The market value of LONGi Green Energy has evaporated by nearly 400 billion yuan, and the annual salary of tens of millions of senior executives has been reduced due to layoffs for the "winter"?

"Investor's Network" Ye Xin

There was a storm of layoffs, the stock price fell by more than 70%, and it was proposed to repurchase shares, new silicon wafer chip products were launched, and a new energy technology company was established......

As the world's largest monocrystalline silicon manufacturer, LONGi Green Energy Technology Co., Ltd. (hereinafter referred to as "LONGi Green Energy", 601012. SH) has been making frequent moves recently.

On the afternoon of March 28, LONGi Green Energy officially released Tererick's silicon wafer products, and announced that it had completed a large number of R&D and system patent layouts, and was ready for full-scale production.

However, at a time when prices in the PV industry are becoming increasingly involuted, LONGi Green Energy is facing challenges such as layoffs, multiple production lines have been shut down, and challenges such as overcapacity and declining profits are still a top priority for the company.

Layoffs for the winter, but executives have received tens of millions of annual salaries

Recently, LONGi Green Energy was exposed to the news of "layoffs", which has aroused widespread attention in the market.

In response to the rumors of layoffs, LONGi Green Energy said that the current photovoltaic industry is facing a complex internal and external competitive environment, and in order to cope with market changes and improve organizational efficiency, the company has optimized the structure of relevant positions. The company is expected to adjust the proportion of personnel adjustment about 5% of the total number of employees.

From a fundamental point of view, LONGi's revenue in 2022 exceeded 100 billion yuan, and its net profit exceeded 10 billion yuan, and as of the end of the third quarter of 2023, the monetary funds on the account were as high as 56.7 billion yuan.

LONGi Green Energy is laying off employees, but its executives are paid quite a lot. According to the 2022 annual report, the annual salary of Zhong Baoshen, chairman of LONGi Green Energy, is 14.8656 million yuan, the annual salary of Li Zhenguo, general manager, is 10.7384 million yuan, and the annual salary of Liu Xuewen, the financial director, is 10.6588 million yuan, the annual salary of Tian Ye, general manager of the supply chain management center, is 6.1717 million yuan, the annual salary of Xu Dapeng, the former director, is 3.2521 million yuan, the annual salary of Liu Xiaodong, secretary of the board of directors, is 2.4229 million yuan, and the annual salary of Bai Zhongxue, assistant to the chairman, is 2.1165 million yuan. As for whether the executives' compensation will decline this year, let's wait for the 2023 earnings report to be announced.

Behind the frequent layoffs of LONGi Green Energy, the photovoltaic industry where it is located has encountered a "cold winter", and photovoltaic companies have to start "cutting back on food and clothing" to prepare for the "winter".

At present, there is serious overcapacity in the photovoltaic industry. According to incomplete statistics, since 2022, the new expansion capacity announced in all aspects of PV is: more than 6 million tons of polysilicon, more than 1,200GW of silicon wafers, more than 1,500GW of cells, and more than 1,400GW of modules. By the end of 2023, the preliminary statistics of the existing production capacity of each link are more than 1.88 million tons of polysilicon, more than 892GW of silicon wafers, more than 844GW of cells, and more than 861GW of modules.

According to the statistics of carbon catch-up, in the photovoltaic industry chain, the silicon wafer link is the most serious due to the relatively low threshold and rapid expansion in the early stage.

With serious overcapacity, high inventory pressure, and weak market demand, the price of the photovoltaic industry chain has also declined. Since mid-March this year, wafer prices have been reduced twice in a row.

According to the Silicon Industry Branch, "In March this year, the output of silicon wafers reached a new high, and the phased oversupply urgently needs to reduce production." ”

As early as May 2023, during the Shanghai SNEC Photovoltaic Exhibition, Li Zhenguo, President of LONGi Green Energy, said that more than half of the photovoltaic companies will be eliminated in the future.

Now, entering 2024, silicon wafers are experiencing industry-wide losses. According to reports, a number of wafer companies have said that there will be industry losses in the wafer sector in the first half of this year, and the situation in the second half of the year is not optimistic. In their 2024 business plans, many wafer companies even make it a goal to strive to lose less money.

The highest market value evaporated nearly 400 billion yuan

Founded in 2000 and listed on the A-share market in 2012, LONGi Green Energy has become the world's largest manufacturer of solar monocrystalline silicon photovoltaic products, covering the entire photovoltaic industry chain of LONGi monocrystalline silicon, LONGi Solar, LONGi New Energy and LONGi Clean Energy.

