Order Improvement But Valuation Remains High, Maintain Underweight Rating on China Concept Stocks

Overview

This report evaluates the recent operational performance and market prospects of Maxwell~A (300751.SS). Although the company's 1Q26 orders improved, with revenue declining but gross margin increasing, the institution believes the current stock price already fully reflects market optimism about profit prospects, especially considering the hype around the space solar concept, making current valuations unattractive. The institution maintains its 'Sell' rating with a target price of Rmb108.

Core views

The institution points out that while Maxwell's 1Q26 orders were strong, revenue declined year-on-year but gross margin improved, indicating increased overseas sales contribution. However, the stock price has risen over 170% since late November, driven mainly by hype around the space solar concept, and the current P/E ratio has reached 53x/41x (2027/2028 forecasts), significantly higher than the historical average of 27x. The institution believes the market may have already priced in order growth expectations for the next few years (2028-30), making order sustainability key. Additionally, while the company's HJT technology is leading, the institution expects it will struggle to compete with TOPCon technology in terms of cost over the next 2-3 years, and industry cyclicality also impacts capital expenditure plans for new entrants.

Analysis framework

The institution employs a Sum-of-the-Parts (SOTP) valuation approach, dividing the company's business into solar cell manufacturing equipment and semiconductor/display manufacturing equipment segments, assigning P/E multiples of 15x and 30x, respectively. This method helps understand the market positioning and profit potential of different business segments. The institution also compares historical data and market expectations to assess whether current valuations are reasonable. Additionally, the institution references financial metrics, profitability, cash flow status, and management views on future orders and industry trends to comprehensively evaluate the company's investment value.

Methodology notes

• Valuation MethodSOTP Valuation

  Sum-of-the-Parts Valuation

  Valuing the company by breaking it into multiple business units and summing their individual valuations. Suitable for diversified enterprises, providing more accurate reflection of each business segment's value.

• Industry Analysis FrameworkSupply-demand framework

  Supply-Demand Analysis

  Analyzing supply-demand dynamics in the company's industry (solar equipment) to assess order trends, market demand, and price movements' impact on profitability.

• Company Fundamentals & Financial FrameworkFree cash flow analysis

  Free Cash Flow Analysis

  Evaluating capital expenditure capacity and operational efficiency by analyzing changes in free cash flow (FCFF), assessing financial health.

• Industry Analysis FrameworkIndustry Chain Up-Downstream Transmission

  Industry Chain Transmission Analysis

  Analyzing relationships within the solar industry chain, such as raw materials, equipment, and end-use applications, to understand how order improvements drive overall business.

Asset mapping & comparison

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

• Maxwell~A(300751.SS)

  Benefits from solar equipment order improvement and overseas sales growth

  Strengths

  Leading HJT technology, holding over 70% market share

  Weaknesses

  High valuation, HJT cost competitiveness lacking

  Comparison

  Compared to peers, technologically advanced but valuation is expensive

  Risks

  Order sustainability, industry cyclicality, HJT cost competition

Key data

• Current Stock PriceRmb249.66As of May 29, 2026
• Target PriceRmb108.00Unchanged, approximately 56.7% below current price
• 2026 Forecast P/E113.3x2026 forecast PE
• 2027 Forecast P/E60.7x2027 forecast PE
• 2028 Forecast P/E43.0x2028 forecast PE
• Gross Margin (2026Q1)51.4%Up 22.3 percentage points year-on-year, benefiting from overseas sales
• Contract Liability Growth Rate+38% qoqReflecting new order improvement
• Operating Cash FlowRmb1.9bn2026Q1, significantly improved year-on-year

Impact & implications

The institution believes that despite order improvement and gross margin expansion, the current stock price already reflects expectations for high-growth concepts like space solar, leading to elevated valuations. If future orders fail to materialize, the stock faces downside pressure. Additionally, HJT technology's lack of cost competitiveness may impact the company's future competitiveness. Investors should closely monitor order sustainability and industry cyclicality, carefully evaluating long-term investment value.

Risks

• Order sustainability risk
• HJT technology cost competitiveness lacking
• Industry cyclicality impacting capex

What to watch

• Future quarter order trends
• Changes in overseas customer orders
• HJT technology development and cost optimization progress