In this era of severe involution and dramatic fluctuations, as long as one holds enough patience and confidence, one can always wait for a few critical moments, such as this sudden bull market. In the face of opportunities, choices often outweigh efforts, and cognition often outweighs diligence.

From a more macro perspective, from the perspective of the redistribution of social wealth, what profound impacts will this unprecedented "saving balance sheets" super action have on the stock market and the real estate market? Is this the last opportunity for wealth transfer?

From the perspective of investing in photovoltaic new energy stocks, some people have already broken even or made a profit, many are still on the way to recovery, such as the millions of shareholders of Longi Green Energy. In this bull market, which links and companies have the opportunity to stand out and become the Longi Green Energy of the last round, becoming the pearl on the crown?

Advertisement

From the perspective of the healthy development of the photovoltaic new energy industry, how will the capital market prosperity brought by quantitative easing and the optimization of the investment and financing environment affect the photovoltaic industry, which is undergoing a profound reshuffling?

01 Who missed this bull market?

Some people are fully loaded, some people are out of the market, and some people have "invested in the National Army before liberation."

The zero-sum game in the capital market does not create value itself, but it will redefine asset prices and redistribute social wealth. In fact, only a very small number of people can sensitively capture the battle opportunities at the first time.

When the bull market comes, it's enough to be foolish at the beginning, as long as the luck is not too bad, you can make money. Those who lose money or earn less are often because they are too smart. There are many well-known companies and institutions that have perfectly missed the market and fallen before dawn.

There are many similar examples recently:Take Ctrip as an example, the global investment company Prosus sold 14.5 million shares of Ctrip last week through block trades at a price of $51.40 per share. Ctrip's current stock price is $68.43, and the institution missed out on nearly $250 million in additional earnings. Baidu also sold 10.5 million shares of Ctrip last week, losing an additional $180 million in potential gains.

Tencent's industrial investments can be considered legendary, with a scale and strength that are not inferior to its main business. However, it was Tencent, which once successfully incubated Futu, that also stumbled before dawn. On September 26th, with the A-share market's favorable situation already clear, Tencent still chose to reduce its holdings in Futu by $200 million. Tencent's reduction was around $80, and before the long holiday was over, Futu's stock had already soared to $128.

Time will indeed reward those honest companies and investors. Recalling the buybacks and increases advocated by regulatory authorities this year, some listed companies have genuinely bought round after round with real money. If it's not enough, major shareholders even personally buy in. However, there are also companies that make a lot of noise but do little, acting coyly. This sudden market trend probably made many companies that have not yet completed their increases regret not being more decisive. If they had known, they would not have been so stingy or dragged their feet.

Take the photovoltaic industry as an example. In terms of company size and market value, GoodWe might be one of the photovoltaic inverter companies with the smallest buyback efforts, only a mere 5 million to 10 million yuan, which was completed as early as May this year. Of course, there are also some leading companies whose buyback efforts do not match their scale, strength, industry status, stock price deviation, and cash on hand. They are very stingy when it comes to saving their market value, and I will not name them here.

Photovoltaic companies with strong buyback and increase efforts include Tongwei Co., Ltd. and Sungrow Power Supply Co., Ltd. Recently, Tongwei announced that the company has spent 1.8 billion yuan on buybacks, with a buyback price ranging from 17.43 yuan per share to 22.94 yuan per share. In addition, the major shareholder, Tongwei Group, has also increased its holdings by 800 million yuan, with an increase price of 20.69 yuan per share. As of the most recent trading day, Tongwei's stock price is 22.83 yuan. From the current stage, this round of buybacks and increases is at least not at a loss.

This year, the stock market has been falling continuously. Some responsible companies, even when it comes to the lock-up period, will voluntarily commit to a lock-up and postpone the reduction time out of consideration for stabilizing the stock price. Of course, there are also many large and small non-holders who are eager to reduce their holdings as soon as the lock-up period expires. "Personal fund needs" and "improving life" are all understandable as long as they are legal and compliant. However, those who reduced their holdings at the bottom of the market in the past may feel a mix of emotions. For such cases, we can only say "you deserved it."

There are also companies that have major shareholders reducing their holdings on the left hand and the listed company buying back shares on the right hand, such as the energy storage company ShengHong Co., Ltd. After the lock-up period, the company's controlling shareholders began to reduce their holdings. The most recent reduction was on August 26th this year, when they reduced 1.88 million shares at a price of 16.64 yuan. By September 30th, ShengHong's stock had risen to 27.56 yuan. While the major shareholders were reducing their holdings, the company was also buying back shares, but only 750,000 shares.

