JPM Forecasts Negative Shift in China's Solar Industry Anti-involution; Regulators Support Mid-term Price Stability

Polysilicon Price Decline: China's solar industry is experiencing a drop in polysilicon prices, falling from above RMB50/kg to RMB48 due to unclear production cost definitions and cash flow pressures among manufacturers.

Policy Implications: The Two Sessions in China are focusing on fair competition, with potential measures to control overcapacity and stabilize polysilicon prices in the mid-term, although short-term declines may continue.

Industry Consolidation: Analysts predict that industry consolidation will be encouraged regardless of policy direction, with timing being the only variable.

Stock Recommendations: Daqo New Energy and GCL Tech are favored within the polysilicon sector, with Daqo's stock seen as more resilient due to its strong cash position.

Space Solar Energy Market Growth: JPMorgan reports a significant hype around space solar energy in China, predicting a potential expansion of 200GW in manufacturing, with related stocks outperforming the index by 21-166% since November 2025.

Feasibility Concerns: Despite the excitement, the feasibility of space solar technology is under scrutiny, as most rising stocks are not directly involved in the mainstream gallium arsenide technology but rather in alternative technologies like P-type heterojunction and perovskite.

Market Ratings: JP Morgan has rated GCL TECH as Overweight, while lowering ratings for GOLDWIND and MINGYANG SMART ENERGY to Underweight, indicating a preference for certain stocks within the solar energy sector.

Short Selling Data: The report includes short selling data for various stocks, highlighting significant short selling activity, particularly for GOLDWIND A-shares and SUNGROW POWER, indicating market caution.

Market Focus: The market will concentrate on themes such as solar and hydrogen energy, the 15th Five-Year Plan, power grid developments, and green fuel, while also considering defensive sectors and nuclear energy.

Cautious Outlook on Power Utilities: HSBC Global Research expresses caution regarding Chinese power utilities due to weak demand and falling power prices, which pose challenges for both thermal and renewable energy sectors.

CIMC ENRIC's Profit Expectations: JPMorgan anticipates that CIMC ENRIC's project in Indonesia could yield a maximum profit of RMB 70 million.

Target Price Adjustments: HSBC Global Research has raised the target price for CIMC ENRIC to between $11.6 and $12.5, maintaining a Buy rating, while also providing target prices for other companies like GCL TECH and CKI HOLDINGS.

Elon Musk's Investigations: Musk's team has conducted secret visits to various Chinese photovoltaic companies, focusing on equipment, silicon wafers, and battery components, particularly those using heterojunction and perovskite technologies.

Market Reaction: Following the news, Hong Kong-listed photovoltaic stocks saw an increase, with notable gains in companies like XINYI SOLAR, GCL TECH, XINYI GLASS, and GCL NEWENERGY.

Offshore Wind Turbine Procurement: China's offshore wind turbine procurement capacity reached 8.42 gigawatts last year, with MINGYANG SMART ENERGY leading at 2.1 gigawatts and GOLDWIND at 1.2 gigawatts, driven by positive market sentiment.

Stock Recommendations: JPMorgan recommends focusing on companies with strong earnings growth, such as ORIENT WIRES & CABLES, DAQO New Energy, and GCL TECH, while the A-share photovoltaic industry index has outperformed the market.

Energy Storage Growth: China's installed capacity of energy storage systems surged by 73% year-on-year, with SUNGROW POWER expected to benefit from policy reforms and increased demand in high-end markets.

Cautious Outlook on Gas Utilities: JPMorgan maintains a cautious view on China's gas utilities sector due to weak growth and profit margins, with KUNLUN ENERGY identified as a top pick, while CHINA RES GAS faces challenges with slow share buybacks and weak operating trends.

Growth of Space Solar Panel Installation: HSBC Global Investment Research predicts that the installation capacity of solar panels in space will increase significantly, reaching 9 GW by 2030, 86 GW by 2035, and 171 GW by 2040, potentially making it the second or third largest market globally by 2035.

Market Size for Space Solar Cells: The market for space solar cells is expected to grow to USD 20 billion by 2030 and USD 64 billion by 2035, representing 27% and 69% of the global solar module market size, respectively, due to higher installation costs in space.

GCL TECH's Position in the Market: GCL TECH is highlighted as the largest perovskite producer, which is anticipated to be the next generation of space solar cells, although its stock performance is currently lagging due to investor concerns over China's policies.

Investment Outlook: Despite underperformance, GCL TECH is considered to offer a better risk/reward profile within the space solar theme, according to Guosen Securities.