology, indicating that TOPCON will remain the primary technology, with marginal improvements from newer technologies [2] Business Segment Performance - **Energy Storage System (ESS)**: The ESS business turned profitable in 2Q25, earning Rmb7-8 million, with a shipment volume of 1.7GWh in 1H25 [6] - **Export Focus**: 90% of ESS shipments were for exports, with significant orders from the US and a target to double shipment volume to 8GWh in 2025E [6] Market Conditions - **US Market Dynamics**: The US solar market may see sustained module demand due to installation rushes, despite regulatory changes that could limit new project approvals [7] - **Polysilicon Preference**: Analysts prefer polysilicon manufacturers like Tongwei over Trina due to uncertain benefits from anti-involution measures for module sales [8] Valuation and Risks - **Target Price**: Rmb12.00/share based on DCF valuation, indicating a potential decline of 28.3% from the current price of Rmb16.740 [4][16] - **Key Risks**: Include faster-than-expected global solar installation growth and price competition among module companies [17] Additional Notes - **Impairment Losses**: Trina may face impairment losses of Rmb400-500 million from its TOPCon production capacity in Thailand [8] - **Debt Levels**: Total debt increased by 5.8% to Rmb48.9 billion in 1H25, with a net debt to equity ratio rising to 91.1% [9]

Summary of Sungrow Power Supply Co., Ltd Conference Call Company Overview - **Company**: Sungrow Power Supply Co., Ltd - **Ticker**: 300274.CH - **Industry**: Energy Storage Systems (ESS) and Solar Inverters Key Financial Highlights - **2Q25 Net Earnings**: RMB 3.91 billion, a 37% increase year-over-year but below consensus expectations of RMB 4.98 billion [2] - **1H25 Net Earnings**: RMB 7.7 billion, representing 62% of FY consensus estimates of RMB 12.36 billion [2] - **2Q25 Revenue**: RMB 24.5 billion, a 33% increase year-over-year, driven by strong ESS sales [3] - **1H25 Revenue**: RMB 43.5 billion, representing 49% of FY estimates of RMB 89.4 billion [3] - **Gross Profit Margin (GPM)**: 34% in 2Q25, up from 30% in 2Q24, exceeding consensus expectations of 30.7% [2][14] Segment Performance - **ESS Segment**: Revenue grew by 128% year-over-year to RMB 17.8 billion, with stable GPM of 40% [3][18] - **Inverter Sales**: Grew by 17% to RMB 15.3 billion, lagging behind industry solar growth of 60%, with margins declining to 36% [3][17] - **New Energy Development**: Revenue declined by 6% year-over-year to RMB 8.4 billion, with GPM of 18% [3] Strategic Developments - **H-Share Listing**: The board approved plans for a secondary H-share listing to enhance global competitiveness and diversify financing sources, expected within 24 months [4] - **Cash Position**: Strong cash position with net cash of RMB 9.7 billion and net gearing at -27% [5][20] Market Outlook and Risks - **Market Sentiment**: Despite strong performance, caution is advised due to anticipated solar slowdown in 2H and rising US ESS tariffs in 2026 [1] - **Investment Risks**: Include elevated inventory and margin pressure, potential market share loss, and policy shifts targeting Chinese suppliers [35] Valuation Metrics - **Price Target**: RMB 65.00, implying a 37% downside from the current price of RMB 102.60 [6][29] - **Valuation Ratios**: Projected 2025 P/E of 11.5x, EV/EBITDA of 8.7x, and P/S of 1.5x [22][28] Conclusion - **Rating**: Market-Perform with a cautious outlook on growth due to competitive pressures and market dynamics [29]