Although the vast majority of Chinese-style buybacks are used for equity incentives, unlike Apple and META, which buy back and cancel to increase share capital, it is at least an attitude that reflects confidence in the company's future development. In a sense, it is a scale. When this round of bull market trends diverge, it may become one of the reference bases for investors' votes.

Carbon wants to say that, in addition to the small investors who have been hurt and cut their positions and left the market, there may not be many people and institutions worth sympathizing with for missing this round of the bull market.

02 Insights from the Japanese stock marketAt the Lujiazui Financial Forum in June this year, the central bank governor Pan Gongsheng clearly stated in his speech that incorporating the buying and selling of government bonds into the monetary policy toolkit does not represent an intention to engage in quantitative easing (QE).

Now, mainstream economists have defined the current round of economic revitalization measures as China's version of quantitative easing, and even an action to save balance sheets. The US dollar rate cut merely created an opportunity. This is very similar to the lifting of YQ lockdowns, which seemed sudden but was actually a natural progression, following a logical sequence.

In June 2023, Koichi Hamada, Chief Economist at Nomura Research Institute, explained Japan's "lost three decades" using the balance sheet recession theory in a public speech. He believes that when asset price collapses lead to the deterioration of the private sector's balance sheets, the latter will pursue debt minimization, leading to a sustained economic recession. Both the United States and Japan have experienced balance sheet recessions. He believes that China is facing the risk of a balance sheet recession.

Gao Shanwen from Anxin Macro also holds a similar view. He believes that due to the interaction of factors such as negative population growth and structural changes, the downturn in the real estate market, unprecedented difficulties faced by private enterprises, and geopolitical uncertainties, residents and businesses have reduced their expectations for China's long-term economic growth. They adjust their economic behavior accordingly, manifesting as a general reduction in consumption, lowering of debt, and cutting of investments, thus forming a Japanese-style balance sheet recession.

There are no two identical leaves in the world. The Chinese economy and the Japanese economy in the mid-to-late 1980s have essential differences in terms of scale, development stage, driving mode, especially the central government's ability to control and mobilize resources, and decision-making mechanisms. However, it is still necessary for us today to further study the Japanese stock market of the 1990s. Our stock market will also be differentiated in the future. How was the Japanese stock market differentiated during the rebound in the 1990s? What kind of logical support is behind it? Perhaps there are some common laws.

In the 1990s, Japanese enterprises generally had operational problems, asset prices collapsed, causing the balance sheets of Japanese non-financial enterprises to衰退 rapidly, the population structure entered an aging phase, coupled with insufficient effective demand, the overall profit margins of non-financial enterprises significantly declined.

From an external perspective, Japan was facing the anti-globalization challenge of Japan-US trade friction at that time. As an economy with severely limited endogenous growth momentum, and the rising country of the last round of globalization (China is the rising country benefiting from the WTO and globalization after Japan), Japan needed to actively respond to the challenges brought by the reshuffling of globalization on the one hand, and on the other hand, it also needed to integrate into the new round of globalization with a positive attitude and a higher position in the value chain division of labor.

From the perspective of downstream demand, the demand side of Japanese manufacturing was generally weak in the 1990s, but there was still growth in orders for highly competitive departments - the representative industry was semiconductors, far stronger than general industrial manufacturing. In addition, another representative industry of Japan with strong competitiveness - automobiles also showed relatively better order growth in some years between 1990-2010, and the law reflected was no longer winning with low prices, but winning with high quality.

The third major theme supporting the stage rebound of the Japanese stock market is consumption. In the 1990s, the substitution of domestic products in Japan's consumer industry significantly accelerated - on the one hand, residents' willingness to consume unit prices significantly decreased, and the demand side's affordable demand and the supply side's affordable domestic products matched, with affordable domestic consumer products represented by Uniqlo, Saizeriya, etc., showing higher growth. In addition, it needs to be emphasized that consumption substitution is not a downgrade of consumption. The essence of consumption substitution is rational consumption with high cost performance without sacrificing happiness/sense of gain. Reflecting in our country's consumer market, similar laws are also shown.

Of course, technology is the most important theme of this era, and it is also the main driving force for the rise of the Japanese stock market during the lost 30 years.Taking the U.S. stock market as an example, over the past 15 years, the S&P 500 has soared from 667 points to 5,767 points, while the Nasdaq, during the same period, has risen from 1,266 points to a peak of 16,212 points. From this perspective, our STAR 50 is highly likely to outperform the CSI 300.

