Goldman tracks China solar profitability inflection: main value chain prices stabilize, but inventory and lower costs still pressure pricing

Overview

This is Goldman Sachs’ monthly tracker on profitability inflection across the China solar supply chain. The report assesses profitability changes across solar subsectors by looking at supply and demand, inventory, spot prices, input costs, and implied cash gross margin/EBITDA margin. The key conclusion is that main-chain prices were fairly stable in May, but glass and film prices weakened; global module demand came in well below expectations, and with inventory buildup and lower upstream costs, the industry still faces further pricing pressure.

Core views

The report’s core stance is cautious, but there are structural opportunities. Goldman believes the module segment has benefited from easing material prices and that profitability has improved MTD; however, glass inventories continue to build and film is being dragged down by lower oil prices, leaving those segments under pressure. On the demand side, global module demand in April 2026 fell 58% YoY, and China installation demand fell 79% YoY, creating downside risk to full-year demand forecasts. On stock selection, Goldman prefers Maxwell, which has new-application opportunities, Hangzhou First, which has potential for film price increases and unit margin expansion, and Longi, supported by lower upstream prices and ESS upside; it also remains cautious on Rod Poly and Glass.

Analysis framework

The report uses a monthly profitability-tracking framework that examines supply and demand, inventory, prices, input costs, and implied profitability from spot prices across solar subsectors, combined with company coverage to express relative preferences. The demand analysis estimates global module demand by combining China installation-implied module demand, Chinese exports, and US AC-side installation-implied module demand; the valuation section uses 2027E EV/EBITDA for key names and discounts back to 2026E.

Methodology notes

• 行业盈利跟踪China Solar Profitability Tracker

  Monthly tracking of supply and demand, inventory, spot prices, input costs, and implied cash gross margin and EBITDA margin across solar subsectors.

  This framework is used to identify how price and cost changes affect profitability inflection across the supply chain, but the estimates do not include company-specific price discounts or premiums and may also be affected by specific plant shutdowns or maintenance schedules.

• Valuation methodsEV/EBITDA target price methodology

  Use 2027E EV/EBITDA multiples to estimate 12-month target prices and discount back to 2026E using the cost of equity.

  Maxwell’s target price is based on 22x 2027E EV/EBITDA and discounted at an 8.3% cost of equity; Hangzhou First’s is based on 13x 2027E EV/EBITDA and discounted at a 10.5% cost of equity; Longi’s is based on 11x 2027E EV/EBITDA and discounted at an 11.3% cost of equity.

• 因子画像GS Factor Profile

  Compare stocks relative to the market and industry peers from the perspectives of growth, financial returns, valuation multiples, and composite indicators.

  Growth uses forward sales, EBITDA, and EPS growth; financial returns use ROE, ROCE, and CROCI; valuation multiples use metrics such as P/E, P/B, P/D, EV/EBITDA, and EV/FCF.

• 并购概率评分M&A Rank

  Goldman uses a rank from 1 to 3 to assess the probability that covered companies become acquisition targets.

  Rank 1 represents a high probability of 30% to 50%, rank 2 represents a medium probability of 15% to 30%, and rank 3 represents a low probability of 0% to 15%; ranks 1 or 2 may be included in target price construction.

• 数据平台Quantum

  Goldman’s proprietary database for accessing historical financial statements, forecasts, and ratios.

  Quantum can be used for deep-dive analysis of a single company as well as cross-industry and cross-market comparisons.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Maxwell

  One of Goldman’s preferred covered companies

  Strengths

  New-application opportunities could support orders and valuation; 12-month target price Rmb278.

  Weaknesses

  Sensitive to sentiment around new-application demand and pilot capex.

  Comparison

  Compared with traditional solar manufacturing segments, the opportunity is more driven by equipment and new-application orders.

  Risks

  New-application demand weaker than expected, tighter export controls on solar equipment, or slower-than-expected development in the semiconductor industry.

• Hangzhou First

  One of Goldman’s preferred covered companies

  Strengths

  There is potential for solar film price increases and unit margin expansion; 12-month target price Rmb21.

  Weaknesses

  Weaker demand would दबraft utilization rates and film ASPs.

  Comparison

  Compared with the glass segment, the report places more weight on film price upside and unit margin improvement potential.

  Risks

  Solar installations weaker than expected, slower-than-expected capacity expansion, slower-than-expected development of high-end non-solar businesses, and intensifying procurement pressure on raw materials such as resins.

• Longi

  One of Goldman’s preferred covered companies

  Strengths

  ESS potential, EBITDA resilience from lower upstream prices, and medium-cycle upside in BC technology.

  Weaknesses

  Still affected by overall module demand and the pricing environment across the supply chain.

  Comparison

  Compared with upstream polysilicon and glass segments, Longi is viewed as having stronger earnings resilience in a lower-cost environment.

  Risks

  If demand exceeds expectations and supply-side policies are strongly enforced, polysilicon and glass prices could rebound more than expected; adoption of cost-reduction technologies could be slower than expected; BC development could lag expectations.

• Daqo ADR/A

  A cautious name in the Rod Poly segment

  Strengths

  The report does not identify a clear advantage, only that it remains cautious on the Rod Poly segment.

