China's solar industry is suffering from a massive loss due to falling prices

Analysts say that restructuring the industry in order to reduce oversupply can help it return to profitability.

Longi Green Energy, in a rare positive development, saw its net loss shrink to 2.6 billion Yuan ($364million) from 5.2 billion Yuan a few months earlier.

Analysts at Huatai Securities in a note published on Monday attributed this improvement to "strengthened management", which led to lower costs and asset impairment losses. A surge in solar panel installations in the domestic market due to frontloading also helped sales.

A series of meetings with a wider circle of government ministers has shown that the authorities are more serious about a campaign against deflationary pricing wars where companies sell below cost in order to undercut their competitors.

Huatai analysts stated that progress on domestic "anti-involution" measures had been smooth. This could support a recovery in industry chain profitability.

Losses of other top manufacturers have increased.

Jinko Solar reported a net loss of 2.6 billion yuan in the first half, up from 87 million yuan one year ago. Jinko blamed falling solar module costs on rising production capacity and supply-demand imbalances, as well as trade barriers.

Trina Solar's net loss jumped to 2.9 billion yuan compared to the 526 million yuan profit it had a year ago, due to an increase in module sales but a fall in prices.

Citi analysts claim that the energy storage division of Trina recorded its first ever quarterly profit during the second quarter. According to a filing in June, Trina has invested 800 million yuan as a sign of its future expansion.

JA Solar reported a loss of 2.58 billion yuan compared to 874.2 millions a year ago. Tongwei, however, had the largest loss, with 5 billion yuan - up from 3.1 million yuan a year before.

Analysts such as Huatai Securities, Citi, and others maintained a “buy” rating for Tongwei, based on their expectation that Tongwei's upstream polysilicon sector, where it is a major participant, will benefit the most from restructuring.

(source: Reuters)