Guojin Securities: The supply of photovoltaic glass accelerates the recovery of leading profits and share recovery, and there is a high degree of certainty

The Zhitong Finance App learned that Guojin Securities released a research report saying that the PV enterprise report further verified that the price and profit bottom of the industry chain were consolidated. Against the backdrop of continued losses in the industry, production capacity and enterprises were cleared one after another, and the implementation of the national standard and general cost accounting rules was strengthened, and the photovoltaic sector was consolidated on the left side. Currently, second- and third-tier companies are still losing cash, and there is still room for subsequent supply decline. Production capacity of about 33,000 tons can be viewed as substantial clearance. Leading companies have a high degree of certainty in recovering profits. At the same time, they are expected to maintain a faster production capacity growth rate than the industry with profit and capital advantages, and achieve a share recovery.

Guojin Securities's main views are as follows:

Against the backdrop of deep losses, the industry accelerated cooling, rapid decline in supply, and the bottom of the price was repaired

Demand for photovoltaics weakened in 2026, and the pressure on supply and demand for photovoltaic glass increased. In late May, industry inventories rose to a record high of 53.4 days, and the low price of 2.0mm glass fell to 8-8.5 yuan/square meter. It is estimated that the entire industry has entered a state of cash loss. In the context of operating pressure, cold repair of production lines has accelerated. According to Zhuochuang information, the industry has a total cold repair production line of 19,600 tons (corresponding module annual demand is about 127 GW). As of September 10, the total nominal production capacity of global/domestic photovoltaic glass production lines was 8.5/72,000 tons, and the corresponding annual demand for components was about 553/466 GW. Considering the background of profit pressure, the actual supply of the industry is expected to drop even lower. After supply contracted, industry inventories fell from a high point. In mid-July/early August/early September, the price of photovoltaic glass rose three times in a row to 10.25 yuan/square meter, up 24% from the previous low.

The cost curve is relatively steep, and there is room for further decline in supply

The cost curve of photovoltaic glass is relatively steep. According to estimates, under the current price (10-10.5 yuan/square meter), second- and third-tier companies are still in a state of cash loss, it is expected that there is room for further decline in subsequent industry supply: the current domestic production of kilns below 1000 t/d is 5,900 tons (the annual demand for corresponding modules is about 38 GW), mainly in second- and third-tier companies, including 2,550 tons of kilns below 700 t/d. There is a high probability that this part of the production capacity will shut down against the backdrop of continued low prices; in addition, there is a high probability that production capacity will shut down in this part of the market against the backdrop of continued deep kiln losses; in addition, in the context of continuous kiln depth losses, some tail companies will only maintain a single seat for market share. Furnace production, even Output and inventory are controlled by blocking kilns, etc., and if prices continue to be low in the future, there is a high probability that part of the production capacity will be forced to shut down the kiln and completely withdraw from the market due to cash flow and debt pressure.

The proportion of actual production capacity clearance is high, the willingness and capacity of second- and third-tier enterprises to ignite/resume production are weak, and the potential increase in supply is limited and manageable

The core work of cold repair of glass production lines is to replace refractory materials in kilns and repair and upgrade kilns. Since 24H2, second- and third-tier companies have continued to lose deep losses for nearly two years. It is estimated that most second- and third-tier enterprises will not be able to actually carry out cold repair projects after the cold repair production line is shut down; in addition, the ignition and resumption of production lines will take 3-6 months, and the output of the production line is rigid and supply adjustment is difficult, unless the price and profit of photovoltaic glass are significantly repaired, and the expected repair state is sustainable. Line companies are less willing to ignite/resume production. In the current cold repair production line, the bank's estimated production capacity of about 33,000 tons (production line size is less than 700 t/d, or the company currently has no production capacity) can be viewed as substantially cleared. Looking ahead, leading companies currently have production lines of more than 8,000 tons. Considering the large cost gap in the industry, it is expected that the production capacity released with the will and ability in the two to three year dimension will mainly be concentrated in leading and leading second-tier companies, and the potential supply increase is limited and manageable.

Leading companies have stable profit advantages, consolidated barriers to differentiated overseas production capacity, and high certainty about profit recovery and share recovery

The leading photovoltaic glass companies Xinyi Solar (00968) and Follett (601865.SH) have maintained a gross margin gap of 10 PCT or more for a long time with second-tier and third-tier companies due to advantages such as self-supply of raw materials and large-scale procurement, energy consumption and yield. In recent years, the profit gap has widened due to overseas premium production capacity. Looking ahead, the increase in overseas supply of photovoltaic glass is limited, leading companies have significant overseas production capacity cost advantages, and premiums are expected to be maintained; in the context of profit pressure, the domestic production capacity of second- and third-tier enterprises has accelerated, and leading companies are more certain about recovering their profits. At the same time, it is expected that with profit and capital advantages, they will maintain a faster production capacity growth rate than the industry and achieve a recovery in share.

Risk Alerts

There is a risk that downstream installed equipment demand falls short of expectations, the risk of industry supply being released too quickly, the risk of deterioration in the international trade environment, and the risk of fluctuations in raw material prices.