The U.S. stock market mapping was the primary logic for pricing Japanese technology stocks in the late 1990s. As a relatively mature market, the U.S. stock market has a relatively significant impact on other global markets in terms of important technological innovations. Despite the fact that Japan had few internet technology companies with top-tier competitiveness during the PC internet wave at the end of the 20th century, it could still enjoy the mapping effect of the U.S. technology industry.

The mapping path of U.S. stocks to Japanese technology stocks can generally be divided into three types: industry chain mapping, competitor mapping, and secondary mapping.

Today's China is by no means comparable to Japan at that time. Humanity is now on the cusp of a scientific singularity, on the eve of a technological explosion, which is also far from comparable to the past. So, benchmarking against the U.S. stock market's 15-year bull run, who will be the Nvidia, Apple, and Tesla of today and future China?

We can use this question to guide our thinking and decision-making.

03 Photovoltaic supply and demand mismatch, is it possible that it is just a man-made disaster?

Fate always plays tricks on people, and photovoltaics have always been plagued by misfortune.

On September 19th, when seven photovoltaic magnates participated in the recording of the CCTV "Dialogue" special program "Where is the confidence in 2024 photovoltaics?", the market was still pessimistic and needed to huddle together to boost confidence.

Now, it seems that the market environment has changed somewhat, yet it appears to remain as usual. Photovoltaic stock prices are rebounding, but photovoltaic module prices continue to disappointingly decline. The rise of photovoltaic concept stocks is a general increase, a correction, a rectification, and a return from abnormal to normal. What about the photovoltaic industry mired in the quagmire of price wars? Who will help it rectify its mistakes, and who will help it recover?!

The modest Carbon Rush has discovered a very strange phenomenon: overcapacity or supply and demand mismatch in various industries is more severe than in photovoltaics, but the internal competition is far less fierce than in the photovoltaic sector.Comparing steel, electrolytic aluminum, and home appliances might seem far-fetched, but at least we can compare with lithium batteries. The supply and demand mismatch of lithium batteries is far more severe than that of photovoltaics; why hasn't there been a cutthroat competition like in the photovoltaic industry?

In 2023, the total nominal production capacity of global lithium batteries was 2568 GWh, with a total output of 1210 GWh and a total demand of 850 GWh.

In 2024, the nominal production capacity of global lithium batteries is projected to be 30000 GWh, with a forecasted total output of 2344 GWh and a forecasted total demand of 1356 GWh.

Based on the above data, the global utilization rate of lithium batteries in 2023 was only 47%, and the inventory ratio (the proportion of inventory to total output) was 30%. In 2024, the global utilization rate of lithium batteries is 78%, and the inventory ratio is as high as 42%.

These figures seem much more terrifying than those of photovoltaics, right? But what is the actual situation?

In 2024, the actual utilization rate of global lithium batteries was only 47.42%. In recent months, the utilization rates for June, July, and August of this year were 63.71%, 49.66%, and 47.42%, respectively, showing a downward trend each month. However, the operating conditions of lithium battery companies have not generally deteriorated. Except for upstream material companies, the entire industry has not seen the overall cash loss situation that occurred in the photovoltaic industry.

The supply and demand situation of photovoltaics is actually far less severe than that of lithium batteries. In 2024, the nominal production capacity of the entire industry is 1000 GW, and the global photovoltaic installation is expected to be around 600 GW this year. That is to say, even if all the nominal production capacities are realized, the ratio of demand to supply is only 60%. So why does the photovoltaic industry, which has a less severe supply and demand imbalance than lithium batteries, engage in such intense competition?

The Carbon Rush believes there may be three reasons:

Firstly, the customer structure of photovoltaics in the domestic market is more singular than that of lithium batteries. Under the centralized procurement mechanism and system of the top five and six small companies, the principle of the lowest price wins. Photovoltaic companies, in order to win bids, do not hesitate to bid below cost, which leads to price trampling and subsequently affects the spot market prices.

Secondly, some leading companies initiated multiple rounds of price wars at the end of last year and the beginning of this year, trying to outcompete their peers. As a result, not only did they fail to outcompete their peers, but they also plunged the entire industry into a vicious cycle of price wars that became uncontrollable.Thirdly, in the upstream segments such as silicon materials and silicon wafers, leading companies have initiated a reshuffling battle, with full capacity utilization, leading to a stampede effect on the downstream battery and component segments. The downstream players are left speechless; they want to raise prices but cannot.

The industry reshuffling of silicon materials and silicon wafers could have been completed swiftly, but unexpectedly, with the support of government industrial recruitment and the assistance of capital, this elimination contest turned into a protracted war that defied market rules—whoever has cheaper electricity costs can survive longer. This was far beyond the expectations of the leading companies that initiated the contest, and they could only go with the flow, leading to an uncontrollable situation.

