LONGi Green Energy's 210 billion yuan in three years is gone, and Li Zhenguo's rich list has retreated

Produced by Radar Finance and Economics, edited by Mo Enmeng, Deep Sea

In the "crisis-ridden" photovoltaic industry, Li Zhenguo and Li Xiyan, who are the actual controllers of LONGi Green Energy, are currently staging the plot of Waterloo of wealth.

In the "2024 Hurun Global Rich List" released this year, Li Zhenguo and Li Xiyan ranked 655th on the list with a wealth of 35.5 billion yuan. However, compared with the highlight moments in 2022, Li Zhenguo and Li Xiyan's wealth has shrunk by 46.5 billion yuan, ranking back 487.

At the same time, Li Chunan, a shareholder standing behind LONGi Green Energy, is also facing the dilemma of shrinking wealth, and Zhong Baoshen, chairman of LONGi Green Energy, who was also on the list last year, fell directly out of the list this year.

It is worth mentioning that the aforementioned Li Zhenguo, Li Chunan, and Zhong Baoshen are actually alumni of Lanzhou University. Because they joined forces to take charge of LONGi Green Energy, the three of them were once given the title of "LONGi Three Musketeers" by the outside world.

Since the establishment of Xi'an Xinmeng Electronic Technology Co., Ltd. in 2000, LONGi Green Energy has gone through more than 20 years. As a result of catching up with the development of the photovoltaic industry, LONGi's performance has ushered in explosive growth. Benefiting from this, the net worth of the "LONGi Three Musketeers" skyrocketed, and they were sent to the throne of billionaires.

The shrinking wealth of these bigwigs is also closely related to LONGi's recent sluggish performance in the capital market. In the past three years, the market value of LONGi Green Energy has evaporated by more than 210.4 billion yuan.

In the first three quarters of last year, the company's revenue and net profit attributable to the parent company have slowed down significantly. At the same time as the performance stalled, LONGi Green Energy's previous honor of "three consecutive championships" in PV module shipments was also cut off by JinkoSolar last year.

Under such circumstances, a series of challenges such as overcapacity in the photovoltaic industry, continuous involution of opponents, and intensifying price wars are also hitting LONGi Green Energy.

The wealth of Li Zhenguo and Li Xiyan shrank by 46.5 billion

In the "2024 Hurun Global Rich List" released in March this year, Li Zhenguo and Li Xiyan ranked 655th on the list with a wealth of 35.5 billion yuan, a decrease of 30.5 billion yuan compared with the previous year, and the ranking fell 424 places.

In fact, this is the second consecutive year that Li Zhenguo and Li Xiyan have faced a decline in their wealth since last year. Time goes back to 2022, when Li Zhenguo and Li Xiyan's wealth was as high as 82 billion yuan, ranking 168th in the overall list.

But then in 2023, the wealth of Li Zhenguo and Li Xiyan will drop to 66 billion yuan, a year-on-year decrease of 16 billion yuan, and their ranking will also drop by 63 places. Compared with the achievements in the "2022 Hurun Global Rich List", Li Zhenguo and Li Xiyan's wealth has shrunk by 46.5 billion yuan this year, and their rankings have fallen by 487 places.

The reason why Li Zhenguo and Li Xiyan have been on the "Hurun Global Rich List" many times is mainly related to the LONGi Green Energy actually controlled by the two. According to the financial report previously released by LONGi Green Energy, as of the end of the third quarter of last year, Li Zhenguo held 1.067 billion shares of the company, accounting for 14.08% of the total share capital, and Li Zhenguo's wife Li Xiyan held 381 million shares of the company, accounting for 5.02% of the total share capital.

According to this calculation, Li Zhenguo and Li Xiyan directly hold 19.1% of the shares in LONGi Green Energy, and are the controlling shareholders and actual controllers of the company. It is worth mentioning that Li Zhenguo currently holds the position of director and general manager of LONGi Green Energy, while Li Xiyan does not hold a position in the company.