  Weaknesses

  A deterioration in upstream supply-demand balance and potential additional polysilicon supply could create price pressure.

  Comparison

  Compared with Goldman’s preferred Maxwell, Hangzhou First and Longi, the Rod Poly segment carries more pronounced risk.

  Risks

  Increased upstream supply, lower prices, and demand below expectations.

• Tongwei

  A cautious name in the Rod Poly segment

  Strengths

  The report does not identify a clear advantage, only that it remains cautious on the Rod Poly segment.

  Weaknesses

  A deterioration in upstream supply-demand balance and lower prices may pressure profitability.

  Comparison

  Together with Daqo, it is part of the Rod Poly risk exposure that the report views cautiously.

  Risks

  Potential additional polysilicon supply, price declines driven by lower module costs, and weaker-than-expected demand.

• Flat A/H

  A cautious name in the Glass segment

  Strengths

  The report does not highlight any clear advantage.

  Weaknesses

  Glass prices are down 7% MTD, inventories have risen to 57 days, and implied profitability from spot prices has fallen by 10 percentage points.

  Comparison

  Compared with improving module profitability, glass profitability continues to deteriorate.

  Risks

  Continued inventory buildup, weak demand, and further price declines.

• Module

  A core segment in the solar main value chain

  Strengths

  Easing material prices improved module profitability by 2 percentage points MTD.

  Weaknesses

  Order visibility is low and global demand has fallen sharply YoY.

  Comparison

  The module segment’s short-term profitability is better than glass, but demand pressure remains heavy.

  Risks

  Further price pressure as production costs keep falling, and insufficient demand recovery.

• Glass and Film

  Auxiliary solar-material segments with weaker pricing

  Strengths

  The report does not emphasize any significant strengths.

  Weaknesses

  Glass prices are down 7%, film prices are down 6%, and glass inventories are clearly building.

  Comparison

  Both segments are materially weaker than the generally stable pricing in the main chain.

  Risks

  Inventory, oil prices, weak demand and price competition continue to weigh on profitability.

Key data

• Global module demand in April 202633GW, -58% YoY, -30% MoMEstimated by aggregating implied demand from China installations, Chinese exports, and US AC-side implied module demand.
• Global module demand in the first four months of 2026156GW, -30% YoYBelow Goldman’s forecast path of a -12% YoY decline for full-year 2026.
• China installation demand in April 20269.5GW, -79% YoYChina demand in the first four months of 2026 was 51GW, -51% YoY, below the full-year forecast path of -25% YoY.
• China module exports in April 202618GW, -16% YoYExports in the first four months of 2026 were 83GW, -2% YoY; APAC, Africa, the Middle East and the EU all weakened MoM.
• Glass price changeMTD -7%Mainly driven by continued inventory buildup.
• Film price changeMTD -6%Mainly driven by the 11% MTD decline in oil prices.
• Glass inventory57 days, +8% MTDInventory buildup is intensifying pricing and profitability pressure in glass.
• Module profitability changeImproved by 2 percentage points MTDMainly driven by easing material prices.
• Glass profitability changeDown 10 percentage points MTDFalling prices worsened implied profitability from spot prices.
• Maxwell target priceRmb278Based on 22x 2027E EV/EBITDA and discounted back to 2026E at an 8.3% cost of equity.
• Hangzhou First target priceRmb21Based on 13x 2027E EV/EBITDA and discounted back to 2026E at a 10.5% cost of equity.
• Longi target priceRmb26Based on 11x 2027E EV/EBITDA and discounted back to 2026E at an 11.3% cost of equity.

Impact & implications

The implication for the solar supply chain is that short-term price stabilization does not mean the profitability cycle has fully reversed. If upstream supply increases in June and module production costs continue to fall due to softer upstream prices and the adoption of low-cost metal technologies, the supply chain could still see further price cuts. On the investment side, it is more appropriate to focus on names with company-specific growth or cost resilience rather than betting broadly on a rebound in solar prices.

Risks

• Deterioration in upstream supply and demand, especially a potential increase in polysilicon supply in June.
• Lower module production costs due to softer upstream prices and the adoption of low-cost metal technologies could create additional pricing pressure.
• Global module demand and China installation demand are weaker than Goldman’s full-year forecast trajectory.
• Continued buildup in glass inventories will weigh on prices and profitability.
• Company-level actual price discounts, premiums, shutdowns or maintenance schedules may cause estimated profitability to differ from actual operating performance.
• New applications, ESS, BC technology and high-end non-solar business growth points at the company level may progress more slowly than expected.
• Export controls or raw-material supply disruptions could affect profitability at relevant companies.

What to watch

• Whether polysilicon supply increases in June and how that affects upstream supply and demand.
• Whether module prices continue to decline as production costs fall.
• Whether China installation demand and module exports recover from the April lows.
• Whether glass inventory days fall from 57 days.
• Whether film prices continue to be affected by changes in oil prices.
• Maxwell’s new-application orders, Hangzhou First’s film price and unit margin, and Longi’s ESS and BC technology progress.
• Whether global module demand continues to run below Goldman’s full-year forecast of -12% YoY for 2026.