"If you don't know that it will be 70,000 or 80,000 yuan/ton next year, even if we sell it like this, we can still make money." This generosity comes from the speech of Luo Liguo, the owner of Halcyon Silicon, at the 2023 general meeting of shareholders.
In fact, last year's polysilicon market was on the verge of collapse, with the lowest price being much lower than 70,000 yuan per ton. Since the beginning of this year, polysilicon prices have fallen even more than expected.
Hesheng Silicon Industry, which claims to be the world's most complete silicon-based company in the whole industry chain, has encountered big trouble, and in order to save the continuous decline in performance, the large-scale production capacity construction promoted by it has become a heavy burden.
This company, which once accounted for as much as 30% of the industrial silicon market, is struggling to break through. However, the industry's downward cycle has diluted the traces of struggle. This is not fair to Halcyon Silicon.
Started
From the perspective of life experience, Luo Liguo, the actual controller of Hesheng Silicon, has always relied on his business resume.
Hesheng Silicon was established in 2005, which was the first time that mainland photovoltaic companies took the stage.
In 1988, 32-year-old Luo Liguo started a straw hat with a borrowed capital of 20,000 yuan. Ten years later, the revenue of the straw hat business exceeded 10 million US dollars, and Luo Liguo, who earned the first pot of gold, did not stop, and chose silicon materials with a higher upper limit for the second venture.
At the time, silicon was still considered a high-tech category. In the 80s of the 20th century, the continental organosilicon industry successfully broke the technical barriers of foreign countries and carried out the industrial test of 10,000-ton fluidized bed synthesis of methylchlorosilane. After overcoming many difficulties and technical breakthroughs, the industry successfully opened up the whole process in 1994, and the output of methylchlorosilane exceeded 10,000 tons in 1997.
Luo Liguo has set his sights on the emerging field of silicon materials, especially silicone rubber prepared from methylchlorosilane.
With the continuous improvement of technology, expansion and additional equipment of domestic manufacturers, 50,000-ton and 100,000-ton fluidized beds appeared at the beginning of the 21st century. In 2000, the national output of methylchlorosilane reached 47,000 tons, increased to 60,000 tons in 2001, and exceeded 100,000 tons in 2003. Despite this, production of 100,000 tonnes is still less than 5% of the world's total production of more than 2 million tonnes. The potential of China's silicone industry is far from being fully realized, and there is huge room for growth.
In 2003, Ningbo Hesheng Group was established, and in 2005, the forward-looking Luo Liguo founded Zhejiang Hesheng Silicon Industry Co., Ltd., focusing on the production of silicon-based new materials. Subsequently, Hesheng Silicon Industry took Jiaxing, Zhejiang Province as its headquarters base, built industrial bases in Shihezi, Xinjiang, Shanshan, Sichuan, Luzhou, Sichuan and other places, and started organic silicon and industrial silicon production lines.
Hesheng Silicon has officially become a giant of organic silicon and industrial silicon. The brokerage pointed out in the research report that as of the end of September 2023, the company has an industrial silicon production capacity of 1.22 million tons/year and an organic silicon monomer production capacity of 1.73 million tons/year; By the end of 2022, the company expects its industrial silicon and silicone production to account for about 30% of its total domestic production.
Grow with peace of mind
However, Hesheng Silicon Industry, which occupies one side of the market, is not without troubles, and after getting up to 8.176 billion yuan of non-net profit in 2021, it has turned into a situation of poor revenue growth.
Like most polysilicon manufacturers, Halcyon Silicon's net profit attributable to its parent company has declined year-on-year for five consecutive quarters since the third quarter of 2022. According to the data, in the third quarter of 2023, the company's net profit attributable to the parent decreased by 60.15% year-on-year.
According to the regular report of Hesheng Silicon, as of the first three quarters of 2023, the company's attributable net profit was 2.185 billion yuan, and the overall sales gross profit margin was 21.84%, a decrease of 18.35% from the same period last year. In terms of finance, financial expenses in the first three quarters increased by 79.44% year-on-year, sales expenses increased by 32.94% year-on-year, and R&D expenses decreased by 50.35% year-on-year. In addition, the company's net profit in the first three quarters of 2020 declined, with a net profit margin of only 10.87%.
The decline in gross selling margin reflected the collapse in prices of silicon-based products. If we say that the sharp increase in financial expenses and sales expenses may reflect the company's increased investment in marketing and capital operation, it shows that Hesheng Silicon is fighting for market competition and expanding market share.
Then the sharp decline in R&D expenses can reflect the subtle changes in Hesheng Silicon, because both industrial silicon and organic silicon require higher R&D investment to reduce costs and improve quality, and a sharp reduction is not conducive to the long-term development of the enterprise.
Of course, even so, Hesheng Silicon's R&D investment still far exceeds that of its peers, of which 558 million yuan was spent in the first three quarters of 2023.
At the same time, the company's net cash flow from operating activities in the first three quarters was negative 160 million yuan, a year-on-year decrease of 123.17%, but this does not indicate that Hesheng Silicon Industry performed poorly, because its net cash flow from investment activities was negative 17.335 billion yuan.
Surprisingly, Hesheng Silicon has not released any earnings forecast so far.
According to the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange, a listed company should disclose its annual results forecast by January 31 after the end of the current fiscal year, if one of the following three conditions is met: there may be a loss for the whole year; There is a turnaround; Net profit increased or decreased by more than 50% compared with the previous year (except when the base is too small).
In the continuous decline in performance, Luo Guoguo once again saw the upper limit of the industry, so industrial silicon did not shackle Hesheng Silicon Industry, and a commercial layout covering the entire photovoltaic industry chain is forming.
However, this time Halcyon Silicon miscalculated. It indicates that the whole industrial chain park of "polysilicon-monocrystalline slicing-battery module & photovoltaic glass-photovoltaic power generation", which covers the whole photovoltaic chain, is facing an embarrassing situation.
The project was jointly built by Hesheng Silicon and the Urumqi Municipal People's Government in December 2021. In the fourth quarter of 2023, Hesheng Silicon announced that the integrated whole industry chain park was fully connected, and the first photovoltaic module product officially rolled off the production line.
Up to now, the photovoltaic industry has entered a state of loss in the whole chain, and it is difficult for Halcyon Silicon to directly transmit its advantages in the upstream of polysilicon to modules. As a result, investors are dissatisfied. For Hesheng Silicon, whether the integrated decision is wise and urgently needs performance support.
The stock market doesn't believe in tears
As a high-tech enterprise with the production capacity of industrial silicon, organic silicon, polysilicon and photovoltaic modules, Hesheng Silicon Industry is regarded as the "light of private enterprises" and "silicon mao", with a market value of 264.3 billion yuan. However, as of April 23, 2024, the total market value of Hesheng Silicon has fallen to 55.032 billion yuan.
The decline is shocking, in order to save the crisis of the secondary market, Hesheng Silicon has thrown out a more sincere dividend plan. Luo Liguo proposed that the cash dividend ratio in 2023 should not be less than 30% of the net profit attributable to shareholders of listed companies in 2023.
However, investors are not buying it, how much profit can be made in 2023?
In fact, judging from the dividend information of previous years, except for 1.622 billion yuan in 2021 and 1.04 billion yuan in 2022, the rest of the time is generally at a low level, of which the dividend in 2020 is only 272 million yuan. But even so, this dividend accounted for 19.3% of the attributable net profit for the year.
As a result, Halcyon's dividend plan is not very attractive to its investors. (PV Time)