CICC: Solar Sector Narrows Losses Significantly in Q3 2025, Focus on Energy Storage Systems and PCS Segment

CICC released a research report stating that while domestic solar demand weakened in Q3 2025 after the rush-installation period ended, the financial performance of key segments such as the main industrial chain and glass improved significantly due to anti-involution efforts. The focus moving forward will be on module price increases and further profit releases from silicon material companies in Q4 2025.

For energy storage/inverters, demand for large-scale storage in China, the U.S., and non-U.S. overseas markets continued to exceed expectations, while commercial and industrial storage demand in Europe and residential storage in Australia remained strong. The report highlights the energy storage system and PCS segments as key areas to watch.

**Key Takeaways from CICC:** 1. **Upstream Recovery in Main Industrial Chain, Module Price Hikes Pending** Post the rush-installation period in H1 2025, solar demand softened. However, silicon materials and wafer segments saw significant earnings recovery due to anti-involution measures, though module price adjustments remain limited.

2. **Stable Paste Processing Fees, Improved Profitability for Glass Leaders** Paste shipments in Q3 2025 saw a slight sequential increase, with gross margins remaining stable. The focus is on the rollout timeline of base metal paste from 2024 to H1 2025 and the second growth curve for leading companies. Glass and film leaders strengthened their advantages, supported by higher overseas shipments and declining costs.

3. **Strong Energy Storage Bidding, Robust Profitability in System Integration & Inverters** Inverter exports weakened slightly in Q3 2025 due to Europe's off-season. However, domestic energy storage bidding surged year-on-year, driving demand for centralized inverters and energy storage systems. Large-scale storage maintained high momentum, while residential and commercial storage markets flourished across multiple regions, with emerging markets like Australia and Southeast Asia performing exceptionally well. Profitability in the energy storage segment remained stable despite regional and power-level variations.

4. **Outlook for Q4 2025: Further Earnings Recovery & Anti-Involution Progress** The sector's overall profits and operating cash flow improved notably in Q3 2025. Silicon material average transaction prices are expected to rise sequentially in Q4, while module price increases may gradually materialize with anti-involution support. Energy storage is poised for strong domestic large-scale installations in Q4, with Europe's post-summer demand recovery, North America's power shortages benefiting large-scale storage, and sustained growth in emerging markets.

**Recommended Stocks:** - **Silicon Materials:** Tongwei (600438.SH), Daqo New Energy (688303.SH) - **High-Efficiency Modules:** JinkoSolar (688223.SH), Aiko Solar (600732.SH) - **Copper Paste & Second Growth Curve:** DK Electronic (300842.SZ), GCL System Integration (688503.SH) - **Glass:** XINYI SOLAR (00968), Flat Glass (601865.SH) - **Energy Storage:** Deye (605117.SH), Torin (002150.SZ), Ginlong (300763.SZ), Sungrow (300827.SZ), Enphase (688348.SH), Canadian Solar (688472.SH)

**Risk Factors:** Potential downside risks include weaker-than-expected solar and energy storage demand, slower supply-demand improvements, and trade policy volatility.