If the above three points hold true, then the cutthroat competition in the photovoltaic (PV) industry is less a natural disaster and more a man-made calamity. As Li Junfeng said, no industry has been as clumsy as photovoltaics!

The elasticity of demand for photovoltaics may far exceed our imagination.

At the recording site of the CCTV "Dialogue" special program "Where is the Confidence in 2024 Photovoltaics?", Liu Hanyuan, Chairman of the Board of Directors of Tongwei Group, passionately appealed:

Our confidence in photovoltaics primarily stems from the potential size of the future market.

Firstly, we should be able to estimate the scale of the energy and electricity market when humanity basically achieves carbon neutrality and renewable energy takes the lead, especially with photovoltaics as the primary protagonist, between 2050 and 2060.

Secondly, to realize our predictions for the future, given that photovoltaic power generation currently accounts for only 5% of the energy structure, our country needs at least 50 to 70 gigawatts of photovoltaic installations annually to achieve carbon neutrality within the next 20 to 30 years.

Thirdly, our decision-making bodies and government officials should understand the pace of photovoltaic enterprise development based on the above scientific data, how to be responsible and take on necessary risks, start our machines, optimize our mechanisms, and accelerate the application of photovoltaics.

04 Feathers Fly to the SkyNo one can resist a bull market.

Today, this photo has gone viral in social circles. That's right, during this year's National Day holiday, it is said that 10 million stock investors opened accounts—no one knows how many of them reopened accounts after having closed them before.

What shocked the Carbon Rush today was an announcement from Bangjie Shares: The company's controlling secondary subsidiary, Yangzhou Bangjie New Energy Technology Co., Ltd., received on September 30, 2024, the Civil Ruling (2024) Su 1091 Bankruptcy Application No. 12 from the People's Court of Yangzhou Economic and Technological Development Zone, which allowed the applicant, Jiangsu Universal Health Physical Examination Co., Ltd., to withdraw its bankruptcy reorganization application against Yangzhou Bangjie.

If some real estate companies with poor performance and debt defaults are fortunate to go from the ICU to the KTV, then this round of quantitative easing is a bit like Bangjie Shares, whose core subsidiary had already been applied for bankruptcy reorganization, lying in the morgue, suddenly opening its eyes when the bull market came—"I'm still here, help me up and try."

The bull market has come, and some photovoltaic companies have also received orders, because now a lot of money is pouring in, and increasing market value has become very important and urgent.

The most timely, of course, is the BC equipment concept stock—Dier Laser. On October 8, Dier Laser issued an announcement about the signing of a significant daily operating contract: Recently, the company and its subsidiaries signed a "Purchase Contract" with the photovoltaic industry leader and its controlled entities. This contract is a significant daily operating contract, with a total contract amount of 1,228,628,300 yuan (RMB, tax excluded), accounting for 76.36% of the company's audited main business revenue in 2023. The subject of the contract is "laser equipment and modification."

It is unknown exactly which day "recently" refers to, but it should not be now. The "photovoltaic industry leader" is most likely Longi Green Energy, which is expected to make a big move on October 11. From the LCOE perspective, the answer to which is better between BC and TOPCon is already clear. However, this is not important. Industry is one thing, and the capital market is another. Let's enjoy this capital feast together.

Best wishes to the millions of shareholders of Longi Green Energy, including the "friend of time" whose holdings have returned to more than 5%, and of course, the companies on the BC industry chain, including the HBC concept stock—Jinyang New Energy, which Carbon Rush has previously paid attention to. If it were not for the patent lawsuit initiated by Jiajia Wei Chuang, there should actually be another photovoltaic equipment company in this capital feast.

Yuneng Technology, which once topped the list of declines among all photovoltaic companies, also won a large energy storage order before the long holiday. On October 8, the company issued a voluntary announcement:

On September 30, 2024, it received the "Winning Notice" from Shenzhen KunTeng Energy Storage Co., Ltd. Tianjin Aolain (Carbon Rush note: Yuneng Technology holds 55%) won the bid for the Shenzhen KunTeng 100MW/400MWh shared energy storage project's general contracting (EPC), with a winning amount of 435,238,300 RMB (including tax).The bull market has arrived, and regardless, these companies are actually run by those who are foresighted and perceptive. It remains to be seen whether the people lining up to open accounts during the long holiday will fall into the same trap as investors in the previous cycle, mistakenly investing in photovoltaics.