China new energy 2Q results diverge; J.P. Morgan focuses more on fundamental opportunities in the second half

Overview

This is a J.P. Morgan 2Q26 earnings preview report on China’s renewable energy sector, covering power generation operators, upstream wind power, energy storage and photovoltaic equipment, and the photovoltaic polysilicon value chain. The core view is that 2Q earnings will diverge significantly: Deye has already disclosed strong guidance, Yangtze Power and Orient Cables are expected to be relatively resilient, while Longyuan, Sungrow, Goldwind, Arctech, and most companies in the photovoltaic polysilicon chain face varying degrees of pressure. The report also emphasizes that share-price pullbacks caused by short-term earnings volatility and geopolitical risks may provide positioning opportunities in fundamentally stronger new energy names for the second half.

Core views

The report’s core view is to be selectively bullish on China new energy rather than broadly bullish on the entire sector. In the short term, 2Q earnings are affected by factors such as base effects, costs, shipment timing, power prices, and grid absorption; in the medium term, structural opportunities more worth watching include offshore wind construction, rising market share of Chinese wind turbines in emerging markets, growth in distributed energy storage in emerging markets, and Sungrow’s AIDC ESS/SST optionality. By contrast, the photovoltaic polysilicon value chain remains in an unfavorable cycle, and LONGi and Tongwei are still listed as the main UW names.

Analysis framework

The report uses a combination of 2Q earnings preview and supply-chain segment analysis, dividing companies into renewable power generation operators, upstream wind power, energy storage and photovoltaic equipment, and the photovoltaic polysilicon chain, among other segments. It assesses how generation volume, on-grid tariffs, curtailment rates, shipment volume, ASP, cost pressure, overseas project delivery, and revenue recognition timing affect earnings, and further maps these to structural investment themes for the second half.

Methodology notes

• Earnings preview2Q26 earnings preview

  Judge the direction of quarterly earnings based on YoY and QoQ growth, as well as shipment and pricing variables.

  The report mainly compares companies’ 2Q26 earnings against the 2Q25 base and, together with 1Q26 shipments, costs, project progress, and revenue recognition timing, infers the relative strength of 2Q results.

• Supply chain analysisProsperity assessment by new energy segment

  Differentiate variations in business conditions across power generation operations, wind power equipment, energy storage and photovoltaic equipment, and the polysilicon value chain.

  The report believes profit drivers differ across segments: operators are more affected by power volume, tariffs, and grid absorption; equipment makers are more affected by shipments, costs, and overseas delivery; while the polysilicon chain is affected by the industry cycle and the implementation progress of anti-involution policies.

• Investment themeStructural theme screening

  Look for second-half opportunities in offshore wind, turbine market share in emerging markets, distributed energy storage, and AIDC ESS/SST optionality.

  The report does not use 2Q earnings as the sole basis for judgment, but instead views short-term pullbacks as opportunities to add exposure to companies with stronger fundamentals and structural growth themes.

Asset mapping & comparison

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

• Orient Cables - A (603606.SS)

  Key OW name, benefiting from accelerating offshore wind construction.

  Strengths

  Accelerating offshore wind development plus a low base in 2Q25 are expected to drive YoY earnings growth in 2Q26.

  Weaknesses

  Dependent on offshore wind project timing and policy progress.

  Comparison

  Compared with the photovoltaic polysilicon chain, offshore wind-related fundamentals are more resilient.

  Risks

  Offshore wind project delays, slower tendering pace, or cost pressure.

• Goldwind - H (2208.HK)

  Key OW name, benefiting from the theme of rising Chinese turbine share in emerging markets.

  Strengths

  Rising turbine market share in emerging markets is one of the structural themes highlighted in the report.

  Weaknesses

  2Q earnings are expected at -10% to +5% YoY, affected by the high base in 2Q25.

  Comparison

  Short-term earnings are not as strong as Deye’s, but the medium-term case is supported by the logic of rising overseas market share.

  Risks

  Project delivery timing, overseas demand, and price competition.

• Deye - A (605117.SS)

  Key OW name, with strong 2Q earnings guidance.

  Strengths

  2Q earnings midpoint is +85% YoY, with growth across solar inverters, energy storage inverters, microinverters, and energy storage battery pack shipments.

  Weaknesses

  High growth may create subsequent base pressure.

  Comparison

  Among the energy storage and photovoltaic equipment companies covered in the report, Deye has the strongest certainty for 2Q earnings.

  Risks

  Slower inverter demand, and pricing and competitive pressure in energy storage battery packs.

• Sungrow - A (300274.SZ)

  Key OW name, with short-term earnings under pressure but improved risk-reward.

  Strengths

  The report believes the recent share-price pullback caused by geopolitical risks does not yet fully reflect AIDC ESS/SST optionality.

  Weaknesses

  2Q earnings are expected to decline by a mid- to high-teen percentage YoY, with energy storage margins pressured by battery and electronic component costs.

  Comparison

  Short-term earnings are weaker than Deye’s, but medium-term optionality is more of a focus.

  Risks

  Energy storage ASP, lagged cost pass-through, overseas geopolitical risks, and margin pressure.

• Yangtze Power - A (600900.SS)

  OW name among renewable energy operators.

  Strengths

  2Q earnings are expected to grow by low- to mid-single digits YoY, matching generation growth.

  Weaknesses

  Growth elasticity is relatively limited.

