Prices along the main PV chain stabilized in May, but profit recovery remains pressured by inventory and falling costs

Overview

This report is part of Goldman Sachs’ China solar profitability tracking series, which monthly tracks supply and demand, inventory, spot prices, input costs, and the implied trends in cash gross margin and EBITDA margin across photovoltaic sub-sectors. The core conclusion is that while prices along the main value chain stabilized temporarily in May, weak demand, elevated inventories, potential upstream supply additions, and lower module costs mean downside price risks have not yet disappeared.

Core views

Goldman Sachs believes that although prices along the main chain were broadly stable in May, trading activity was slow due to weak price expectations and limited module order visibility. Glass and film were the clearest weak links, with glass dragged down by inventory accumulation and film impacted by falling oil prices. On profitability, modules improved thanks to easing material costs, while glass deteriorated further. In stock selection, Goldman Sachs favors Maxwell for its new application opportunities, Hangzhou First for film price increases and unit-profit expansion potential, and Longi for its energy storage potential and EBITDA resilience from lower upstream prices; at the same time, it remains cautious on Rod Poly and Glass.

Analysis framework

The report mainly uses monthly industry chain tracking, combining China installations, module exports, and U.S. AC-side installations to estimate global module demand, and uses spot prices and input costs to estimate cash gross margin, unit gross profit, and EBITDA margin at each stage. Company target prices mainly use 2027E EV/EBITDA multiples discounted back to 2026E.

Methodology notes

• Industry tracking frameworkChina Solar Profitability Tracking

  Monthly tracking of supply and demand, inventory, spot prices, input costs, and cash profitability

  The framework observes supply-demand and inventory dynamics by sub-sector and uses spot prices and input costs to infer trends in cash gross profit and EBITDA margins for the relevant stages of covered companies.

• Demand estimation frameworkGlobal Module Demand Estimation

  Aggregation of China installations implied module demand, China module export volumes, and U.S. AC-side installations implied module demand

  The report synthesizes global module demand using three categories of indicators, noting that global module demand was 33GW in April 2026 and 156GW in 4M26, significantly below the full-year forecast path.

• Profitability estimation frameworkSpot Price-Implied Cash GPM / Unit GP

  Using spot prices and input costs to derive cash gross margin and unit gross profit

  The report notes that this estimation does not include company-level price discounts or premiums and may also differ from actual company operating results due to specific factory shutdown or maintenance schedules.

• Valuation frameworkEV/EBITDA Target Price Method

  2027E EV/EBITDA multiples discounted to 2026E

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

• Goldman Sachs proprietary frameworkGS Factor Profile

  Comparative percentile analysis of growth, financial returns, valuation multiples, and composite ranking

  This framework uses metrics such as sales, EBITDA, and EPS growth, ROE, ROCE, CROCI, and P/E, P/B, EV/EBITDA to compare stocks against the market and industry peers by percentile.

Asset mapping & comparison

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

• Maxwell

  Preferred name within the coverage universe

  Strengths

  Benefits from new application opportunities, with the target price using a combined EV/EBITDA valuation for the core business and new application orders.

  Weaknesses

  If demand for new applications falls short of expectations, willingness for experimental capital expenditure may weaken.

  Comparison

  Listed as one of Goldman Sachs’ priority preferred companies within its coverage universe.

  Risks

  Cancellation of new application orders, tighter solar equipment export controls, and slower-than-expected development in the semiconductor industry.

• Hangzhou First

  Preferred name within the coverage universe

  Strengths

  Benefits from solar film price increases and unit-profit expansion potential, while also having the possibility to expand into high-end non-PV businesses such as AI-PCB and solid-state battery packaging.

  Weaknesses

  If PV installations come in below expectations, capacity utilization and film ASP may come under pressure.

  Comparison

  Compared with the glass segment facing pricing pressure, Goldman Sachs places greater value on its film pricing and unit-profit elasticity.

  Risks

  Installations below expectations, slower-than-expected capacity expansion, slower-than-expected development of high-end non-PV businesses, and intensified procurement pressure for raw materials such as resin.

• Longi

  Preferred name within the coverage universe

  Strengths

  Has energy storage potential; declining upstream prices support EBITDA resilience, and BC technology may provide medium-cycle upside.

  Weaknesses

  Profit improvement still depends on progress in cost-reduction technologies and the pace of BC development.

  Comparison

  In a weak demand environment, Goldman Sachs believes it is relatively more resilient.

  Risks

  If demand exceeds expectations alongside strong execution of supply-side policies, Poly/Glass prices may rebound more strongly than expected; progress in cost-reduction technologies may be slower than expected; BC development may be slower than expected.

• Daqo ADR/A

  Cautious Rod Poly name

  Strengths

  The report does not disclose clear advantages.

  Weaknesses

  The Rod Poly segment faces potential supply increases and downside pricing pressure.

  Comparison

  Goldman Sachs describes Daqo ADR/A as Neutral/Sell.

  Risks

  Deterioration in upstream supply and demand, potential Poly supply increase in June, and continued price pressure from lower module costs.

• Tongwei

  Cautious Rod Poly name

  Strengths

  The report does not disclose clear advantages.

  Weaknesses

  Its polysilicon-related business falls within Goldman Sachs’ cautious coverage scope.

