PV Industry Investment Potential Analysis

Since the beginning of this year, the price of polysilicon has dropped sharply. Statistics show that since the beginning of this year, the decline rate has reached 60%, and it has fallen by 20% since the fourth quarter. The drop in the price of polysilicon directly affected the profitability of domestic photovoltaic companies. None of the small and medium-sized enterprises in China's photovoltaic industry survived. Statistics show that of the 10 photovoltaic leading companies listed overseas, 8 have reported losses.

It is against this background that Sino-U.S. Energy Holding, the stockholder of Warren Buffett, invested twice in US$3.8 billion in photovoltaic power generation projects within a month.

We believe that Buffett's investment in the photovoltaic industry can explain that, in Buffett's view, the current photovoltaic industry is basically at the bottom, and it has strong confidence in the future development of the industry. This is a "strengthening agent" for the market in the short term. However, it remains to be seen when the photovoltaic industry will emerge from its predicament.

We have observed that currently the capacity of the top four polysilicon manufacturing companies in the world can already meet the downstream demand of the entire photovoltaic industry. The overcapacity situation of the components is equally severe. Many companies even have "half-way out of business" because of low technical barriers. Although many companies have already stopped production, the industrial structure has not yet been fundamentally improved. This is the driving force behind the decline in product prices. From a spatial point of view, the current price of crystalline silicon has fallen to historical lows, and has fallen below the cost price of many manufacturers. The downside has been limited, so overall, product prices will continue to decline slightly in the future. Judging from the future development trend, the upstream polysilicon and silicon wafer sectors will focus more on specialization, and the battery segment will focus more on the brand. At the same time, the component companies with stronger capital strength will gradually extend to downstream power plant investment.

It is worth mentioning that Buffett’s investment is mainly concentrated in the downstream power stations. We believe that in the event of a significant drop in the prices of the industrial chain, the investment returns for downstream power plant operations will increase significantly, and the companies with strong cash flow and operating power plants will operate. Will benefit significantly.

Investment suggestion: We believe that the photovoltaic industry's economic downturn will continue at least until the end of the first quarter of next year, maintain a “neutral” rating for the industry, suggesting attention to alternative technologies and opportunities for the domestic market to start, and currently recommending to benefit from the photovoltaic market launched by the domestic market. Solar generator power supply.