The photovoltaic industry has encountered a "hurdle": the first quarter report of leading enterprises "collectively turned into losses"

Economic Observer Network Reporter Zheng Chenye The photovoltaic industry has encountered a "hurdle".

On the evening of April 29, 2024, photovoltaic leader LONGi Green Energy Technology Co., Ltd. (601012. SH, hereinafter referred to as "LONGi Green Energy") disclosed its 2023 annual report and 2024 first quarter report. According to the information in the annual report, in 2023, LONGi Green Energy will achieve operating income of 129.498 billion yuan, a slight increase of 0.39% year-on-year, and net profit attributable to shareholders of listed companies will be 10.751 billion yuan, a year-on-year decrease of 27.41%.

The quarterly report information shows that in the first quarter of 2024, LONGi Green Energy actually lost money: the operating income in the quarter was 17.674 billion yuan, a year-on-year decrease of 37.59%, and the net loss attributable to shareholders of listed companies was 2.35 billion yuan. The reporter noticed that the last time LONGi Green Energy had a single-quarter loss was 11 years ago, that is, in the first quarter of 2013.

As a leading enterprise in the industry, LONGi's financial report reflects the huge pressure faced by the entire photovoltaic industry.

As of April 29, 2024, the reporter of the Economic Observer Network combed the 2023 annual report and the first quarter report of the 50 constituent stocks of the CSI Photovoltaic Industry Index and found that the total revenue of these 50 companies in 2023 reached 1.448 trillion yuan, an increase of 161.791 billion yuan from 2022, but 38 of them had a year-on-year revenue growth rate in 2023 compared with 2022, and 11 companies had negative revenue growth, and in the first quarter of 2024, the situation became more severe, with 14 companies incurring net losses attributable to shareholders of the parent company in the quarter.

Industry leaders "collectively turn losses"

"If you don't know about the industry, you wouldn't dare to think that just over a year ago, the price of polysilicon exceeded 300,000 yuan/ton, and now no one mentions 'silicon is king'. On April 28, the sales director of a photovoltaic module manufacturer in East China told reporters.

According to the data of the Silicon Branch of the China Nonferrous Metals Industry Association, on April 24, 2024, the transaction price range of polysilicon P-type dense material was 40,000 yuan/ton to 45,000 yuan/ton, and the average transaction price was 42,800 yuan/ton, and the transaction price range of N-type granular silicon was 42,000 yuan/ton to 44,000 yuan/ton, and the average transaction price was 43,000 yuan/ton.

The "avalanche" of polysilicon prices is the first to impact the performance of polysilicon manufacturers.

According to the data, Xinjiang Daqo New Energy Co., Ltd. (688303. SH, hereinafter referred to as "Daqo Energy") achieved revenue of 16.329 billion yuan in 2023, a sharp decrease of 14.611 billion yuan from 2022, a net profit attributable to the parent company of 5.763 billion yuan, a direct decrease of 13.358 billion yuan from 2022, and a revenue of 2.982 billion yuan in the first quarter of 2024, a year-on-year decrease of 38.6% , the net profit attributable to the parent company was 331 million yuan, a decrease of 2.58 billion yuan from the first quarter of 2023, and the gross profit margin of sales also plummeted from 74.83% disclosed in the 2022 annual report to 16.71% in the first quarter of 2024.

Another example is Tongwei Co., Ltd. (600438. SH, hereinafter referred to as "Tongwei Co., Ltd.") achieved revenue of 139.104 billion yuan in 2023, a decrease of 3.319 billion yuan from 2022, and a net profit attributable to the parent company of 18.246 billion yuan, a decrease of 14.127 billion yuan from 2022. In the first quarter of 2024, Tongwei also incurred a loss, with a net loss attributable to shareholders of the parent company of 787 million yuan in the quarter, which was the first time since the second quarter of 2016 that Tongwei had a single-quarter loss.

It is worth noting that Daqo Energy is still expanding its polysilicon production capacity.

"At present, polysilicon prices are approaching the cost line of enterprises in the industry, bringing certain pressure and challenges to the industry, and providing new opportunities for enterprise development. The 100,000-ton high-purity polysilicon project in Baotou, Inner Mongolia, is progressing smoothly and is scheduled to be completed and put into operation in the second quarter of 2024. After the implementation of the project, the company's cumulative annual production capacity can reach 305,000 tons. Daqo Energy noted in its first quarter 2024 report.