  Comparison

  Goldman Sachs describes Tongwei as Sell.

  Risks

  Supply increases, falling prices, and demand weaker than expected.

• Flat A/H

  Cautious photovoltaic glass name

  Strengths

  The report does not disclose clear advantages.

  Weaknesses

  Glass prices fell 7% MTD in May, cash profitability fell 10 percentage points, and inventory increased to 57 days.

  Comparison

  Goldman Sachs describes Flat A/H as Sell.

  Risks

  Continued accumulation of glass inventory, further price declines, and module demand weaker than expected.

• Module segment

  Industry chain segment with improving profitability

  Strengths

  Easing material prices drove a 2-percentage-point improvement in profitability MTD in May.

  Weaknesses

  Order visibility is weak, and demand has declined significantly.

  Comparison

  Compared with the glass segment, modules showed a more obvious short-term profitability improvement.

  Risks

  Further weakness in upstream prices and the adoption of low-cost metallization technology may put pressure on module pricing.

• Photovoltaic glass segment

  Industry chain segment with deteriorating profitability

  Strengths

  The report does not disclose clear advantages.

  Weaknesses

  Price declines, inventory accumulation, and falling profitability occurred simultaneously.

  Comparison

  Compared with the module segment, glass was the segment with more pronounced profitability deterioration in May.

  Risks

  Continued inventory accumulation, continued price declines, and a slower-than-expected demand recovery.

Key data

• May prices along the main chainBroadly flatTrading was slow, mainly affected by weak price expectations and insufficient module order visibility.
• Photovoltaic glass priceDown 7% MTD in MayThe report attributes this to continued inventory accumulation.
• Film priceDown 6% MTD in MayThe report attributes this to an 11% MTD decline in oil prices in May.
• Glass inventoryUp 8% to 57 daysInventory build is a key reason for the decline in glass prices and profitability.
• Module profitabilityImproved 2 percentage points MTD in MayMainly driven by easing material prices.
• Glass profitabilityDown 10 percentage points MTD in MayMainly dragged down by falling glass prices.
• Global module demand in April 202633GW, down 58% year over year and down 30% month over monthThis weighed on 4M26 demand performance and was below Goldman Sachs’ FY26 forecast path.
• Global module demand in 4M26156GW, down 30% year over yearBelow Goldman Sachs’ FY26 forecast path of a 12% year-over-year decline.
• China installations in April 20269.5GW, down 79% year over yearMarch was down 56% year over year to 8.9GW; 4M26 China installations were down 51% year over year to 51GW.
• China module exports in April 202618GW, down 16% year over year4M26 exports fell 2% year over year to 83GW, weakening from 3M26's 3% year-over-year growth.
• Regional demand month-over-month changesAsia-Pacific -56%, Africa -50%, Middle East -39%, European Union -26%The report notes that export demand weakened month over month across multiple regions.
• Maxwell target priceRmb278Based on 22x 2027E EV/EBITDA, discounted back to 2026E at an 8.3% cost of equity.
• Hangzhou First target priceRmb21Based on 13x 2027E EV/EBITDA, discounted back to 2026E at 10.5%.
• Longi target priceRmb26Based on 11x 2027E EV/EBITDA, discounted back to 2026E at 11.3%.

Impact & implications

The implication for the industry chain is that short-term price stabilization does not mean the industry profitability inflection point has been confirmed. The module segment may benefit temporarily from falling upstream prices, but weak demand, rising inventories, and declining costs will also suppress end-market price expectations; segments such as glass and film are more directly exposed to inventory, raw material, and pricing pressures. From an investment perspective, the preference is for stocks with new applications, unit-profit expansion, or cost resilience, rather than segments facing greater supply pressure or still-declining prices.

Risks

• Potential Poly supply may increase in June, which could further worsen upstream supply and demand.
• Module production costs are declining due to softer upstream prices and Tier 1 manufacturers adopting low-cost metallization technology, which may create downside pricing pressure.
• Global module demand is significantly below the full-year forecast path, especially with China installations falling sharply year over year.
• Glass inventory has built up to 57 days, continuing to weigh on prices and profitability.
• Company-level price discounts, premiums, as well as factory shutdowns or maintenance may cause spot price-implied profitability to deviate from actual results.
• Maxwell faces risks from insufficient demand for new applications, order cancellations, tighter export controls, and slower-than-expected progress in the semiconductor industry.
• Hangzhou First faces risks from installations below expectations, slower-than-expected capacity expansion, slower-than-expected progress in high-end non-PV businesses, and raw material procurement pressure.
• Longi faces risks from stronger-than-expected rebounds in Poly/Glass prices, slower-than-expected progress in cost-reduction technologies, and slower-than-expected BC development.

What to watch

• Whether Poly supply increases in June and whether upstream supply and demand deteriorate further.
• Whether module order visibility and end-market price expectations improve.
• Whether glass inventory days fall from 57 days and whether glass prices continue to decline.
• The pace of adoption of low-cost metallization technology by Tier 1 manufacturers and its impact on module production costs and pricing.
• Subsequent changes in implied demand from China installations, module exports, and U.S. AC-side installations.
• Whether Hangzhou First’s film prices and unit profitability continue to expand.
• Whether Longi’s energy storage business and BC technology progress are delivered.
• Changes in Maxwell’s new application orders and the export control environment.