Tongwei and LONGi both reported losses in the first quarter, and Tongwei announced a buyback Financial reports

Wall Street Sights

2024-04-30 03:27Posted on the official account of Shanghai Wall Street News

The price war in the photovoltaic industry has intensified, and the revenue growth rate, gross profit margin and net profit of LONGi Green Energy and Tongwei Co., Ltd. have all declined sharply in the first quarter due to the sharp decline in product prices in all links of the photovoltaic industry chain.

On the evening of April 29, Tongwei Co., Ltd. announced its Q1 quarterly results, the company's Q1 quarter total revenue fell 41.13% year-on-year to 19.57 billion yuan, and the net profit attributable to the parent company fell 109.15% year-on-year to a loss of 787 million yuan.

Subsequently, the "photovoltaic leader" LONGi Green Energy also announced its loss-making Q1 quarterly report and 2023 annual report. In the first quarter, LONGi's total revenue decreased by 37.59% year-on-year to 17.674 billion yuan. The net profit attributable to the parent company decreased by 164.61% year-on-year to a loss of 2.35 billion yuan. For the full year of 2023, LONGi's total revenue increased by 0.39% year-on-year to RMB129.498 billion. The net profit attributable to the parent company fell 27.41% year-on-year to 10.751 billion yuan. In addition, LONGi Green Energy announced a cash dividend of 1.7 yuan (tax included) for every 10 shares to all shareholders, with a total cash dividend of 1.288 billion yuan.

At the same time, the performance of other PV companies that announced Q1 quarterly reports, such as JinkoSolar and Trina Solar, also fell sharply. JinkoSolar's net profit fell 29.09% year-on-year to 1.176 billion yuan, and Trina Solar's net profit fell 70.83% year-on-year to 516 million yuan.

All the data shows that the PV industry is currently in a downward cycle.

The price war in the photovoltaic industry has intensified, and the Q1 performance of the leading photovoltaic companies has declined sharply

In terms of revenue, among the secondary classification industry "photovoltaic equipment", the top four companies in terms of revenue in 2023 are Tongwei Co., Ltd., LONGi Green Energy, Jinko Solar, and Trina Solar.

(1) For the full year of 2023, Tongwei's revenue decreased by 2.33% year-on-year to RMB139.1 billion, LONGi's revenue increased by 0.39% year-on-year to RMB129.498 billion, JinkoSolar's revenue increased by 43.55% year-on-year to RMB118.7 billion, and Trina Solar's revenue increased by 33.32% year-on-year to RMB113.4 billion.

(2) In the first quarter, Tongwei's revenue fell 41.13% year-on-year to 19.570 billion yuan, LONGi's revenue decreased by 37.59% year-on-year to 17.674 billion yuan, JinkoSolar's revenue decreased by 0.3% year-on-year to 23.084 billion yuan, and Trina Solar's revenue decreased by 14.37% year-on-year to 18.256 billion yuan.

(3) In the past ten years, LONGi's revenue growth rate has been stable at more than 30% since 2012 (except for negative growth in 2012), and it has been stable at more than 48% in the past five years. It is worth noting that the company's revenue growth will slow down significantly in 2023, hitting the lowest value of 0.39% since its listing (excluding 2012).

In terms of profits:

(1) For the full year of 2023, Tongwei's net profit decreased by 47.25% year-on-year to RMB13.574 billion, JinkoSolar's net profit increased by 153.20% year-on-year to RMB7.440 billion, and Trina Solar's net profit increased by 50.26% year-on-year to RMB5.531 billion.

In contrast, in 2023, LONGi's net profit attributable to the parent company decreased by 27.41% year-on-year to RMB10.751 billion, and the net profit after deduction decreased by 24.84% year-on-year to RMB10.834 billion. Basic earnings per share fell 27.18% year-on-year to 1.42 yuan/share.

In the face of industry competition, LONGi Green Energy pointed out:

The main reason for the decline in performance in 2023 is that, due to the impact of product price decline and technology iteration, the company will make a provision for inventory and fixed asset price decline of 6.757 billion yuan in 2023, of which 5.171 billion yuan will be provided for inventory price decline.

In terms of inventory, the rapid decline in the prices of photovoltaic products in 2023, coupled with the long detention time of some of the Group's products at the US Customs due to policy reasons, the Group cancelled the signed sales contracts with the relevant customers, and the inventory originally stored in the US ports was sold in other regions, during which the price was significantly reduced, and the Group made a provision for inventory decline based on the net realizable value determined by the Group after deducting the relevant expenses from its market price.

In recent years, with the strong support of local governments and the capital market, photovoltaic new and expanded investment projects have been carried out rapidly, upstream and downstream production capacity has been greatly expanded, and a large number of cross-border players have poured in, resulting in a sharp increase in production capacity in various links in the short term, and the contradiction between supply and demand imbalance is prominent. Against this backdrop, PV product prices have fallen sharply in 2023, especially since the fourth quarter of 2023, when module bidding prices have repeatedly hit record lows, falling below RMB 1/W.

According to InfoLink data, in 2023, polysilicon (polycrystalline dense material) prices will drop by about 70%, wafer and cell prices (PERC 182) will drop by about 60%, and module (PERC 182) prices will drop by about 50%.