In addition, Li Chunan, Li Zhenguo and Li Xiyan are acting in concert, and the former holds 160 million shares of the company, corresponding to a shareholding ratio of 2.11%.

Zhong Baoshen, who now serves as the chairman of the company, is an alumnus of Li Zhenguo and Li Chunan, and the three of them were once given the title of "LONGi Three Musketeers" by the outside world. As of the end of the third quarter of last year, Zhong Baoshen held 98,610,400 shares of LONGi Green Energy, corresponding to a shareholding ratio of 1.3%.

It is worth noting that in the 2023 "Hurun Global Rich List", in addition to Li Zhenguo and Li Xiyan, you can also find the names of Li Chunan and Zhong Baoshen, who ranked 668th and 2923rd on the list with a wealth of 31 billion yuan and 6.7 billion yuan respectively.

However, in the "Hurun Global Rich List" released this year, Li Zhenguo, Li Xiyan, and Li Chunan's rankings have retreated, and Zhong Baoshen's name disappeared directly from the list.

Looking back on the road to the fortune of the "LONGi Three Musketeers", LONGi Green Energy has helped a lot in this process. Because of this, the wealth of Li Zhenguo and Li Xiyan has shrunk in the past two years, which is also inseparable from the recent frustration of LONGi Green Energy's performance in the capital market.

According to Flush iFinD, in the past year, LONGi's share price has fallen by 47.1%, and its market value has evaporated by nearly 123.3 billion yuan. If the timeline is extended to the last three years, LONGi's share price has fallen by 60.32%, and its market value has evaporated by more than 210.4 billion yuan during this period.

The history of the "Three Musketeers of LONGi".

As a leading player in the photovoltaic industry, LONGi Green Energy has successfully sent a number of shareholders to the throne of the "Hurun Global Rich List". The myth of LONGi Green Energy should start from the student days of the "Three Musketeers of LONGi".

In the 80s of the last century, a group of freshmen such as Li Zhenguo and Zhong Baoshen entered the gate of Lanzhou University. At that time, the school held an entrance education ceremony in front of the statue of President Jiang Longji. Since then, every freshman, including Li Zhenguo, has been deeply infected by Jiang Longji's deeds. It was also at that time that Li Zhenguo, Zhong Baoshen and other freshmen buried a thought in their hearts, "In the future, the company will be called LONGi!"

In 1990, Li Zhenguo graduated from the Department of Physics of Lanzhou University, majoring in semiconductor materials. After graduation, Li Zhenguo was assigned to the Huashan Semiconductor Materials Factory (i.e., the state-owned 741 factory) in Huaxian County, Shaanxi Province, where he worked on drawing monocrystalline silicon rods. Later, taking advantage of the reform and opening up, Li Zhenguo also decided to go to the sea to start a business.

In 1993, Li Zhenguo's classmate Zhong Baoshen, together with Li Chunan and several other alumni, founded a company engaged in the research and development and expansion of magnetic applications in Fushun, which is Fushun Longi Magnetoelectric Equipment Co., Ltd. named after LONGi, which is committed to the research and development and expansion of magnetic applications.

In the blink of an eye, Li Zhenguo, who has worked hard in the monocrystalline silicon industry for many years, officially founded Xi'an Xinmeng Electronic Technology Co., Ltd., which is mainly engaged in the development, manufacturing and sales of semiconductor materials and semiconductor equipment, and it is the predecessor of LONGi Green Energy.

However, the company's business did not go very smoothly in the early days. After careful reflection and review, Li Zhenguo believed that the reason for the company's disadvantage was the lack of organizational ability, so Li Zhenguo decided to look for a partner who was better at management.

In August 2003, Xi'an Xinmeng decided to increase the registered capital by 10 million yuan, and Li Chunan became the largest shareholder of the company holding 44% of the shares by injecting 8.8 million yuan. It is worth mentioning that Li Chunan's shareholding in LONGi Green Energy is now relatively low, because it has subsequently reduced its holdings and transferred most of its shares to Hillhouse Capital.

