The core subsidiary of Lingda Co., Ltd. has postponed the resumption of production, and some debts have defaulted

Whether the core subsidiary of Lingda Co., Ltd. (300125) can resume production as scheduled finally has an answer.

Previously, Lingda Co., Ltd. announced that its subsidiary Jinzhai Jiayue will temporarily suspend the production line of 3.5GW-182mm large-size PERC high-efficiency solar cells from March 14 to April 15 due to various factors such as technology iteration and the recent fluctuating downward trend of the overall price of the photovoltaic industry chain.

On the evening of April 15, Lingda announced that in view of the market situation of Jinzhai Jiayue PERC high-efficiency solar cell products and the difficulties of the company's supply chain, sales, labor organization and other aspects, considering the company's current financial constraints and existing debt default, the company decided to continue to suspend the production of Jinzhai Jiayue's main production equipment, which is expected to stop production until May 15. The company will pay close attention to the progress of Jinzhai Jiayue's suspension of production and the subsequent resumption of production in strict accordance with relevant regulations, and fulfill the obligation of information disclosure in a timely manner.

The main source of the company's main business income is Jinzhai Jiayue, which produces and manufactures monocrystalline silicon photovoltaic cells, and its monocrystalline silicon photovoltaic cell business accounts for 95.50% and 94.45% of the revenue in the latest year, which is an out-and-out core subsidiary.

Talking about the impact of Jinzhai Jiayue's continued suspension of production and follow-up solutions, Lingda said that the company is currently actively docking with the market, striving to land orders as soon as possible, and provide guarantee for the resumption of work and production.

At the same time, in order to resume production as soon as possible, the company has formulated a comprehensive response plan to reduce the losses caused by the temporary shutdown and return to normal production as soon as possible. The company will carry out a comprehensive overhaul and maintenance of the production equipment, strengthen the daily maintenance and maintenance of the equipment, and ensure the normal operation of the equipment; will comprehensively sort out the production process, carry out targeted optimization and improvement, so as to improve production efficiency, reduce production costs, and further enhance the competitiveness of the enterprise; reserve a certain amount of raw materials in advance according to the production plan to ensure the stable supply of raw materials; and reasonably allocate personnel according to production needs.

In addition, the company will also strengthen staff training, improve the operation skills and safety awareness of employees, and provide a strong guarantee for the smooth progress of production; in addition to the above specific measures, the company will also establish a sound production recovery mechanism, set up a special resumption of production team, responsible for coordinating the resources of all parties, to ensure that the measures are effectively implemented, to develop a detailed resumption of production plan, clear tasks of the time node and responsible persons; the company will also pay close attention to market dynamics and industry development trends, for the early resumption of work and production to make full preparations.

In the latest announcement, Lingda said that based on the above situation, the company currently judged that there is no other risk warning due to "the company's production and business activities have been seriously affected and it is expected that it will not be able to return to normal within 3 months".

However, the company also reminded that although Jinzhai Jiayue did its best to resume work and production on schedule, it still faces uncertainty and the risk of not being able to resume work on time, which may touch "the company's production and business activities are seriously affected and are expected to not return to normal within 3 months" and other risk warnings will be implemented, and the company will actively take corresponding measures to prevent and respond to strategies and issue relevant announcements in a timely manner.

The current market is not friendly to photovoltaic cell companies. According to data released last week by industry consulting firm InfoLink, the price of P-type M10-size batteries fell at 0.36 yuan per watt, and the price of G12-size batteries remained at 0.35 yuan per watt, but overseas quotations for these two types of batteries fell sharply by 7.7%-9.6%. M10 TOPCon cell prices also eased slightly.

InfoLink pointed out that in recent weeks, major module manufacturers have continued to curb the selling prices of cell manufacturers through dual-distribution and OEM cooperation, and the recent increase in silver points has squeezed the profit margin of cells. Compared with professional battery manufacturers, enterprises that also lay out the module link are trying to increase the price of individual specifications under the increase in the proportion of self-use, in addition to avoiding production risks, and even individual specifications of products are still trying to increase the price.

The impact of Jinzhai Jiayue's shutdown on Lingda's shares is being reflected in other aspects. According to the latest estimates, the company's net profit loss in 2023 will be 249 million yuan - 298 million yuan, a year-on-year decrease of 1370% - 1660%, and the non-net profit loss will be 274 million yuan - 323 million yuan, a year-on-year decrease of 1307% - 1559%.

The main reason for the downward revision of performance is that Jinzhai Jiayue has temporarily stopped production, the company based on the principle of prudence, hired an asset appraisal agency to evaluate Jinzhai Jiayue's P-type equipment, and after communicating with the appraiser, the company made an impairment provision of 228 million yuan for the relevant assets of Jinzhai Jiayue according to the preliminary valuation.

In the announcement on the evening of April 15, Lingda also reminded the company of other risks it faced, and mentioned debt default for the first time.

Specifically, the first is the long suspension of production of Jinzhai Jiayue's production equipment, which makes the company face greater operating risks. Jinzhai Jiayue shutdown makes the company face a severe business situation, due to Jinzhai Jiayue's long period of shutdown, the company's procurement, supply, processing and labor and other business operation order will be stagnant; the production equipment is not running for a long time, which will lead to hidden dangers and failures of equipment; the company's long period of shutdown will affect the company's leading products of the main customers, the company has the risk of losing the market and customers.

Lingda believes that Jinzhai Jiayue, as an important subsidiary of the company, in view of the fact that Jinzhai Jiayue has stopped production for a long time, so that Jinzhai Jiayue has not realized revenue and cash flow for a long time, which will bring difficulties to the company's daily operation and bring great difficulties to the company's financing, and the company has defaulted on some debts. Due to the long-term shutdown of Jinzhai Jiayue without realizing revenue, it will have an impact on employees, during the shutdown, the company will make every effort to do a good job in safety and environmental protection, hidden danger investigation, employee stability and other aspects, and strive to resolve related risks.

Second, the company and its subsidiaries have a number of litigation/arbitration arising from sales contract disputes, construction contract disputes, capital loan contract disputes, etc., in view of the fact that some of the litigation/arbitration cases are in the stage of unfulfilled trial, the stage of unfulfilled trial, the stage of unfinished trial, and the stage of case filing and acceptance, it is currently impossible to accurately judge the impact on the company's current or future profits.

On April 15, Lingda's share price closed down 10.70%, with a closing price of 5.76 yuan per share, and a total market value of only 1.541 billion yuan.