In the management and founder team of LONGi Green Energy, Li Zhenguo, the actual controller and president of LONGi Green Energy, Zhong Baoshen, chairman of the board, and Li Wenxue, vice president, are the soul of the company, and are also known as the "Three Musketeers of LONGi" in the industry.

In the past two years, when competitors are surrounding and the photovoltaic sector is "seriously involuted", LONGi's performance growth has also slowed down significantly. According to the financial report data, in 2022, LONGi's operating income will be 128.998 billion yuan, a year-on-year increase of 60.03%, and the net profit will be 14.812 billion yuan, a year-on-year increase of 63.02%, while in the first three quarters of 2023, the revenue will be 94.1 billion yuan, a year-on-year increase of 8.55%, and the net profit will be 11.694 billion yuan, a year-on-year increase of 6.54%. Both revenue and net profit grew from double-digit to single-digit.

At the same time, LONGi Green Energy is also highly indebted. According to the financial report, in the first three quarters of 2021, 2022 and 2023, LONGi Green Energy had liabilities of 50.148 billion yuan, 77.301 billion yuan and 92.7 billion yuan, while the net profit in the same period was 9.086 billion yuan, 14.812 billion yuan and 11.694 billion yuan respectively, and the increase in liabilities even outperformed the growth of profits.

In the past two years, in addition to the impact of the overall decline in the market, the stock price performance of LONGi Green Energy has also been unsatisfactory. Wind data shows that as of March 29, LONGi's share price was 19.51 yuan per share, with a total market value of 147.848 billion yuan and a price-to-earnings ratio (TTM) of 9.52 times. The current stock price has fallen by about 70% compared with the company's historical stock price peak of 72.55 yuan per share in November 2021, and the market value has evaporated by nearly 400 billion yuan. At the same time, the share price of CSI PV Industry (931151.CSI) fell by 56%, and the share price of LONGi Green Energy fell worse than the performance of the PV industry.

The company's stock price is not performing well, and the company's executives and shareholders are still reducing their holdings and cashing out. In October 2023, the company's directors Liu Xiaodong, director Tian Ye, director Bai Zhongxue, director Liu Xuewen, and chairman Zhong Baoshen all reduced their holdings, with an average transaction price of 27.67 yuan per share.

Since 2024, the photovoltaic industry has continued to decline, and from the beginning of this year to March 29, the photovoltaic industry index fell by 5.87%. LONGi Green Energy fell by 14.8% in the same period, and its market value evaporated by more than 24 billion yuan during the year.

In addition to the recession in the industry, Li Chunan, one of the "Three Musketeers of LONGi", the concerted actor of LONGi Green Energy's controlling shareholder, was exposed to insider trading, which also cast another layer of frost on LONGi's sluggish stock price.

However, it is worth noting that Zhong Baoshen, chairman of the board of directors who reduced his stake in LONGi Green Energy in 2023, began to call on the company to repurchase its own shares with its own funds on February 5 this year. According to the announcement, LONGi Green Energy announced that Zhong Baoshen proposed that the company repurchase shares in a centralized bidding transaction for employee stock ownership plans or equity incentives, with a repurchase amount of not less than 300 million yuan and no more than 600 million yuan.

Subsequently, on March 7, LONGi Green Energy issued a repurchase report on the company's repurchase of shares through centralized bidding transactions, with a repurchase amount of not less than 300 million yuan and no more than 600 million yuan, and the repurchase price not exceeding 31.54 yuan per share (inclusive).

In terms of business, LONGi Green Energy officially released Terui silicon wafer products on March 28, and the launch of new silicon wafers is also considered by the market to further consolidate its innovative advantages in products. However, in the past two years, LONGi's R&D expenditure has decreased significantly, from 7.141 billion yuan in 2022 to 1.613 billion yuan in the first three quarters of 2023.

At the time of the cold winter of the industry, LONGi Green Energy is still further expanding the new energy industry chain. According to the Qichacha APP, recently, Bayannur Longjiaxin New Energy Technology Co., Ltd., wholly owned by LONGi Green Energy, was established, the legal representative is Yu Litao, with a registered capital of 1 million yuan, and its business scope includes: solar thermal power generation equipment sales, photovoltaic power generation equipment leasing, photovoltaic equipment and components manufacturing, photovoltaic equipment and components sales, etc. (Produced by Thinking Finance)■