Evaluation of Tongwei (600438) and Hesheng (603260) Investment Value in PV Anti-Involution and PR Application

I have retrieved multiple public information sources and online search results (some content has encoding issues; I will synthesize and present verifiable conclusions). Based on the retrieved online sources and search results, this article evaluates the investment value of Tongwei Co., Ltd. (600438.SH) and Hesheng Silicon Industry Co., Ltd. (603260.SH) against the backdrop of ‘anti-involution’ in the photovoltaic (PV) industry, and discusses the application and limitations of the ‘Price-to-Earnings Ratio (PR)’ in PV cyclical stocks (Important Note: The latest brokerage API financial data has not been successfully obtained; the following valuation and PR discussions are purely methodological; specific values should be based on the latest financial reports).

1. ‘Anti-Involution’ and Price Trends of the PV Industry Chain (Online Search and Industry Information)

• Polysilicon Price Recovery: According to data from the China Photovoltaic Industry Association (covering trends within 2025), the average prices of polysilicon, wafers, cells, and modules have risen significantly compared to the beginning of the year, with polysilicon showing a particularly notable recovery (reports indicate ‘increases of 38.9%, 2.2%, 0.4%, and 2.3% respectively compared to the start of the year’). The downward price trend across the entire industry chain has been initially curbed, but the recovery is differentiated: the upstream polysilicon segment has回暖 more significantly, while the midstream and downstream cell and module segments remain relatively under pressure [1].
• Industry Self-Regulation and Capacity Clearance: Reports show that a series of policies and industry self-regulation measures were promoted in 2024-2025, including raising industry access thresholds, strengthening fair competition reviews, and encouraging the exit of backward production capacity. The Ministry of Industry and Information Technology’s new ‘Photovoltaic Manufacturing Industry Specification Conditions’ and adjustments to export tax rebate rates aim to drive the transformation from ‘scale competition’ to ‘quality competition’ [2][3].
• Market Sentiment and Market Value Changes: Data from industry associations and media show that the market value of polysilicon enterprises in 2025 has recovered significantly from the low point in April of the same year (reports mention a ‘market value increase of 52.1%’), reflecting the marginal contribution of ‘anti-involution’ and production cut expectations to the valuation improvement of upstream segments [3].

2. Key Points of Tongwei Co., Ltd. (600438.SH) (Based on Retrievable Information, Excluding Unverified Figures)

• Business Structure: Public information and multiple news sources indicate that the company adopts a dual-main business synergy model of ‘feed + PV’. The feed business is regarded as a ‘cash cow’ and ‘stabilizer’, providing stable cash flow during periods when the PV business is under pressure. The agricultural segment’s revenue remained stable in 2024; in the first three quarters of 2025, the net profit of the feed business continued to grow year-on-year (described in news as ‘further consolidating its leading position’), reflecting its smoothing effect during cycles [4].
• Profitability and Stock Price: Media reports indicate that the company incurred continuous losses in 2024-2025, and its stock price experienced a noticeable correction at the end of 2025 (reported as ‘a cumulative decline of 23.27% over 32 trading days’), which was related to factors such as the details of the storage platform falling short of expectations. Industry self-regulation and price recovery have a positive impact on profit improvement in the upstream polysilicon segment, but the transmission to downstream segments still needs to observe the full-chain ‘volume-for-price’ strategy and the implementation intensity of production cuts [4][7].
• Qualitative Judgment: The upstream silicon material business benefits from ‘anti-involution’ and production cut expectations, combined with the cash flow buffer provided by the feed business, giving it a relative advantage in ‘anti-cyclical capabilities’ in the medium and long term; in the short term, it is necessary to track inventory, the sustainability of price recovery, and the feedback of downstream production cuts on demand.

3. Key Points of Hesheng Silicon Industry Co., Ltd. (603260.SH) (Based on Retrievable Information, Excluding Unverified Figures)

• Performance and Prices: Public reports show that the company’s net profit attributable to shareholders was in a loss in the first three quarters of 2025, but it turned profitable in the single third quarter (reported as ‘achieving a net profit attributable to shareholders of RMB 76 million in Q3’). With the ‘dry season + declining operating rate’ and the recovery of demand driven by PV ‘anti-involution’, the volume and price of industrial silicon improved month-on-month (reports indicate that industrial silicon sales volume increased by 61.69% month-on-month, and the average price increased by 8.11% month-on-month) [5].
• Industrial Silicon Futures and Supply-Demand Pattern: The related futures of polysilicon and industrial silicon rebounded in 2025 (reports mention that ‘the main contract stabilized and rebounded rapidly after retracing to the 8300 level’), reflecting the market’s expectations for upstream capacity reduction and marginal improvement in supply and demand; however, high inventory levels and downstream production cuts remain constraining factors (social inventory rose to around 561,000 tons) [6][7].
• Qualitative Judgment: The company has both industrial silicon and organic silicon layouts, benefiting from the support of PV ‘anti-involution’ for upstream raw material demand and prices; however, product price declines and inventory pressure still exist, requiring continuous observation of production cut implementation and terminal demand verification.