Zhong Baoshen's joining of LONGi Green Energy can be traced back to 2006. At that time, at the kind invitation of Li Zhenguo, Zhong Baoshen joined the company founded by Li Zhenguo, a friend of the same level. In December 2007, Zhong Baoshen acquired 1.4179% of the shares held by Li Chunan, thus becoming a shareholder of the company.

After joining the company, Zhong Baoshen was entrusted with important responsibilities by Li Zhenguo, who successively served as the director and president of Xi'an LONGi Silicon Materials Co., Ltd., and the president of LONGi Solar Photovoltaic Technology Co., Ltd. Li Zhenguo even gave up the position of chairman of the company to Zhong Baoshen.

Under the leadership of the "LONGi Three Musketeers", the development of LONGi Green Energy has embarked on a fast track. In April 2012, LONGi Green Energy, which was still called LONGi at that time, was officially listed on the main board of the Shanghai Stock Exchange.

"Make good use of the sun's rays to create a green energy world", this is the mission that LONGi Green Energy has set for itself, and from the above sentence, it can also be seen that LONGi Green Energy's own positioning and goals, and it is committed to becoming the world's most valuable solar energy technology company.

It is understood that LONGi Green Energy focuses on scientific and technological innovation, and has built five business segments: monocrystalline silicon wafers, battery modules, distributed photovoltaic solutions, ground photovoltaic solutions, and hydrogen energy equipment, and has formed "green electricity" + "green hydrogen" products and solutions that support global zero-carbon development.

Due to stepping on the tuyere of the photovoltaic industry, LONGi Green Energy, which ushered in explosive growth, has become the leading player in the industry. In the year of listing, LONGi's revenue was only 1.708 billion yuan, and by 2022, LONGi's revenue has soared to 129 billion yuan, and the company's net profit attributable to the parent company has also soared from the negative value in the year of listing to 14.81 billion yuan in 2022.

According to the data displayed on the official website of LONGi Green Energy, as of April 30, 2023, LONGi Green Energy has more than 60,000 employees worldwide. As of May 15, 2023, LONGi ranked first in China's photovoltaic industry, with a brand value of 61.416 billion yuan.

LONGi's performance stalled, losing the "sales crown" of photovoltaic modules last year

Although it has now become a player with a revenue of 100 billion, LONGi Green Energy is not restless. Since LONGi Green Energy has not disclosed the annual financial data for 2023, the outside world cannot know the full financial picture of LONGi Green Energy last year.

According to LONGi's previously released financial report for the third quarter of 2023, in the first three quarters of last year, LONGi Green Energy achieved a total revenue of 94.1 billion yuan, an increase of 8.55% compared with the same period last year. Although from a year-on-year perspective, LONGi Green Energy still maintained a revenue growth trend in the first three quarters of last year, further extending the long-term period shows that LONGi's revenue growth has actually slowed down.

Radar Finance learned through Oriental Fortune that from 2013 to 2022, LONGi's revenue growth rate has never fallen below 30%. Recently, from 2019 to 2022, LONGi's revenue growth rate was above 47%, and in 2020 and 2022, LONGi's revenue even achieved year-on-year growth of 65.92% and 60.03%. In contrast, LONGi's revenue growth rate of 8.55% in the first three quarters of last year is quite bleak.

While revenue growth is showing signs of weakness, LONGi Green Energy's net profit indicators are also facing the same situation. In 2022, LONGi Green Energy recorded a net profit attributable to shareholders of listed companies of 14.81 billion yuan, a growth rate of 63.02% compared with the same period last year. However, in the first three quarters of last year, LONGi's net profit attributable to shareholders of listed companies was 11.69 billion yuan, an increase of only 6.54% compared with the same period last year.

In a single quarter, in the third quarter of last year, LONGi's performance declined significantly. During the reporting period, LONGi's revenue was 29.45 billion yuan, down 19.58% year-on-year, and the net profit attributable to the parent company was 2.515 billion yuan, down 44.05% year-on-year.

