The market value of LONGi Green Energy has disappeared by more than 200 billion, and the price of photovoltaic modules has been cut in half
Text | Jin Wei
"The price of photovoltaic modules has directly fallen below 1 yuan per watt, and second-tier photovoltaic companies are selling at a loss. "Recently, the price of PV modules has been cut in half, and module manufacturers have been deeply affected, so there is a voice from a module manufacturer to sell at a loss. At the same time, there are frequent news of layoffs and production cuts in the photovoltaic industry, including PV giant LONGi Green Energy.
A few days ago, a person from the secretary office of the board of directors of LONGi Green Energy publicly said, "Regarding the number of layoffs rumored in the market, we do not have a clear proportion or number of people now. For the follow-up talent planning, it is still necessary to consider all factors such as the changes in the market behind and the expansion of the company's production capacity. ”
On December 14, LONGi's share price was quoted at 20.3 yuan, with a total market value of 154.1 billion. Since the beginning of this year, LONGi's share price has fallen endlessly, from a high of 49 yuan at the beginning of this year to about 20 yuan now, a drop of nearly 60%, and a shrinkage of 217.5 billion.
What happened to LONGi Green Energy?
Stock price rollercoaster
LONGi's main business is the R&D, production and sales of monocrystalline silicon rods, wafers, cells and modules, providing products and system solutions for the development of photovoltaic centralized ground power stations and distributed rooftops.
At present, LONGi's main revenue comes from solar modules and cells, silicon wafers and silicon rods, which accounted for 74.6% and 22.5% respectively in the first half of this year.
In the past two years, when the installed scale of domestic and global photovoltaic installations continued to grow, LONGi's production capacity of silicon wafers, cells and modules continued to increase, and the sales volume and price of silicon wafers and modules rose together, driving LONGi's performance to increase significantly, and the stock price once rose from less than 10 yuan to a high of 73 yuan (before the resumption), and the total market value once exceeded 500 billion yuan. As the tide recedes, LONGi Green Energy has fluctuated all the way downward, reaching more than 150 billion yuan today.
In terms of performance, from 2019 to 2022, LONGi's revenue was 32.89 billion, 54.58 billion, 80.6 billion, and 129 billion respectively, and the net profit in the same period was 5.28 billion, 8.55 billion, 9.08 billion, and 14.81 billion respectively.
In the first three quarters of 2023, LONGi Green Energy achieved operating income of 94.10 billion yuan, a year-on-year increase of 8.55%, and attributable net profit of 11.694 billion yuan, a year-on-year increase of 6.54%. From the perspective of revenue and net profit growth, LONGi Green Energy has declined sharply. Especially in the third quarter of 2023, LONGi's revenue and net profit decreased by 19% and 44% year-on-year, respectively.
From a long-term perspective, although LONGi Green Energy has hit a record high in operating income and net profit, the growth rate has declined significantly compared with previous years, and the stock price performance is a projection of performance.
PV giants continue to expand
In recent years, the photovoltaic industry has developed greatly, and photovoltaic giants have continued to expand and expand production, especially photovoltaic modules have accelerated on the road to expansion.
Since the beginning of this year, LONGi Green Energy has disclosed a number of investment announcements and continuously increased the scale of production capacity. In January, LONGi Green Energy successively announced that it would increase the planned production capacity of the company's Xixian Leye 15GW high-efficiency monocrystalline cell project to 29GW and plan to invest in the construction of a 100GW monocrystalline silicon wafer project and a 50GW monocrystalline cell project per year. In March, LONGi Green Energy announced that it plans to invest 7.777 billion yuan to build a 30GW high-efficiency monocrystalline cell project in Ordos.
In April this year, LONGi Green Energy announced that the company signed an agreement with the Tongchuan Municipal People's Government and the Management Committee of Tongchuan New Material Industrial Park to reach a cooperation intention on investing in the construction of a monocrystalline cell project with an annual output of 12GW in Tongchuan New Material Industrial Park, Shaanxi Province.
In the face of increasing photovoltaic production capacity, the question of overcapacity has followed.
On July 5 this year, LONGi Green Energy said through an investor interactive platform that overcapacity and capacity expansion are not contradictory. First of all, the photovoltaic industry is an industry with rapid technological progress, overcapacity is a structural overcapacity, and advanced production capacity cannot meet the market demand for high-efficiency products. Secondly, overcapacity is a phased overcapacity, and the photovoltaic industry has a broad space for growth in the future.
