Yangtze River Business Daily news ● Yangtze River Business Daily reporter Ming Hongze
Under the high PV boom, the risk of large-scale expansion of the industry may already exist.
On the evening of December 7, A-share company Jingyuntong (601908.SH) announced that it intends to invest 5.5 billion yuan to build a 22GW high-efficiency monocrystalline silicon rod and slice project in Leshan, Sichuan. This is the second phase of the company's construction project in Leshan. In the first phase of the project, the company plans to build 12GW of monocrystalline rods and slices.
The Reporter of The Yangtze River Business Daily combed and found that since last year, Beijing Yuntong has expanded production on a large scale. At present, the projects under construction include the first phase of the Leshan Jingyuntong 12GW project, the Wuxi Jingyuntong Technology 10GW project, and the Wuhai project has not yet been officially constructed.
If all these projects are successfully completed, Jingyuntong will add 54GW of new production capacity.
Large-scale expansion of production is bound to lead to financial pressure on Beijing Express. As of the end of September this year, the company's book funds were about 3.6 billion yuan, and 5.5 billion yuan was invested in the construction of projects, with a gap of about 1.9 billion yuan.
Judging from the information disclosed by Jingyuntong, the company does have a problem of insufficient production capacity. On December 7, the company signed a sales order of about 3.6 billion yuan with A-share company Aixu shares, which is expected to be delivered within 2022.
Last year's sales of 314 million yuan, next year's sales of 3.6 billion yuan, a 10 times growth rate, the market questioned Jingyuntong indigestion. In the case of the emergence of an industry price war, how to avoid the risk of large-scale expansion of Beijing Express?
Whether the 3.6 billion large order can be executed is in doubt
Winning a big order is originally a good thing, but for Jingyuntong, it is necessary to be vigilant against good things becoming bad things.
On the evening of December 7, Jingyuntong announced that Wuxi Jingyuntong, a wholly-owned subsidiary, signed the "Silicon Wafer Procurement Framework Contract" with Guangdong Aixu, Zhejiang Aixu, Tianjin Aixu and other buyers. The two parties agreed that from January to December 2022, the buyer would purchase 600 million monocrystalline silicon wafers from Wuxi Jingyuntong. According to the current market price (converted with reference to the average price of monocrystalline silicon wafers newly announced by PVInfoLink) and the scheduling plan, the total sales amount is expected to be about 3.6 billion yuan (including tax).
The announcement shows that the pricing mechanism is based on the current market conditions, the buyer and seller negotiate friendly, and adopt the monthly bargaining method for pricing. The company said the final realized sales amount could fluctuate with market prices. The above sales amount is an estimated amount and does not constitute a performance commitment or performance forecast. In response to this sales contract of up to 3.6 billion yuan, Jingyuntong said that if the contract is successfully performed, it may have a positive impact on the company's current operating income.
What does the sales order of 3.6 billion yuan mean for Jingyuntong?
In 2020, Jingyuntong achieved operating income of 4.056 billion yuan, an increase of 97.15% year-on-year. In the first three quarters of this year, the company's operating income was 3.782 billion yuan.
The large order of 3.6 billion yuan is close to the sales revenue in the first three quarters of this year, close to 88.76% of the annual operating income in 2020.
According to the annual report, the sales revenue of Jingyuntong silicon wafer products was 1.698 billion yuan, accounting for about 41.86% of the operating income of the current period. In this year's semi-annual report and third quarterly report, the company has not disclosed the sales revenue of silicon wafer products. It can be seen that the sales revenue of 3.6 billion yuan of silicon wafers will have a significant impact on the operating performance of Jingyuntong.
Silicon wafers are the upstream industry of photovoltaics. Since the beginning of this year, affected by various policies, the photovoltaic industry has flourished, and the price of silicon wafers of various specifications has risen to a certain extent. However, the price of silicon wafers has recently declined.
A large order of 3.6 billion yuan is indeed a good thing. However, whether Jingyuntong can be truly fulfilled is highly questioned.
Jingyuntong's production capacity is close to saturation. According to the 2020 annual report, the output of monocrystalline silicon wafers of Jingyuntong is 1.016 billion pieces, the capacity utilization rate is 94.20%, the production and marketing rate reaches 100.16%, and there is no production line under construction.
However, the Wuxi Jingyuntong Technology-10GW project, which started construction in March this year, was put into operation at the end of October this year, and the first phase of the Leshan project is expected to be put into operation at the end of this year. However, there is a process from production to capacity ramp-up and mass production.
It is worth mentioning that this year's semi-annual report disclosed that Tongwei Co., Ltd. and Jiangsu Runyang Yueda Photovoltaic Technology Co., Ltd. intend to purchase 960 million monocrystalline silicon wafers and 946 million pieces from Jingyuntong respectively, with delivery time from January 2021 to 2023, and the total sales amount is expected to be 8.950 billion yuan.
In 2020, the amount of purchases from Beijing Express by Aixu Co., Ltd. and its subsidiaries was 314 million yuan, and the purchase amount in 2022 soared 10 times. How does JingYuntong guarantee delivery?