  Comparison

  Compared with Longyuan, the earnings trend is more resilient.

  Risks

  Hydrology, generation volume, and power price changes.

• CGN Power (1816.HK)

  OW name among renewable energy/power operators.

  Strengths

  Improved generation supports fundamentals.

  Weaknesses

  2Q earnings are expected to be flat YoY, as weaker power prices offset the improvement in generation.

  Comparison

  Earnings stability is relatively strong, but short-term growth elasticity is not high.

  Risks

  Weaker power prices, and policy changes in nuclear power or power operations.

• Longyuan (0916.HK)

  Listed as Neutral in the report, with 2Q earnings under pressure.

  Strengths

  Still offers sector exposure as a new energy operator.

  Weaknesses

  2Q earnings are expected to decline by about 30% YoY, affected by pressure on wind and solar power prices and a higher curtailment rate.

  Comparison

  Performance is weaker than Yangtze Power and CGN Power.

  Risks

  Falling power prices, rising wind and solar curtailment, and declining project returns.

• LONGi Green - A (601012.SS)

  Main UW name.

  Strengths

  The report does not emphasize short-term advantages.

  Weaknesses

  It is in an unfavorable photovoltaic industry cycle, and anti-involution policies have not yet reversed the industry cycle.

  Comparison

  Compared with selected equipment and energy storage names, profit pressure is greater in polysilicon and the photovoltaic chain.

  Risks

  Supply-demand imbalance in the industry, falling prices, and continued losses.

• Tongwei - A (600438.SS)

  Main UW name.

  Strengths

  The report does not emphasize short-term advantages.

  Weaknesses

  Most companies in the photovoltaic polysilicon value chain are expected to remain loss-making in 2Q.

  Comparison

  Like LONGi, it is a representative photovoltaic chain name that the report sees as still in an unfavorable cycle.

  Risks

  Weak polysilicon prices, industry capacity reduction slower than expected, and delayed policy effects.

• Arctech - A (688408.SS)

  OW name but with risk of losses in 2Q.

  Strengths

  3Q momentum is expected to improve.

  Weaknesses

  Delays in shipments of key motor drive components for Middle East projects may postpone revenue recognition, creating a risk of losses in 2Q.

  Comparison

  Short-term visibility is lower than for Deye and Orient Cables.

  Risks

  Overseas project logistics, delays in key components, and postponed revenue recognition.

Key data

• Deye 2Q earnings guidanceRmb1.48bn-Rmb1.54bn; midpoint +85% YoY, +27% QoQGrowth is mainly driven by shipment growth in solar inverters, energy storage inverters, microinverters, and energy storage battery packs.
• Deye shipment growth assumptionsSolar inverters +30% QoQ; energy storage inverters +50% QoQ; microinverters +10% QoQ; energy storage battery packs +60% QoQThe report views these shipment increases as the main source of strong 2Q earnings.
• Yangtze Power 2Q earnings forecastLow- to mid-single-digit YoY growthExpected to be broadly in line with generation growth.
• Longyuan 2Q earnings forecastDown about 30% YoYPressure comes from lower wind and solar power prices and a higher curtailment rate.
• CGN Power 2Q earnings forecastFlat YoYImproved generation is offset by weaker power prices.
• Goldwind 2Q earnings forecast-10% to +5% YoY2Q25 turbine shipments created a high base due to project timing.
• Sungrow 2Q earnings forecastDown by a mid- to high-teen percentage YoYEnergy storage revenue recognition lags shipments, while rising battery and electronic component costs pressure margins.
• Coverage company price dateClosing prices on 2026-07-13The report lists company prices based on the close on July 13, 2026, unless otherwise noted.

Impact & implications

The investment implication of this report is that short-term earnings across the new energy sector are uneven, so allocation should not rely solely on sector labels; instead, investors should distinguish between companies with structural growth in orders, shipments, overseas market share, offshore wind, or energy storage, and companies still in an unfavorable cycle or under margin pressure. If 2Q earnings cause share-price volatility, the report tends to view pullbacks in fundamentally stronger companies as opportunities to add exposure.

Risks

• 2Q earnings may come in below market expectations due to high base effects, cost pressure, shipment delays, and revenue recognition timing falling short of expectations.
• Anti-involution policies in the photovoltaic industry chain have not yet reversed the industry cycle, and most polysilicon value chain companies may continue to post losses.
• Declining wind and solar power prices and rising curtailment rates may pressure earnings of new energy operators.
• Overseas projects in regions such as the Middle East may be disrupted by logistics, component delays, or geopolitical risks.
• Margins in the energy storage business may be affected by rising battery and electronic component prices.
• Share-price volatility and geopolitical risks may alter short-term risk-reward.

What to watch

• Whether Deye’s official 2Q results fall within the Rmb1.48bn-Rmb1.54bn guidance range.
• Orient Cables’ offshore wind orders, deliveries, and revenue recognition progress.
• Sungrow’s energy storage gross margin, AIDC ESS/SST orders, and market pricing.
• Changes in Longyuan’s wind and solar power prices and curtailment rate.
• The actual impact of anti-involution policies on supply-demand and pricing in the photovoltaic polysilicon value chain.
• Whether Goldwind’s rising turbine share in emerging markets materializes.
• Delivery of key components for Arctech’s Middle East projects and the recovery of 3Q revenue recognition.