Overview of China’s Renewable Energy Sector

China’s renewable energy sector continues to witness significant achievements, with a record-breaking solar installation capacity of 277.17 GW in 2024, marking a 27.8% year-on-year growth. However, the industry now faces challenges such as prolonged consolidation, moderated global installation growth, and rising protectionism. As solar energy remains the fastest-growing segment since 2021, the cumulative installed capacity now stands at 886.7 GW, accounting for 26.5% of the country’s total power generation.

Despite these achievements, 2025 is expected to be a year of rationalization for the global solar sector. Growth is predicted to slow to single-digit percentages due to waning fiscal incentives, grid constraints, and the stabilization of module prices. UOB Kay Hian maintains a “MARKET WEIGHT” recommendation for the sector, with the view that further industry consolidation and policy interventions could help restore order and improve fundamentals.

Market Trends and Challenges

The solar energy market is experiencing a range of dynamics:

• Attempts to increase polysilicon prices are meeting resistance from downstream manufacturers, leading to stable spot prices. Polysilicon chunk prices range between Rmb37.00-42.50 per kg, while granular silicon prices stand at Rmb36-38 per kg.
• Wafer and battery cell prices have seen a temporary rebound due to supply-demand mismatches caused by the Chinese New Year holiday season. However, this price recovery might not be sustainable post-holiday.
• Solar module pricing remains steady, with most deliveries deferred to after the holidays. Domestic manufacturers adhere to the China Photovoltaic Industry Association’s (CPIA) guided floor price of Rmb0.68-0.70 per watt.

Export markets also show shifting dynamics, with declining demand from Europe offset by rapid growth in the Middle East. In addition, protectionist policies in countries like India and Pakistan threaten to curb Chinese module exports further.

Detailed Company Analysis

Longi Green Energy

Recommendation: HOLD

Target Price: Rmb16.40

Current Price: Rmb14.53

Longi Green Energy is navigating challenging times with a profit warning for 2024, forecasting a net loss of Rmb8.2b–8.8b. This performance is slightly weaker than market expectations. However, the company is adopting a differentiation strategy centered on technological innovation, aiming to achieve 200GW/50GW in high-efficiency Tairay silicon wafer and HPBC 2.0 module annual production capacity. Sequential recovery in earnings is expected in 2025.

The firm is focused on restoring market order through collaborations and joint efforts among industry players. UOB Kay Hian anticipates more policy interventions to accelerate industry consolidation, potentially ending the ongoing price war.

Tongwei

Recommendation: Not Rated (NR)

Current Price: Rmb19.80

With a market capitalization of USD 14,145.2 million, Tongwei is a major player in the polysilicon segment. The company demonstrates strong financial metrics, including a projected PE ratio of 43.5x for 2025, which is expected to decline to 16.0x in 2026. Its EV/EBITDA ratios for 2025 and 2026 stand at 12.3x and 7.6x, respectively, with an ROE of 3.1%.

Xinjiang Daqo

Recommendation: Not Rated (NR)

Current Price: Rmb20.78

Xinjiang Daqo holds a market capitalization of USD 7,494.5 million. Its 2025 PE ratio is 31.3x, dropping to 18.9x in 2026. The company’s EV/EBITDA ratios are 15.4x for 2025 and 9.1x for 2026, with a solid ROE of 4.2%. Xinjiang Daqo is well-positioned to benefit from its focus on polysilicon production.

GCL Tech

Recommendation: Not Rated (NR)

Current Price: Rmb1.18

GCL Tech has a market capitalization of USD 4,789.5 million. The company exhibits promising financial metrics, with a 2025 PE ratio of 32.5x, reducing to 8.6x in 2026. Its EV/EBITDA ratios stand at 8.6x for 2025 and 5.2x for 2026, supported by an ROE of 1.8%.

Xinte Energy

Recommendation: Not Rated (NR)

Current Price: Rmb7.20

Xinte Energy has a smaller market capitalization of USD 1,656.4 million. The company boasts attractive valuation metrics with a 2025 PE ratio of 5.5x and 4.3x for 2026. Its EV/EBITDA ratios are 10.3x and 6.1x, respectively, with an ROE of 1.3%.

Other Notable Companies

Several other companies in the sector, such as Jinko Solar, JA Solar, and Trina Solar, exhibit diverse financial metrics and market strategies. These companies continue to play a pivotal role in China’s renewable energy landscape, adapting to the evolving challenges of the global market.

Future Outlook

China’s renewable energy sector is at a crossroads, with significant opportunities and challenges ahead. While the current price war and low utilization rates persist, the worst seems to be over, with limited downside expected. Industry consolidation and rationalization of supply chain prices are critical to restoring balance and driving long-term growth. Companies like Longi Green Energy are poised to benefit from technological advancements and a focus on innovation.

As protectionist policies and shifting global markets continue to impact export demand, the sector must adapt to new dynamics, including localization trends and evolving policy landscapes. With a “MARKET WEIGHT” recommendation, UOB Kay Hian suggests cautious optimism for the renewable energy sector in 2025.