Regarding the decline in net profit attributable to the parent company, LONGi Green Energy explained in the financial report that the profit in the third quarter was mainly due to the decrease in investment income and foreign exchange income, the increase in inventory price loss, the increase in R&D expenses and the impact of the accelerated exercise of share-based payment.

At a time when performance growth was facing a bottleneck, LONGi Green Energy also announced in December last year that it would lay off 10,000 employees, and the layoffs affected labor personnel and management trainees. At that time, in the face of various rumors from the outside world, the secretary department of the board of directors of LONGi Green Energy responded to the media that the market has changed greatly, and the company will allocate resources accordingly according to the operating situation, changes in the market environment and future industrial structure adjustment.

At a time when there is serious overcapacity in the photovoltaic industry, LONGi Green Energy is facing severe challenges. At the 16th SNEC Global Photovoltaic Conference held in May last year, Li Zhenguo, the founder and general manager of LONGi Green Energy, admitted that there has been a serious overcapacity problem in the photovoltaic industry. Over the next two to three years, more than half of China's PV manufacturers could be forced out of the market.

According to the China Photovoltaic Industry Association, China's polysilicon production will exceed 1.4 million tons in 2023, and the production capacity of silicon wafers, cells and modules will exceed 700GW, far exceeding the demand of about 450GW. The serious consequence of overcapacity is that the prices of all links in the industrial chain have plummeted. The superimposed industry continues to roll in, and the price war may intensify.

According to the data, in 2023, the price of photovoltaic modules will fall from 2 yuan/watt to less than 1 yuan/watt, and the price of polysilicon will plummet from the highest level of 330,000 yuan/ton in 2022 to less than 100,000 yuan/ton, which is a very heavy decline.

What's worse is that in the list of the top 10 PV module shipments in 2023, LONGi Green Energy failed to hold on to the championship and missed the opportunity to achieve the achievement of "four consecutive championships", and its ranking fell to third place last year, while in front of the champion JinkoSolar and the runner-up Trina Solar.

According to the financial report released by LONGi Green Energy, in the first three quarters of last year, the company achieved external sales of 37.45GW of monocrystalline silicon wafers, 4.71GW of monocrystalline cells, and 43.53GW of monocrystalline module shipments, of which 43.12GW were sold externally and 0.41GW were used for self-use.

At the performance briefing in the third quarter of last year, Li Zhenguo also admitted that the company had two major strategic mistakes. First, when polysilicon volatility declined rapidly at the beginning of the year, LONGi adopted the pricing principle of following the price changes of polysilicon, which hurt the profitability of wafers at that time. On the other hand, when competitors seized the market with low-price orders in the second quarter, LONGi did not follow up, which affected module sales and delivery in the fourth quarter.

When talking about the company's view on the development direction of the future market competition, LONGi Green Energy said that there is a certain uncertainty about when the industry can return to a relatively normal position in the future, which may happen in the first half of 2024.

LONGi Green Energy further added that if some PV expansion projects start to stall at the end of this year, and this pace is very fast and violent, then the actual production capacity released by the industry is not as large as originally planned, and the time for industry adjustment may be relatively short. However, if industry participants are still determined to expand production at this price level, then the industry may take a little longer to adjust, so it is difficult to judge when the industry will recover.

LONGi Green Energy believes that global PV demand will increase in 2024, but the growth rate will slow down, and it is expected to increase by 20% on the basis of this year's market. There are still many accumulated projects in the process of implementation, so the domestic market demand will increase on the basis of this year. The overseas market has maintained a growth rate of about 20%-30% for many years. There is a certain degree of uncertainty in the U.S. market due to anti-circumvention and other control measures.

It is worth mentioning that LONGi Green Energy will disclose the "2023 Annual Report" and "2024 First Quarterly Report" on April 30, and is scheduled to hold a performance briefing on the same day. It is reported that the performance briefing will be carried out in an interactive way of online and telephone conferences, and the company's management will communicate with investors on matters such as operating performance, cash dividends, and development plans that investors are concerned about.

What kind of answer will LONGi's 2023 annual report deliver?