LONGi Green Energy said that the announced capacity expansion plan will be flexibly implemented according to the changes in market supply and demand and the pace to meet the next round of industrial cycle.
In the first half of this year, the country's installed photovoltaic capacity still increased significantly. According to data from the National Energy Administration, in the first half of 2023, 78.42 million kilowatts of new PV will be connected to the grid across the country, a year-on-year increase of 154%. By the end of June 2023, the installed capacity of photovoltaic power generation in China has reached 470 million kilowatts, including 272 million kilowatts of centralized photovoltaic and 198 million kilowatts of distributed photovoltaic.
However, the speed of photovoltaic installation does not seem to be able to keep up with the speed of industry expansion. In the view of the photovoltaic industry, the current structural overcapacity of the photovoltaic industry is relatively obvious, and the effective demand of the downstream of the photovoltaic industry chain in the fourth quarter of this year has not increased significantly from the previous quarter, while many enterprises are still accelerating the release of production capacity. "Since enterprises want to complete the performance target of VAM, they have to fight for the market and scale, and profits are no longer important at this time, and many companies are putting production capacity in the fourth quarter. ”
At present, PV overcapacity has become a reality, and one reference indicator is that the price of PV modules has changed dramatically.
The price of photovoltaic modules has been cut in half
At present, the price of photovoltaic modules has fallen from 2 yuan/watt at the beginning of the year to less than 1 yuan/watt at present.
On December 6, in the second centralized procurement of photovoltaic modules in 2023~2024, the module companies participating in the bidding generally quoted lower than 0.95 yuan/watt, and some companies even exposed a low price of about 0.86 yuan/watt.
According to public information, in November this year, about 34GW of photovoltaic module procurement projects were awarded in the bidding market, with an average price of 1.098 yuan/W. Compared with the level of 1.8 yuan/W to 1.9 yuan/W at the beginning of the year, the price of modules has been nearly halved in less than a year.
A person in the photovoltaic industry said, "Now that the price of modules in the market is about 1 yuan per watt, LONGi may be able to sell 1 yuan per watt and make a little money. ”
In addition to photovoltaic modules, polysilicon prices are also declining. According to data from the Silicon Branch of the China Nonferrous Metals Industry Association on December 6, the current transaction price of monocrystalline dense material has fallen below 60,000 yuan/ton, and the average transaction price is 60,400 yuan/ton. According to rough statistics, polysilicon prices have fallen by more than 60% since the beginning of this year.
The sharp price reduction of photovoltaic modules and polysilicon has triggered a "butterfly effect", and the operating rate of all links in the industrial chain has declined and the pace of production has slowed down.
Recently, there has been news that a number of photovoltaic specific production cuts, shutdowns, and layoffs, and many mainstream head manufacturers have laid off employees as high as 15% to 20%, and the "big brother of photovoltaics" LONGi Green Energy is rumored to be laying off 10,000 employees, while many companies in the battery sector such as Aiko are rumored to be reducing production by 30%. ”
In the past three years, LONGi's staff has increased significantly, from 46,600 in 2020 to 60,600 in 2022.
Regarding the rumors of layoffs, a person from the board secretary office of LONGi Green Energy told the media: "Generally speaking, at the end of each year, we will do some normal organizational optimization according to the annual performance appraisal and the changes in the entire market, which are normal situations. ”
"Regarding the number of people who have been negotiated in the market, we don't have a clear percentage or number of people right now. For the follow-up talent planning, it is still necessary to consider all factors such as the changes in the market behind and the expansion of the company's production capacity. Therefore, there is no relatively long-term plan for the future, because the whole market is changing very quickly. ”
The person from the secretary office of the board of directors of LONGi Green Energy said that at the performance briefing in September 2023, we clarified the company's follow-up expansion plan and will adopt the BC route. At present, we are also continuing to promote the construction of production capacity in new technologies. The original production capacity will be adjusted to a certain extent according to market conditions, and the production line will be upgraded. ”
Nowadays, when the price of photovoltaic modules has plummeted, the market value of listed photovoltaic companies has fallen again and again, and some companies have taken the initiative to terminate the expansion or postpone investment.
In the third quarter of this year, the number of institutional holdings of LONGi Green Energy dropped to 198, and the proportion of holdings dropped to 21%. Not long ago, LONGi Green Energy announced that the shareholder HHLR Management Co., Ltd. (hereinafter referred to as "HHLR") has been formally investigated by the China Securities Regulatory Commission for allegedly violating restrictive regulations to transfer LONGi Green Energy shares.
If you have any thoughts on LONGi Green Energy, please leave a message below.