The China Nonferrous Metals Industry Association's silicon branch in its polysilicon market commentary published on April 24 is more straightforward:

"At present, polysilicon prices have reached the cash cost of most enterprises, and even fallen below the cash cost of some enterprises. Although polysilicon prices have been declining for several weeks, the current price decline is still lower than expected by the downstream, and the downstream continues to be bearish, and there is no sign of large-scale low-price stockpiling. From the perspective of the whole industry chain, in the context of phased oversupply, the main links from industrial silicon to modules have fallen below the production cost, and the market is showing irrational competition in the short term. ”

In addition, in terms of wafers, TCL Zhonghuan New Energy Technology Co., Ltd. (002129.SH, hereinafter referred to as "TCL Zhonghuan"), a leading company in this field, has not fared much better than polysilicon manufacturers. According to the data, TCL Zhonghuan will achieve revenue of 59.146 billion yuan in 2023, a year-on-year decrease of 11.74%, and a net profit attributable to the parent company of 3.416 billion yuan, a year-on-year decrease of 49.9%. Similarly, it also posted a net loss of $880 million in the first quarter of 2024.

"As of the end of the first quarter of 2024, the production capacity of each link of the photovoltaic industry chain exceeded 1,000GW, and there is a phased mismatch between supply and demand between the supply side and the terminal installed capacity, and the photovoltaic industry is still at the bottom of the market cycle. TCL Zhonghuan explained the reasons for the loss in the first quarter of 2024.

In the more competitive photovoltaic cell and module sector, the decline in the performance of related manufacturers is more obvious. For example, according to the 2023 global module shipment ranking released by InfoLink, a well-known photovoltaic industry research institution, JinkoSolar Co., Ltd. (688223.SH, hereinafter referred to as "JinkoSolar"), which won the first place in global PV module shipments in 2023, achieved operating income of 118.682 billion yuan in 2023, a year-on-year increase of 43.55%, but in the first quarter of 2024, the company achieved revenue of 23.084 billion yuan, a decrease of nearly 100 million yuan from the same period last year.

Similarly, Trina Solar (688599. SH, hereinafter referred to as "Trina Solar"), the year-on-year revenue growth rate in 2023 fell to 33.32% from 91.21% in the previous year, and also experienced negative revenue growth in the first quarter of 2024, achieving revenue of 18.256 billion yuan in the current quarter, a decrease of 3.063 billion yuan from the first quarter of 2023.

In addition, like LONGi Green Energy, which has already incurred quarterly losses and ranks third in global shipments, JA Solar Technology Co., Ltd. (002459. SZ, hereinafter referred to as "JA Solar") also incurred a net loss of 483 million yuan in the first quarter of 2024.

In JA Solar's 2023 annual report, the company pointed out that as solar photovoltaic power generation achieves "grid parity" in more and more countries and regions, the photovoltaic market is gradually changing from "policy-driven" to "demand-driven", and the photovoltaic industry will be more sensitive to changes in market demand, and will show cyclical characteristics with fluctuations in market demand. At the same time, as the consumption of power grids in various countries around the world comes to the surface, the growth of the main market demand slows down, and the industry will be differentiated, accelerating the pace of survival of the fittest.

Cross-border enterprises "retreat from difficulties"

In the context of the overall pressure on the photovoltaic industry, cross-border enterprises have also started to "retreat".

On April 24, Suzhou Jolywood Photovoltaic New Materials Co., Ltd. (300393. SZ, hereinafter referred to as "Jolywood") announced that the market environment of the photovoltaic industry has undergone major changes, and the feasibility of silicon-based projects has undergone major changes. Based on this, it is expected that the continuation of the project will not achieve the expected investment results. Combined with the company's overall development plan and market conditions, in order to optimize the company's resource allocation, reduce investment risks, and effectively safeguard the interests of the company and all shareholders, the company decided to terminate the investment in silicon-based projects after careful research.

Jolywood's silicon-based projects were first disclosed in an announcement issued on March 15, 2022, when polysilicon prices were continuing to rise. The lucrative profit prospects in this link have made Jolywood, whose revenue in 2022 is less than 10 billion yuan, directly throw out a polysilicon construction project with a total investment of about 14 billion yuan, with a planned annual production capacity of 200,000 tons of industrial silicon and 100,000 tons of high-purity polysilicon. Today, the project is clearly "out of fashion".