In 2020, Jingyuntong is the third largest supplier of Aixu shares, and in 2020, the company's sales of silicon wafers to Aixu shares accounted for about 18% of the company's silicon wafer sales revenue in the current period.
On the other hand, there are also questions about whether Aixu shares have the ability to perform the contract.
On November 12 this year, three subsidiaries of Aixu Co., Ltd. signed a procurement contract with Jiangsu Meike Solar Technology Co., Ltd. to purchase 1.6 billion monocrystalline silicon wafers from the other party, with an estimated amount of 11 billion yuan. Among them, 400 million pieces in 2022, the estimated amount is 2.75 billion yuan.
In order to cope with the increase in the price of silicon wafers and the supply of silicon wafers, Aixu co., Ltd. continues to cultivate and develop new suppliers. In the first quarter of this year, the number of silicon wafer suppliers was 28, the amount of the top three suppliers accounted for 80.74%, the number of suppliers increased to 48 in the second quarter, and the proportion of the top three suppliers fell to 60.43%.
Constantly developing suppliers and frequently signing procurement contracts, the performance ability of Aixu shares has also been questioned.
A surge of 54GW in production capacity requires a need to guard against market changes
Whether Jingyuntong can perform the contract depends on the company's expansion progress and mass production.
Since last year, Jingyuntong has implemented a rather radical expansion plan.
In November last year, Jingyuntong announced that it intends to invest in the construction of 24GW of single crystal rods, cut-square projects and related supporting facilities in Leshan, Sichuan, with a total investment of 7 billion yuan, of which the first phase of the project is 4 billion yuan, and 12GW of rods, cutting-square and related supporting facilities will be built.
In March this year, the construction of the Wuxi Jingyuntong Technology 10GW project, the Yangtze River Business Daily reporter did not find the investment in the project, the estimated investment amount is about 2 billion yuan.
Jingyuntong has raised capital through the Wuhai 10GW high-efficiency monocrystalline silicon rod project, with a planned total investment of 2.3 billion yuan. As of August 26 this year, the project is still in the process of relevant procedures, and no capital investment has been made.
On December 7, Jingyuntong launched the construction of the second phase of the Sichuan Leshan project ahead of schedule, and the originally planned 12GW of high-efficiency monocrystalline silicon rods and sliced phase II projects were increased to 22GW, and the investment amount increased from 3 billion yuan to 5.5 billion yuan.
So far, Jingyuntong has spent a total of 13.8 billion yuan to expand production, and will add 54GW of new production capacity (the Wuxi project is a large-size photovoltaic wafer).
The reporter of Changjiang Business Daily found that enterprises in the photovoltaic industry chain are expanding production in a large scale, including Tongwei shares and Aixu shares in the downstream of Jingyuntong.
The market predicts whether the problem of overcapacity exists as capacity expands and is released dramatically.
It is worth noting that the product price war in the industry has sounded.
On November 30 this year, photovoltaic leader LONGi issued an announcement announcing that the price of silicon wafers of various sizes fell by 0.41 yuan / piece - 0.67 yuan / piece, a decrease of 7.2% -9.8%. The price cut was followed by Zhonghuan Shares, which announced on December 2 that the price of silicon wafers was lowered, and the price of different specifications fell by between 6.04% and 12.48%.
Industry leaders have taken the lead in announcing comprehensive price cuts, which seems to mean that the price war has sounded. If the price war spreads, the profitability of Jingyuntong may be affected.
In 2020 and the first three quarters of this year, the net profit (net profit) attributable to the shareholders of the listed company achieved by Jingyuntong was 440 million yuan and 707 million yuan, an increase of 67.09% and 69.83% year-on-year, and the net profit after deducting non-recurring gains and losses (referred to as non-net profit) was 422 million yuan and 640 million yuan, an increase of 921.81% and 55.04% respectively. In 2019, the company achieved operating income of 2.057 billion yuan, a slight increase of 1.15% year-on-year, net profit of 263 million yuan, down 41.73% year-on-year, deducting non-net profit of -0.51 billion yuan, falling into a loss situation.
It is foreseeable that if the price of the product drops significantly and the market conditions change, the profit space of Jingyuntong will be greatly squeezed.
Also in the spotlight are financial pressures.
At the beginning of this year, Jingyuntong successfully implemented a fixed increase of 2.5 billion yuan, and by the end of September this year, the company's book monetary funds were 3.607 billion yuan and bank wealth management products were 692 million yuan, totaling 4.299 billion yuan.
Since the 2.3 billion yuan investment in the Wuhai project has not yet been invested, the company has thrown out 5.5 billion yuan of Leshan Phase II investment and construction projects, totaling 7.8 billion yuan, and the existing 4.299 billion yuan of funds are far from enough, and the financial pressure is obvious.
It is worth mentioning that according to this year's semi-annual report, the company has 433 million yuan of restricted funds, mainly the margin and the freezing of some bank deposits due to litigation.
Editor-in-charge: ZB
This article originated from the Yangtze River Business Daily
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