4. Discussion on the Applicability of ‘Price-to-Earnings Ratio (PR=PE/ROE/100)’ in PV Cyclical Stocks (Methodology)

• Basic Meaning: PR depicts the ‘matching degree between valuation (PE) and profitability (ROE)’. Some investment researchers proposed the concept of ‘buying $1 for 40 cents’ when reviewing Buffett’s cases, and used PR as a quantitative reference—for example, PR≈0.4 is regarded as a significantly undervalued range [9].
• Correction Ideas for Cyclical Stocks: For strongly cyclical industries like PV, the ROE at a single point in time fluctuates greatly. It is recommended to use the ‘average ROE over 5 years or a longer cycle’ instead of the current ROE, or combine profits, assets and liabilities, and cash flow for multi-cycle smoothing to avoid PR being falsely low at the peak of high boom ROE and falsely high at the trough [9][11].
• Dividend Rate Correction (PR=N×PE/ROE): Some studies suggest that for companies with low dividend rates, a dividend rate correction factor N (e.g., N=50%/dividend rate) should be introduced to reflect the impact of ‘retained earnings reinvestment efficiency’ and cash flow quality on valuation. The corrected PR is more suitable for value stocks with stable ROE and clear dividend policies; for PV enterprises with both high dividends and strong cyclicality, it is necessary to comprehensively judge based on current dividend policies and long-term cash flow [9][11].
• Combination with Other Methods:
  • Asset Quality and Margin of Safety: Refer to Net Current Asset Value (NCAV), P/B ratio, and asset-liability ratio to avoid relying solely on PR when asset quality deteriorates or debt risks rise [9][11].
  • Industry/Index Comparison: Use the PR quantile and historical average of the industry or index to make relative valuation judgments. Reports indicate that over the past 5-10 years, the dividend index often corresponds to a cyclical bottom when PR is around 0.4-0.5; currently, some dividend indices are around PR 0.8 [11].
• Valuation Trends and Signals (From Online Search, Excluding Specific PR Values): Some media and investment communities have conducted examples and discussions of the PR framework for PV leaders, emphasizing the need to comprehensively judge based on industry beta, inventory cycles, and policy rhythms; in the early stage of industry boom reversal, upstream segments often first reflect price and profit improvements [1][3][6][7][9][11].

5. Cycle Bottom Identification and Trackable Indicators (Framework Based on Public Information)

• Price Signals: The futures prices of polysilicon and industrial silicon rebounded from low levels (reported as ‘stabilized and rebounded rapidly after retracing to low levels’), and attention should be paid to inventory and production scheduling data (such as social inventory of 561,000 tons, month-on-month changes in wafer production scheduling, etc.) [6][7].
• Capacity and Profit Structure: Industry self-regulation and policies promote the clearance of backward production capacity; upstream cash profit margins have improved, but downstream wafer/cell cash profit margins are still negative, indicating that the balanced recovery of the entire chain has not yet been completed [7].
• Policy and Association Mechanisms: The information monitoring and coordination mechanism led by industry associations (covering over 90% of production capacity) helps improve industry transparency and the effectiveness of production cut coordination [3].

6. Risk Tips and Practical Recommendations (Methodology and Risk Tips Only; Not Investment Advice)

• Upstream Priority Principle: Under the background of ‘anti-involution’ + production cut expectations, upstream polysilicon/industrial silicon segments benefit more directly; midstream and downstream segments need to pay more attention to the ‘volume-for-price’ consensus and demand verification [1][7].
• Diversification and Position Management: Consider diversifying allocations between ‘upstream leaders + cash flow-stable targets’, and use position adjustments and rebalancing to smooth cyclical fluctuations.
• Data Acquisition and Verification: Given that the latest brokerage API financial data was not obtained this time, it is recommended to use brokerage terminals or authoritative data sources to obtain the latest PE, ROE, dividend rate, and asset-liability data, then calculate PR and conduct industry and historical comparisons. In actual operations, PR should be comprehensively verified with industry quantiles, asset quality, inventory and production scheduling, and policy rhythms.

7. Key References (Online Search and Public Information)
   [1] The Paper, ‘Special Focus | PV Price Recovery ≠ Successful Anti-Involution; High-Quality Development Is the Core Goal’, December 27, 2025 [1]
   [2] S&P Global Ratings, 'In-Depth Adjustment Under PV