Capacity Clearing in the Photovoltaic Industry and Investment Value Analysis of LONGi Green Energy

Based on the collected data, I will provide an in-depth analysis of capacity clearing in the photovoltaic industry and LONGi Green Energy’s ability to navigate the industry cycle.

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The photovoltaic industry is in a

, with capacity clearing progressing continuously. According to TrendForce Energy Storage Observations and the research report from Zhongyuan Securities, the current industry exhibits the following characteristics [1][2]:

Phase	Time Window	Core Characteristics
Intensified Overcapacity Phase	2023	Large-scale industry expansion, supply growth far outpaces demand
Peak Price War Phase	Q1-Q3 2024	Polysilicon prices fell by over 39%, wafer prices fell by over 50% [3]
Industry Self-Regulation Initiation Phase	Q4 2024	CPIA announced the minimum cost price, and enterprises reached a consensus against excessive internal competition
Backward Capacity Clearing Phase	2025	First negative growth in capacity, key clearing year
Supply-Demand Balance Phase	2026-2027	Industry is expected to return to healthy growth

: In 2025, effective capacity will be approximately 2.95 million tons, with output around 1.3 million tons, resulting in a severe supply-demand mismatch. Prices are in an pattern, fluctuating in the low range of RMB 30,000-35,000 per ton throughout the year, with substantive clearing expected in Q4 [1].

: In 2025, capacity will drop from 1153GW in 2024 to 1088GW, , marking the first negative growth in nearly four years and signifying the industry’s shift from “incremental expansion” to “stock competition” [1].

: It is expected that module prices will gradually return to rational levels in 2025, and even if they recover to RMB 0.7/W, enterprises will still be in a loss-making situation. The industry’s profitability recovery will have to wait until 2026 [3].

: Zhongyuan Securities predicts that the photovoltaic industry will enter the phase in 2025. In 2026, with the adjustment of the power system’s ability to absorb new energy, the market is expected to return to a medium-speed growth pattern of around 10% [2].

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Based on the latest data [0][4]:

Indicator	Value	Industry Position/Interpretation
Market Capitalization	USD 141.559 billion	One of the world’s largest photovoltaic module manufacturers
Price-to-Book Ratio (P/B)	2.49x	In the historical low range
Current Ratio	1.43	Adequate short-term solvency
Quick Ratio	1.20	Good liquidity after excluding inventory
ROE	-9.39%	Caused by losses at the cycle bottom
Net Profit Margin	-7.36%	The entire industry is under pressure

LONGi Green Energy recorded a net loss of

in 2024, mainly due to the following reasons [3][5]:

1. Sharp decline in product prices
   : Wafer prices fell by 61% year-on-year, and module prices fell by 39% year-on-year
2. Asset impairment loss
   : RMB 8.7 billion impairment from the elimination of PERC capacity
3. Equity investment loss
   : RMB 486 million loss from investments in polysilicon enterprises
4. Insufficient operating rate
   : Low capacity utilization caused by industry supply-demand imbalance

: In Q1 2025, the loss was RMB 1.436 billion, , indicating marginal improvement in operating conditions [3].

LONGi Green Energy has the following advantages in cost control:

• Significant economies of scale
  : Wafer shipment volume of 108.46GW, module shipment volume of 82.32GW [3]
• Clear technological cost reduction path
  : The cost gap between BC cells and TOPCon has been controlled within RMB 0.05/W
• Global layout
  : The US joint venture factory has achieved full production and sales, becoming the most efficient module factory in the Western Hemisphere

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LONGi Green Energy has significant leading advantages in back-contact (BC) cell technology [2][5]:

Technical Indicator	LONGi HPBC2.0	Industry Mainstream TOPCon
Mass Production Efficiency of Cells	>26.6%	~26%
Maximum Module Power	670W	~640W
Power Advantage	+30W or more	Benchmark
2025 BC Capacity Target	70GW	-
2025 BC Shipment Share	>25%	-

[5]:

1. Continuous improvement in cell conversion efficiency
2. Cost reduction driven by economies of scale (large-scale deployment in 2025)
3. R&D breakthroughs in silver-reduced and silver-free metallization solutions

: BC cell technology leads the industry by 1-2 generations, with HPBC2.0 achieving major breakthroughs

: One of the world’s largest suppliers of wafers and modules; plans to ship 120GW of wafers and 80-90GW of modules in 2025

: Well-established global layout, covering multiple markets in the US, Europe, and Southeast Asia

: Clear technological cost reduction path, but currently still affected by industry price wars

: Continuous losses have consumed cash reserves, but liquidity indicators remain healthy

: Sustained high-intensity R&D investment, strong technological iteration capability

1. Technological Differentiation
   : BC technology forms a unique competitive barrier; its cost is expected to be equal to or even lower than that of TOPCon in 2025
2. Capacity Optimization Strategy
   : Gradually upgrade PERC capacity to HPBC2.0 to achieve technological route switching
3. Global Capacity Layout
   : The US joint venture factory is at full production, reducing the impact of trade barriers; Vietnamese capacity is re-planned after adjustment
4. Participation in Industry Self-Regulation
   : Actively responds to the consensus against excessive internal competition, promoting the rational return of module prices

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Risk Type	Specific Content	Risk Level
Industry Cycle Risk	Capacity clearing may be prolonged, leading to continued losses	High
Trade Policy Risk	Uncertainty of US “double anti-dumping and countervailing” investigation	High
Technological Route Risk	BC technology cost reduction progress falls short of expectations	Medium
Cash Flow Risk	Consumption of cash reserves due to continuous losses	Medium

[0][4]:

• P/B: 2.49x, at a historical low
• Market Capitalization: USD 141.559 billion
• Stock price still has a significant pullback from the 52-week high

:

• Substantive progress in industry capacity clearing
• Increase in BC module shipment share
• Module prices stabilize and rebound
• Increased high-profit contributions from overseas markets

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1. Capacity Clearing Timeline
   : Substantive progress in capacity clearing of the photovoltaic industry is expected in
   2025
   , supply-demand balance is expected to be achieved in 2026, and a new round of healthy growth cycle will begin in 2027.
2. LONGi Green Energy’s Cost Control Capability
   : The company has advantages in economies of scale, technological cost reduction, and global layout, but its profitability is currently under pressure due to the industry cycle bottom.
3. Evaluation of Cycle Navigation Capability
   :
   Moderately Strong
   . Leading advantages in BC cell technology, global capacity layout, and industry leading position support its ability to navigate the cycle, but continuous losses test its financial strength.

Dimension	Evaluation
Industry Cycle Position	Cycle bottom, dawn emerging
Company Competitive Advantages	Leading BC technology, significant economies of scale
Risk-Return Ratio	Medium-high risk, medium-to-long-term layout value emerges
Recommended Strategy	Build positions in batches, hold long-term, pay attention to capacity clearing progress

: This analysis is based on current market data and industry research. Actual investments need to pay attention to factors such as changes in industry policies, progress of trade frictions, and speed of technological iteration.

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[1] TrendForce Energy Storage Observations: The global photovoltaic industry chain enters a deep adjustment period in 2025, with capacity clearing and technological iteration becoming the main themes throughout the year (http://www.qw-inverter.com/newsinfo/1068763.html)

[2] Zhongyuan Securities: Market Clearing, Cycle Bottoming – 2025 Photovoltaic Industry Annual Strategy (https://pdf.dfcfw.com/pdf/H3_AP202412021641143846_1.pdf)

[3] Yicai Global: Supply-demand imbalance leads to performance losses, LONGi Green Energy management previews 2025 BC module shipment plan (https://www.yicai.com/news/102598020.html)

[4] Gilin AI Financial Database: Company Profile and Financial Data [0]

[5] Securities Times: LONGi Green Energy will promote BC cell technology cost reduction from three aspects, maintaining a prudent attitude towards overseas capacity expansion (https://www.stcn.com/article/detail/1478570.html)