Goldman Sachs Raises LONGi Target Price to RMB 26.00 on Strong ESS Potential

Overview

This report outlines Goldman Sachs’ updated investment view on LONGi Green Energy (601012.SS). The core thesis is that the market currently severely undervalues the company’s newly launched energy storage system (ESS) business. Although the traditional photovoltaic (PV) module business faces near-term headwinds—including surging silver prices and lower pricing under long-term contracts—the high-growth ESS business is expected to offset these negative impacts and drive overall profit structure optimization. Accordingly, Goldman Sachs raises LONGi’s target price by 38% to RMB 26.00 and reiterates its Buy rating.

Core views

The ESS business has emerged as a new growth engine. Following LONGi’s acquisition of a 62% stake in Suzhou Jingkong in January 2026, the company formally articulated its ESS business goals. Management guidance forecasts 6 GWh of ESS shipments in 2026 and RMB 70 billion in ESS revenue by 2030 (corresponding to ~90 GWh in sales volume). Goldman Sachs projects that LONGi’s global ESS market share will rise from 2% today to 11% by 2030, leveraging its global distribution network covering over 160 countries and strong brand recognition. By 2030, the ESS business is expected to contribute 39% of total revenue and 35% of total EBITDA, with ESS EBITDA growing at a 99% CAGR from 2027 to 2030. Existing businesses face short-term pressure, but technological upgrades present a turning point. Impacted by soaring silver prices and fixed-price long-term orders, module-level EBITDA per watt declined to RMB 0.01/W in Q1 2026—below expectations. As a result, Goldman Sachs lowers its average EBITDA forecast for existing businesses by 19% for 2026–2030. However, the company is accelerating deployment of its HPBC 2.0 modules, with shipments expected to exceed 65% of total module volume in 2026. HPBC 2.0 offers approximately a 10-percentage-point gross margin premium versus mainstream TOPCon products. Additionally, LONGi plans to apply its low-silver-consumption AMC technology across 20 GW of capacity by June, which is expected to drive an inflection point in operating profit in Q3 2026. Valuation re-rating reflects higher growth expectations. Given the enhanced growth outlook driven by the ESS business (raising the 2027–2030 EBITDA CAGR from 21% to 31%), Goldman Sachs raises its target valuation multiple from 11x EV/EBITDA to 15x. This multiple aligns with LONGi’s historical average but reflects a higher-quality earnings mix. Scenario analysis indicates the current market pricing implies only a 2% global ESS market share for LONGi by 2030—versus Goldman Sachs’ 11% forecast—highlighting a substantial expectation gap.

Analysis framework

Goldman Sachs adopts a sum-of-the-parts (SOTP) approach combined with growth-equity valuation. First, it conducts a bottom-up business breakdown, separately forecasting revenue and profits for traditional PV businesses (wafers and modules) and the emerging ESS business. For the ESS business, key drivers analyzed include global demand growth, cross-selling ratio, and regional market penetration. Second, rather than relying solely on historical P/E comparisons, the valuation methodology uses EV/EBITDA multiples, adjusted for shifts in business composition. Finally, scenario analysis (Bear/Base/Bull) quantifies the expectations embedded in current market pricing, thereby substantiating the upside potential. This analytical framework underscores the pivotal role of a 'second growth curve' in reshaping valuations for traditional manufacturing champions.

Methodology notes

• Valuation MethodologyEV/EBITDA valuation

  Enterprise Value Multiple Valuation

  The report uses EV/EBITDA—not P/E—for valuation because this metric better isolates capital structure and depreciation policy effects, making it especially suitable for capital-intensive, rapidly expanding companies such as PV and energy storage firms. As the high-growth ESS business increases its share of the overall mix, the firm assigns a higher multiple (15x vs. 11x).

• Industry/Value Chain Analysis FrameworkUpstream-Midstream-Downstream Value Chain Transmission

  Cross-Selling Ratio Analysis

  The report estimates ESS sales volume via the 'module-to-storage' cross-selling ratio—leveraging LONGi’s large existing module customer base to sell storage solutions to the same customers. This reduces customer acquisition costs and accelerates market share gain. It is a critical metric for evaluating integrated manufacturers’ potential to expand into adjacent businesses.

• Corporate Fundamentals & Financial FrameworkOperating/Financial Leverage Analysis

  Cost Structure Mitigation via Technological Iteration

  The report analyzes how rising raw material costs (e.g., silver) erode gross margins—and how new technologies (HPBC 2.0 and low-silver AMC) mitigate cost pressure by improving efficiency and reducing silver consumption per watt. This highlights how technological iteration can restore profitability during cyclical troughs in manufacturing industries.

Asset mapping & comparison

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

• LONGi Green Energy (601012.SS)

  Direct beneficiary; ESS business unlocks second growth curve

  Strengths

  Global distribution network covering 160+ countries, strong brand equity, leading HPBC 2.0 technology

  Weaknesses

  Existing module business constrained by silver prices and long-term contract pricing, resulting in near-term earnings volatility

  Comparison

  Compared to pure-play inverter/storage players like Sungrow, LONGi benefits from stronger module-customer bundling capability; compared to other module makers, its BC technology pathway offers differentiated gross margin advantages

  Risks

  ESS development falls short of expectations, sustained high silver prices, slower-than-expected adoption of BC technology

Key data

• Target PriceRMB 26.00Raised 38% from prior RMB 18.80
• 2030E ESS Revenue ForecastRMB 69 billion95% CAGR from 2026–2030
• 2030E Global ESS Market Share11%Significant increase from 2% in 2026
• 2027–2030E EBITDA CAGR31%Markedly raised from prior forecast of 21%
• 2026E HPBC 2.0 Shipment Share>65%Further raised from prior guidance of >50%
• Valuation Multiple15x EV/EBITDABased on 2027E, raised from prior 11x

Impact & implications

For LONGi Green Energy, this signals a strategic shift from a pure PV module manufacturer to an integrated 'PV + Storage' energy solutions provider. In the near term, investors should tolerate margin volatility caused by silver price swings and long-term contract pricing, while monitoring confirmation of the Q3 2026 operating profit inflection point. Over the longer term, the high-growth ESS business will reshape the company’s valuation logic—enabling it to command a premium valuation relative to pure-play module manufacturers. For the industry, LONGi’s channel-driven entry into energy storage may intensify competitive pressure on Tier-2 and Tier-3 storage integrators, accelerating industry consolidation.

Risks

• If demand exceeds expectations and supply-side policy implementation proves effective, polysilicon/glass prices could rebound more sharply than anticipated
• Adoption of cost-reduction technologies (e.g., low-silver-consumption tech) proceeds more slowly than expected
• BC technology development lags, diminishing the likelihood of a near-term margin inflection
• ESS business growth falls short of expectations

What to watch

• New supportive policies in key regions (e.g., EU, Australia)
• Breakthrough progress in overseas markets
• Quarterly shipment volumes and margin results—particularly the operating profit inflection point in Q3 2026