CICC released a research report stating that the solar PV industry chain is expected to bottom out and gradually improve in the second half of 2025 due to anti-overcapacity measures. However, slower financial statement improvements may delay market-driven adjustments, making continued anti-overcapacity efforts essential, with module pricing flexibility being a key factor.
Although industry demand may weaken temporarily in 2026, anti-overcapacity policies and leading companies' competitive advantages could help some firms return to profitability. Enhanced grid absorption capacity from energy storage installations is expected to drive a recovery in solar demand by the mid-to-late 15th Five-Year Plan period.
With solar curtailment issues intensifying, China's power market reforms and flexible power sources are accelerating, while energy storage benefits from synchronized domestic and overseas growth. Domestic absorption challenges, overseas grid parity, and rising electricity demand are fueling strong energy storage demand. Falling costs are driving overseas storage affordability, while data center power gaps and load fluctuations are boosting storage deployment needs. Global energy storage installations could grow nearly 50% in 2026.
Amid weaker installations, glass and encapsulant firms may see diverging performance. Companies with overseas client bases could increase export shares and margins, while others face fiercer competition. High silver prices are accelerating silver-coated copper paste industrialization, prompting material suppliers to explore second growth curves in semiconductors and memory sectors.
Valuation and Recommendations: Mainstream solar companies currently trade at historically low valuations of 1x–2.5x P/B. Potential catalysts in Q2 2026 include demand recovery, anti-overcapacity progress, and product mix optimization. Energy storage valuations have rebounded after H2 2025 gains, with further upside possible if demand exceeds expectations.
Key picks include: 1) Leading utility/commercial storage players: CSI Solar (688472.SH), Sineng Electric (300827.SZ), Ningbo Deye Technology (605117.SH), Jiangsu Tongrun Equipment (002150.SZ), Yuneng Technology (688348.SH); 2) High-power module makers: Jinko Solar (688223.SH), Shanghai Aiko Solar (600732.SH), Trina Solar (688599.SH); 3) Polysilicon producers: GCL TECH (03800), Tongwei (600438.SH), Xinjiang Daqo New Energy (688303.SH); 4) Optimized segment players: XINYI SOLAR (00968), Flat Glass Group (601865.SH); 5) New product developers: Wuxi Dk Electronic Materials (300842.SZ), Changzhou Fusion New Material (688503.SH).
Risks include weaker-than-expected demand, ineffective anti-overcapacity measures, and geopolitical uncertainties.