With two large investments of 5 million US dollars, can the overseas construction of factories bring the industry leader back to the market value of 100 billion yuan?
文 / NE-SALON新能荟小编团
Recently, Foster, a leading domestic photovoltaic film company, announced that in order to avoid idle new production capacity, it was officially announced that Hangzhou's "annual output of 250 million square meters of high-efficiency battery encapsulation film project" was postponed to 2025. At the same time, two overseas investments of 5 million US dollars were announced, one is to invest 5 million US dollars to set up a subsidiary in Singapore, holding 100% of the shares, and the other is to invest 5 million US dollars in Hangzhou Foster Electronic Materials Co., Ltd., a subsidiary of Foster Holdings, to set up a subsidiary in Thailand, with the holding subsidiary holding 100% of the shares.
As the leader of the photovoltaic film industry, Foster is trying to balance the profit problem caused by overcapacity by adjusting the output at home and abroad. Under the volume of the photovoltaic industry, Foster is also facing its own problems.
Profits have increased, but the market value has shrunk sharply in three years
Under the goal of carbon neutrality, the popularity of the new energy concept has made various sub-sectors of photovoltaic industries become the sweets of the capital market, and major upstream and downstream manufacturers compete with each other, from technology research and development to price game, the competition reshuffle continues. Under the scuffle, photovoltaic film, as the core auxiliary material of midstream "photovoltaic modules", is "no one cares", and few new investors enter the game.
At present, the competition pattern within the photovoltaic film industry has been solidified for a long time, and Foster has always occupied the dominant position in the domestic and international scope, with a global market share of more than 50%.
In 1998, Lin Jianhua founded Foster in Lin'an, Hangzhou, in 2003, Foster chose EVA film as the main track, and in 2014, Foster was listed on the main board of A-shares, and recently, Foster released its 2023 annual report, achieving revenue of 22.589 billion yuan, a year-on-year increase of 19.66%, and a net profit attributable to the parent company of 1.85 billion yuan, a year-on-year increase of 17.2%.
As the king of the industry, Foster could not hide his loneliness. The double growth in revenue and profit failed to give Foster a foothold in the stock market. As the leader of the subdivision track, Foster's market value has been falling all the way since August 2021, from 150 billion yuan at the peak to less than 50 billion yuan so far, and Foster's share price reached 167.08 yuan / share at the highest point, and now falls to 25 yuan / share, down more than 80%.
The neglected photovoltaic film, porridge less monks and more difficult to make profits
The business performance failed to positively feed back the market value of Foster, which is no longer a single corporate problem of Foster, and a deeper level reflects the embarrassing situation of photovoltaic film in the photovoltaic industry chain.
Different from the high investment and high technology threshold of other links in the industrial chain, photovoltaic film is more similar to a manufacturing link, both in terms of capital investment and technical barriers.
In the photovoltaic film industry, in addition to the three leading companies (Foster, Haiyou New Materials, and Sveck), most of the other manufacturers are halfway home. For example, Mingguan New Materials and Cybrid Technology were originally mainly engaged in photovoltaic backsheets, as well as SkyOcean New Materials and Lushan New Materials, which were engaged in the field of hot melt adhesives. The "moat" of the photovoltaic film industry is not deep, and the asset-light characteristics are significant.
The problem is that the lower threshold makes the photovoltaic film fall into the situation of less porridge and more monks, and under the passive industrial chain position, the photovoltaic film is highly dependent on the market situation of photovoltaic modules.
By the end of 2023, the domestic PV module production capacity exceeded 800GW, and the oversupply of production capacity has led to repeated declines in PV module prices, from 1.8-2 yuan/w at the beginning of the year to less than 1 yuan/W, a drop of nearly 50%.
Photovoltaic film is affected by this, and it is difficult to make profits. Judging from the recent announcements issued by listed companies in the adhesive film, in addition to Foster's "one family", other second- and third-tier companies are generally facing losses. Among them, the net profit loss attributable to the parent company of Mingguan New Materials is 23.8754 million yuan, and the net profit attributable to the parent company in the performance forecast of SkyOcean New Materials is expected to lose 87 million yuan to 99 million yuan.
Overseas layout, can usher in a turnaround?
As the industry leader, Foster is one of the earliest companies in the field of adhesive film to deploy overseas. Prior to the US$10 million investment in Singapore and Thailand, Foster already had two overseas production bases.
The first is in Thailand, where Foster invested $5 million in 2016 to set up a wholly-owned subsidiary in Thailand, and in 2018, the overseas production base in Thailand was officially put into use, with an annual production capacity of 65 million square meters. In 2021, Foster will continue to expand its survival base in Thailand and invest in the construction of the second phase of the project, with an annual production capacity of about 100 million square meters.
After the successful layout in Thailand, Foster invested US$226 million to build a production base in Vietnam in 2022, with an annual production capacity of 250 million square meters, exceeding the total production capacity of the Thai base.
The postponement of the Hangzhou project announced by Foster is a comprehensive consideration of the production capacity of overseas Vietnamese bases and Hangzhou, Suzhou and other places.
However, in recent years, in order to seize the share of global new energy, European and American countries have successively introduced relevant policies such as the Inflation Reduction Act (IRA) and the Net Zero Industry Act (NZIA) to support the local industrial chain. Foster will continue to face uncertainty about international trade policy in the future.
epilogue
In the field of photovoltaic film, Foster's opponent has long been not other competitors, when the industry is in a predicament, Foster, as a leader, can reactivate the potential of the industry has become a greater proposition. Source: NE-SALON