中国光伏行业：久居底部；光伏玻璃临近周期拐点

IndustryChina Solar Sector Lingering at the bottom; solar glassnearing a cyclical turning point Gary Zhou, CFA Solar glass: Approaching a near-term inflection Research Analyst+852-2203-5889 Following around nine months of inventory build-up and price correction since4Q25, we believe the solar glass sector may be approaching a cyclical inflectionpoint. Industry inventories appear to have peaked in mid-June 2026 and have sincedeclined by c.10%, with the pace of destocking accelerating in recent weeks. Thisis consistent with our monthly supply-demand analysis, which suggests theindustry could enter a destocking phase in July, supported by a modest recovery inmodule demand (+10% MoM) and declining glass supply. With end demand still ata low base and likely to recover seasonally into 4Q26, while weak industryeconomics limit capacity restarts, we expect solar glass prices to rebound in thecoming months. Xinyi Solar's (0968.HK) share price has corrected by c.38% sincemid-May 2026, and we view the current valuation of 0.6x P/B as offering anattractive risk-reward profile. Polysilicon: Inventory build-up resumes On the other hand, the roughly three months of inventory destocking in thepolysilicon segment (which we believe was largely driven by Tongwei), duringwhich producer inventories declined by at most c.20%, now appears to have cometo an end. With hydropower-rich southwestern China entering the summer wetseason, idled polysilicon capacity is gradually returning to the market. According toSMM, July polysilicon production is expected to increase by 6-7% MoM. IMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. Deutsche Bank doesand seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm mayhave a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a singlefactor in making their investment decision. THE CONTENT MAY NOT BE DISTRIBUTED IN THE PEOPLE"S REPUBLIC OFCHINA ("THE PRC") (EXCEPT IN COMPLIANCE WITH THE APPLICABLE LAWS AND REGULATIONS OF PRC), EXCLUDINGSPECIAL ADMINISTRATIVE REGIONS OF HONG KONG AND MACAU. 7 July 2026Alternative EnergyChina Solar Sector China'slong-awaited energy-consumption and energy-efficiency standardscovering polysilicon, wafers and modules have now been finalised and will takeeffect on 1 January 2027.If effectively enforced, the new standards could eliminateclose to one-third of existing polysilicon capacity and reduce effective industrycapacity to around 2.4mtpa. However, we do not believe this alone would besufficient to restore industry profitability, as weak end-demand remains the keychallenge. We forecast polysilicon demand of 1.4mt in 2027E, implying industryutilisation is likely to remain below 60% even after the anticipated capacityrationalisation. Valuation and earnings revisions We cut earnings forecasts and target prices for Xinyi Solar, GCL Tech and Drinda(see next page for details), mainly to reflect weaker-than-expected solar pricing in1H26 and limited visibility on industry consolidation. Ourorder of preferenceisnow LONGi (BC technology) > Drinda (space solar) > Xinyi Solar (solar glassmargins nearing a trough) > GCL Tech (battery materials upside, polysiliconremains under pressure) > Tongwei (most exposed to polysilicon oversupply). Previous editions ofDB China Solar Monthly S-D Monitor: Jan-Feb 2025, March2025, April 2025, May 2025, June 2025, July 2025, August 2025, September 2025,October 2025, November 2025, December 2025, January 2026, February 2026,March 2026, April 2026, May 2026, June 2026 Summary of key earnings and TP revisions nXinyi Solar (0968.HK):Due to weaker-than-expected solar glass prices in 1H26 (down 25% YoY and 19% HoH), we lower our ASP assumptions for XinyiSolar, now expecting the company to turn loss-making in FY26E, and cut FY27-28E EPS by 20-46%. Accordingly, we revise our DCF-based target price toHK$3.6 from HK$4.7. Our valuation is based on a DCF methodology, assuming a 9% WACC (10% cost of equity and 4% after-tax cost of debt) and a 1%terminal growth rate. That said, we believe the recent inflection in industry inventory days could signal an emerging near-term price recovery, as currentsolar glass prices are at historical lows and, in our estimates, imply cash losses across the industry. At 0.6x P/B, current valuation appears overly depressed,in our view, while any near-term ASP rebound could act as a short-term share price catalyst. Key risks include: 1) weaker-than-expected solar demand inChina; 2) more intense-than-expected solar glass price competition; and 3) slower-than-expected progress in Xinyi Solar's overseas expansion. nGCL Technology (3800.HK): Given persistently depressed polysilicon prices YTD and the absence of a meaningful supply-side reform signal, we nowforecast a wider net loss of Rmb0.9bn in 2026E and cut our 2027-28E EPS estimates by 19-48%, lowering our DCF-