(2) In the first quarter, Tongwei's net profit decreased by 109.15% year-on-year to a loss of 787 million yuan, LONGi Green Energy's net profit decreased by 164.61% year-on-year to a loss of 2.350 billion yuan, JinkoSolar's net profit decreased by 29.09% year-on-year to 1.176 billion yuan, and Trina Solar's net profit decreased by 70.83% year-on-year to 516 million yuan.

LONGi pointed out that the main reason for the decline in Q1 quarter performance was that in the first quarter of 2024, the prices of products in all links of the photovoltaic industry chain continued to decline, and the company's overall gross profit margin declined significantly, with an impairment provision of 2.649 billion yuan for inventory assets and 152 million yuan for fixed assets in the current period, and an investment income of 103 million yuan recognized by shareholding polysilicon enterprises due to a sharp drop in polysilicon prices, a significant decrease of 1.082 billion yuan year-on-year.

Tongwei also pointed out that the year-on-year decline in the company's Q1 operating income, net profit attributable to shareholders of listed companies, and net cash flow from operating activities was affected by the sharp decline in the price of the photovoltaic industry chain, and the price of the company's main products fell sharply compared with the same period last year.

(3) From the perspective of single-quarter profit trends, LONGi's net profit will continue to decline from Q2 2023.

Tongwei's net profit also continued to decline sharply.

In terms of gross profit margin:

LONGi's gross profit margin fell sharply to 8.89% in the first quarter.

Tongwei's gross profit margin slipped to 9.20% in the first quarter. It is worth noting that in the five quarters from Q1 2023 to Q1 2024, the gross profit margin continued to decline, from 43.15% to 9.20%.

Look at the following products:

(1) In 2023, LONGi's module and cell revenue increased by 16.91% year-on-year (a significant decrease from the revenue growth rate of 45.15% in 2022), and silicon wafers and silicon ingot decreased by 35.81% year-on-year (124.32% year-on-year in 2022). Others decreased by 27.72% year-on-year (68.77% year-on-year in 2022). As a result, the slowdown in module and cell growth, as well as the sharp decline in wafer and ingot business and other businesses, were the main reasons for the company's revenue growth.

In terms of gross profit margin, LONGi's gross profit margin for the full year of 2023 increased by 2.88% year-on-year to 18.26%. By product, the gross profit margin of modules and cells increased by 4.73% year-on-year to 18.38%, while the gross profit margin of silicon wafers and silicon ingots decreased by 1.74% year-on-year to 15.88%.

In terms of shipments:

(1) In 2023, LONGi Green Energy's wafer and module shipments continued to grow rapidly, with wafer shipments of 125.42GW (including 53.79GW of external sales), a year-on-year increase of 47.45%, maintaining the world's largest monocrystalline wafer shipments for nine consecutive years, 5.90GW of cell sales, and 67.52GW of module shipments (including 66.44GW of external sales), a year-on-year increase of 44.40%.

(2) In Q1, the company shipped 26.74 GW of wafers (12.43 GW of external sales), up 12.26% year-on-year, 1.51 GW of cells, and 12.89 GW of modules (12.84 GW of external sales), up 16.55% year-on-year. During the reporting period, the company shipped 4.75 GW of HPBC products, maintaining a sustained growth momentum and helping to significantly increase the volume of distributed business.

In terms of debt-to-asset ratio:

(1) In 2023, the asset-liability ratio of LONGi Green Energy will be 56.87%, Tongwei will be 55.08%, JinkoSolar will be 73.99%, and Trina Solar will be 69.63%. Among them, LONGi's asset-liability ratio has been higher than 50% in the past six years.

In terms of monetary funds, LONGi Green Energy's monetary funds were 57.001 billion yuan, Tongwei's shares were 19.418 billion yuan, JinkoSolar's were 24.779 billion yuan, and Trina Solar's was 24.350 billion yuan.

(2) In Q1, the asset-liability ratio of LONGi Green Energy was 59.38%, Tongwei was 59.27%, JinkoSolar was 72.85%, and Trina Solar was 71.73%.

Valuation:

As of press time, LONGi Green Energy's current price-to-earnings ratio (TTM) is about 9.27 (at the historical quantile of 0.42%), the price-to-book ratio is 2.03 (the historical quantile is 0.5%), and the price-to-sales ratio (TTM) is 1.06 (the historical quantile value is 0.5%).

Tongwei currently has a price-to-earnings ratio (TTM) of about 4.99 (historical quantile value of 0.51%), a price-to-book ratio of 1.63 (historical quantile value of 1.98%), and a price-to-sales ratio (TTM) of 0.67 (historical quantile value of 36.76%).

JinkoSolar's current price-to-earnings (TTM) ratio is around 10.15 (historical quantile 2.02%), price-to-book ratio (historical quantile 0.37%), and price-to-sales ratio (TTM) is 0.64 (historical quantile 0.37%).

Trina Solar's current price-to-earnings (TTM) ratio is around 11.01 (historical quantile value 13.27%), price-to-book ratio (historical quantile value 0.64%), and price-to-sales ratio (TTM) is 0.43 (historical quantile value 0.64%).

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