Jin Baofang has been deeply involved in technology for 20 years, and JA Solar has earned 7 billion yuan in 9 months after its major expansion

Yangtze River Business Daily News ● Yangtze River Business Daily reporter Shen Yourong

In 2023, the photovoltaic industry has experienced a "turbulent" year.

After two years of running at a high level, polysilicon prices have finally entered a downward channel. Refinancing was suddenly tightened, the capacity expansion model of equity financing was unsustainable, the crisis of excess became more and more apparent, and the whole industry entered the cycle of capacity clearance.

In the last round of the photovoltaic cycle, the shrewd and decisive Jin Baofang successfully avoided the crushing of the cycle and became one of the few tumblers in the photovoltaic industry.

In the past three years, the photovoltaic industry has set off a round of expansion tide, and JA Solar (002459. SZ) is also in the middle of it.

However, in Jin Baofang's view, there is a process of capacity release, and overcapacity is not as serious as the outside world imagines.

In the first nine months of 2023, JA Solar earned 7 billion yuan, doubling from the same period last year.

PV tycoons who go through cycles

Among the bigwigs in China's photovoltaic industry, it is relatively rare to abandon official positions and engage in business, and Jin Baofang can be regarded as an alternative.

In September 1952, Jin Baofang was born in an ordinary rural peasant family in Hebei Province. After graduating from high school, he joined a catering service company as a worker, and by 1992, he had served as party secretary and director of the Ningjin County Electric Power Bureau in Hebei Province.

In 1996, 44-year-old Jin Baofang resigned and went to the sea to start a business. He ran a shoe factory and a glass factory, but all of them ended in failure.

By chance, he heard that Hebei University of Technology had a technology for producing monocrystalline silicon rods, so he immediately went to buy it, and came to do work five times, and finally persuaded Ren Bingyan, the technical director, and Hebei Jinglong Industry was established.

Technology and market are the key to the survival and development of enterprises. Jin Baofang had a joint venture with Matsunomiya, the world's largest silicon wafer supplier at the time, to produce monocrystalline silicon rods. By 2004, Jin's company had become the king of monocrystalline silicon in the world.

In 2005, Jinglong Industrial Co., Ltd., Australian Optoelectronic Science and Engineering Corporation and Australian Solar Energy Development Co., Ltd. jointly invested 120 million yuan to establish a Sino-foreign joint venture JA Solar. Choosing to bring in Australian funds, Jin Baofang tried to get rid of his dependence on Japan's Matsunomiya and extend the industry from silicon wafers to downstream cells and modules.

In 2008, China's photovoltaic industry entered an unprecedented stage of madness. Nearly 1,000 companies have poured in, accounting for half of the world's photovoltaic industry, and 11 photovoltaic companies have been listed on the U.S. stock market. Peng Xiaofeng and Shi Zhengrong frantically expanded production, and even Miao Liansheng, the boss of Yingli who returned from Wall Street, also established 69 Silicon Industry to prepare for a bloody battle against polysilicon.

Jin Baofang was scared, everyone was expanding production, could the market accommodate it? He decisively ordered a fire sale, clearance, and only cash!

The catastrophic adjustment of the global photovoltaic industry came unexpectedly, Peng Xiaofeng, the world's No.1 solar silicon wafer, collapsed, Shi Zhengrong, the richest man, also fell, and countless photovoltaic tycoons who were busy expanding production collapsed.

Jin Baofang became a survivor. He worked hard to improve his internal skills and tackle technical problems in order to make a comeback.

A new round of high prosperity cycle in the photovoltaic industry is coming, and Jin Baofang has waited for the opportunity to rise rapidly.

JA Solar continues to be at the forefront of the global PV industry. According to the latest data from InfoLink, JA Solar ranks fourth in the world in terms of module shipments.

In October 2023, Jin Baofang ranked 97th in the "2023 Hurun Report" with a wealth of 45 billion.

7.3 billion R&D has been invested in two years

Why was Jin Baofang able to go through the cycle?

At the end of March 2023, Jin Baofang said in an open letter to all shareholders of JA Solar that in 1996, it started with three monocrystalline furnaces and became a pioneer in China's photovoltaic industry. For more than 20 years, no matter how the industry fluctuates, JA Solar has always adhered to the original intention of simplicity and innocence, not rushing forward when the market is good, and not losing confidence when the situation is difficult.

JA Solar's main business is the R&D, production and sales of silicon wafers, solar cells and solar modules. In February 2007, it was listed on the NASDAQ in the United States, and in 2019, it returned to the A-share market through backdoor Tianye Tonglian.

Since 2005, Jin Baofang has promoted the integrated layout of the photovoltaic industry chain to reduce costs and reduce the risk of dependence on the upstream. JA Solar is also the first company in the industry to implement industrial integration.

Leading technology is an important guarantee for Jin Baofang to pass through the cycle. Technology not only means excellent product quality, but also means reducing costs and increasing efficiency. Low cost is the first principle of standing firm in the photovoltaic industry.

From 2019 to 2022, JA Solar's R&D investment was 1.118 billion yuan, 1.453 billion yuan, 2.718 billion yuan, and 4.608 billion yuan, respectively. In 2021 and 2022, the total R&D investment in the two years will exceed 7.3 billion yuan.

In 2021, polysilicon prices soared, Risen Energy suffered a rare annual loss, JinkoSolar's non-net profit fell sharply, and JA Solar's net profit still maintained a growth rate of 35.31%.

In recent years, JA Solar's operating performance has continued to grow rapidly. From 2019 to 2022, the company's operating income was 21.155 billion yuan, 25.847 billion yuan, 41.302 billion yuan, and 72.989 billion yuan respectively, a year-on-year increase of 7.67%, 22.17%, 59.80%, and 76.72%. The net profit in the same period was 1.252 billion yuan, 1.507 billion yuan, 2.039 billion yuan and 5.533 billion yuan, a year-on-year increase of 74.09%, 20.34%, 35.31% and 171.40%.

In the first three quarters of 2023, the company's net profit and non-net profit were 6.765 billion yuan and 7.029 billion yuan, respectively, a year-on-year increase of 105.62% and 116.83%.

In the past two years, the photovoltaic industry has set off a new round of expansion of production.

At the end of May 2023, JinkoSolar announced a 56 billion yuan expansion plan. Since 2022, JA Solar has also announced an investment of nearly 60 billion yuan.

In the eyes of the outside world, Jin Baofang was forced to be involved in the expansion of production, integration, scale, and superposition of leading technology in order to ensure the leading position.

With such a large-scale expansion, will the PV catastrophe of 2008 be repeated?

Industry insiders believe that under the background of "double carbon", the photovoltaic industry belongs to the sunshine track, and there is still a lot of market space. However, the phased surplus of the industry is an inevitable trend. But even so, the 2008 round of PV industry adjustment will basically not happen.

JA Solar publicly stated that the production capacity in a broad sense includes backward production capacity and production capacity that has not been put into operation in the planning to achieve results, and the production capacity of this statistical caliber has been in a state of excess far exceeding market demand for a long time, but cost-effective products are usually in a state of insufficient production capacity. More and more enterprises are crossing over to the photovoltaic field, and the industry competition will undoubtedly be more fierce in the future.

There is no doubt that JA Solar, which is involved in the expansion of production capacity, will also face severe challenges. Can Jin Baofang deal with it calmly?