Investment Ratings - The report maintains a "Sell" rating on Flat A/H, Xinyi Solar, and Tongwei, while it has a "Buy" rating on Longi [10][11][19]. Core Insights - The recent rally in share prices for Solar Glass and Poly is seen as an overreaction to supply-side policy expectations, with a noted average increase of 17% from June 30 to July 2 [1][2]. - There is an anticipated decline in demand for solar modules, with projections indicating a year-over-year decrease of 57% in China and 40% globally for the second half of 2025 [2]. - The report highlights the need for significant production cuts in the glass segment to balance supply and demand, estimating that a 30% cut is necessary given the current oversupply situation [5][6]. Summary by Key Sub-segments Poly - Poly inventory reached 140GW by the end of June, equating to four months of average demand, indicating significant oversupply [5]. - The report anticipates a 15% decline in poly prices in the second half of 2025 to 2026, driven by excess capacity [20]. Glass - A 30% production cut is deemed necessary to align supply with demand, with current monthly supply at 50GW against an average demand of 34GW [6]. - The report suggests that the industry may face prolonged margin pressure due to challenges in executing production cuts [6]. Module - Increased inventory pressure is expected to enhance the bargaining power of module manufacturers, leading to price discounts of 5%-10% on contracts for Poly and Glass [6]. - Longi is expected to maintain a relatively resilient profitability outlook due to anticipated upstream price cuts [7]. Company-Specific Insights Longi - Longi is rated "Buy" due to its potential EBITDA inflection in the second half of 2025 and superior mid-cycle return on equity (ROE) compared to peers [7][10]. - The 12-month target price for Longi is set at Rmb19.8, indicating a potential upside of 27.2% from the current price [10]. Xinyi Solar - Xinyi Solar is rated "Sell" due to a deteriorating industry landscape and structural margin pressures, with a target price of HK$1.9, reflecting a downside of 31.2% [11][12]. Flat A/H - Flat A/H is also rated "Sell," with a target price of Rmb10.3, indicating a downside of 39.1% [15][16]. Tongwei - Tongwei is rated "Sell" due to its high exposure to the Poly segment and anticipated structural margin pressures, with a target price of Rmb13, suggesting a downside of 27% [19][23].

Investment Rating - The report maintains a "Buy" rating on Cell & Module and Film, while it has a "Sell" rating on Glass, Poly, Wafer, and Equipment [4]. Core Insights - The profitability of the solar industry is expected to face deterioration for Cell and Module, while Glass may see temporary improvement due to price hikes [6][14]. - The report highlights a significant decline in solar capital expenditure, projected at -55% year-over-year in 2025, alongside a lower capacity utilization rate averaging 59% from 2025 to 2030 [4]. - The report indicates that upstream pricing in China has started to lose momentum as the peak of rush installations is ending, while US module pricing has jumped due to a 90-day tariff exemption [19]. Summary by Sections Pricing Dynamics - As of April 17, 2025, month-to-date (MTD) spot prices for Poly/Wafer/Cell/Module/Glass/Film/Inverter in China showed average changes of -1%/-0.3%/-7%/+0.5%/+5%/+0%/+1%, while overseas module prices increased by 20% in the US [19]. - The report notes that inventory days across the value chain have improved to below 20 days, except for Poly at 40 days and Glass at 27 days, driven by strong domestic demand [13]. Production and Demand - Production volumes across the solar value chain are expected to recover significantly in April, with Poly/Wafer/Cell/Glass/Module projected to increase by +4%/+17%/+29%/+9%/+31% month-over-month [12]. - The report anticipates a decline in inventory levels across the value chain, with a lowered production-to-demand ratio at 94% in April compared to 104% in March [15]. Profitability Trends - The average cash gross profit margin (GPM) for Poly/Wafer/Cell/Module/Glass/Film in April showed changes of -0.3pp/+0.4pp/-11pp/-6pp/+3pp/+1pp, indicating a decline in profitability for Cell and Module [10]. - Monthly average cash profitability for the companies covered is expected to remain largely flat month-over-month in April, although it is better than the first quarter of 2025 [7].