"Downsizing" of PV supply side accelerates, GCL Technology leads related concept stocks with a rise of over 8%

Today, Hong Kong-listed PV concept stocks collectively strengthened. As of press time, GCL Technology (03800.HK) rose by 8.24%, Photon Energy (00757.HK) by 7.58%, GCL New Energy (00451.HK) by 2.99%, and Xinte Energy (01799.HK) by 2.54%.

Note: Performance of PV concept stocks

Supply-side reform accelerates, capacity exits the market at a faster pace

The latest data from the Silicon Branch of the China Nonferrous Metals Industry Association shows that domestic polysilicon enterprises have generally adopted a strategy of reducing operating loads. Three enterprises that originally planned maintenance have initiated production line contraction, and two enterprises with new capacity have canceled their expansion plans. It is expected that domestic polysilicon production in May will decline by 3% MoM to 96,000 mt, and the number of operational enterprises in Q2 may shrink to around 10. This supply-side contraction trend stands in stark contrast to the current situation of high polysilicon inventory levels (approximately 4-5 months of stock), laying the groundwork for subsequent price recovery.

Bottom of the earnings reporting cycle confirmed, industry turning point approaches

A research report by China Securities points out that after experiencing a price downturn cycle since 2023, the PV industry's fundamentals now exhibit three bottoming-out signals: First, profitability on the financial statements has bottomed out, with the impact of the Southeast Asian anti-dumping and countervailing duties in Q1 fully absorbed and corporate impairment provisions nearing completion. Second, core financial indicators are at historically low levels, with the lagging effects of delayed order recognition cycles in modules and other segments largely cleared. Third, polysilicon, as a bellwether for the industry cycle, is expected to see inventory pressure return to normal levels by H1 2026, based on projected wafer production of 700/840 GW in 2025-2026.

Policy empowerment combined with demand release, a dual-driven pattern emerges

Guokai Securities emphasizes that domestic capacity exit policies and the global energy transition are forming a synergistic effect. With the increasing demand for power grid stability in various countries, the demand for household and large-scale energy storage systems in emerging markets in Asia and Africa is on the verge of a surge.

It is worth noting that the National Energy Administration has recently clarified the target for the proportion of renewable energy in the "14th Five-Year Plan." Coupled with the approaching peak electricity demand season in summer, the demand for PV installations is expected to experience seasonal recovery. The current valuation of the sector already reflects pessimistic expectations, and marginal improvements in supply and demand may generate a Davis Double Play opportunity.