In the first quarter of 2024, Jolywood achieved operating income of 1.288 billion yuan, a year-on-year decrease of 52.43%, and a net loss attributable to shareholders of listed companies of 172 million yuan, turning from profit to loss year-on-year.

In fact, since the beginning of this year, there are many listed companies like Jolywood that "retreat from difficulties".

On March 18, Jiangxi Haiyuan Composite Materials Technology Co., Ltd. (002529. SZ, hereinafter referred to as "Haiyuan Composites") announced that the company signed the "Termination Agreement" after friendly consultation with the People's Government of Quanjiao County, decided to terminate the cooperation of relevant projects, and transferred 100% of the equity of Chuzhou Saiwei Energy Technology Co., Ltd. (hereinafter referred to as "Chuzhou Energy") to Zhejiang Aiko Solar Technology Co., Ltd. (hereinafter referred to as "Aiko Technology") at a price of 38 million yuan. After the completion of the transfer, Haiyuan Composite Materials will no longer hold the equity of Chuzhou Energy.

Haiyuan Composites' Chuzhou project began at the end of 2022. On December 22, 2022, the company disclosed its plan to invest in a new photovoltaic industrial base in Quanjiao County, Chuzhou City, with its wholly-owned subsidiary Chuzhou Energy as the main body, of which the first phase plans to build a 10GW TOPCon (tunneling oxide passivation contact cell) high-efficiency photovoltaic cell project, and the second phase plans to build a 5GW HJT (heterojunction solar cell) ultra-high-efficiency photovoltaic cell and 3GW high-efficiency photovoltaic module project.

"In view of the great changes in the photovoltaic industry and market environment in the process of promoting the Chuzhou project, the company decided to terminate the Chuzhou project after careful study, in order to reduce investment risks and management costs, optimize resource allocation, and negotiate with the Quanjiao government amicably. Haiyuan Composites explained the reason for terminating the project in the announcement.

In 2020, Lingda Group Co., Ltd. (300125. SZ, hereinafter referred to as "Lingda shares") also announced on March 18 that it plans to terminate its investment in the construction of Tongling's 20GW high-efficiency photovoltaic cell industrial base project.

According to the previous announcement, the original planned investment of the terminated project was as high as 9.15 billion yuan, and it was planned to be constructed in two phases, of which the first phase of the project will build a high-efficiency cell production line with an annual output of 10GW, and the second phase of the project will build a high-efficiency cell production line with an annual output of 5GW TOPCon and a 5GW-hjt cell production line.

In the announcement, Lingda's statement is very similar to that of Haiyuan Composites: "In view of the fact that the construction of the project is affected by various factors such as the macro environment, changes in the market environment of the photovoltaic industry, the financing environment, the implementation conditions of the project construction, and the progress of the relevant parties involved in the construction of the project, the project cannot advance the construction progress as originally planned. In order to effectively control the risk of foreign investment, the company reached a consensus with the Management Committee of Tongling Lion Rock High-tech Zone and decided to terminate the investment and construction of the Tongling project. ”

A distributor of photovoltaic modules in South China told reporters that in the future, more and more companies like Jolywood, Haiyuan Composites, and Lingda will terminate photovoltaic projects. "Now not only modules, but also the price of the whole industry chain is approaching the cost line, and even some project bidding is to quote a loss price, and companies without strength cannot hold on for too long. The dealer said.

"Now the second- and third-tier photovoltaic companies have begun to terminate the project, which is normal, the overcapacity is staged, and the market environment does not support the company to continue to expand production. I think the future is not only about the termination of projects, but also about many companies that will be eliminated. Lin Boqiang, dean of the China Energy Policy Research Institute of Xiamen University, also told reporters.

However, Lin Boqiang also stressed to reporters: "In the long run, if the dual carbon goal is to be realized, wind power and photovoltaic will be the main consumption energy." Therefore, the current capacity of the photovoltaic industry is insignificant for the future, and it is only a nodal surplus now. I am still very optimistic about photovoltaics, but it is not that the industry has no problems now, after all, the new energy industry is a new system, which requires us to face challenges and solve problems in development. ”