Recently, with the end of the disclosure of the annual report, listed companies have also held performance briefings, among which, several special performance meetings organized by the Shanghai Stock Exchange have triggered a lot of discussions, especially several special sessions involving new energy enterprises, showing that upstream and downstream enterprises are currently quite different in their survival states and concerns.
Power companies with stable performance are gradually increasing the layout of new energy business
On May 6, the Shanghai Stock Exchange launched the "ESG Theme Week" of the performance briefing of the main board companies of the Shanghai Stock Exchange, including two industry collective briefings of "clean and low-carbon" and "high dividends and heavy returns". In the clean and low-carbon special session held on May 8, the seven participating companies are mainly downstream power generation companies in the energy field, including clean energy power companies whose main business is hydropower and nuclear power, such as Yangtze River Power (600900.HK). SH), Three Gorges Energy (600905. SH), Guiguan Power (600236. SH), Huaneng Hydropower (600025. SH) and China Nuclear Power (601985.SH), the leader in the field of nuclear power, also have power companies that used to focus on thermal power and have actively carried out low-carbon transformation in recent years, such as SDIC Power (600886. SH) and Guangzhou Development (600098. SH）。
In general, among these seven companies, except for Guiguan Power's revenue and net profit in 2023, which will decline significantly year-on-year (revenue down 23.85% and net profit down 61.8%), the performance of other companies is stable, and net profit has grown, but except for SDIC Power, which increased by 64.31% year-on-year, the other increases have not exceeded 25%, and the decline or increase in revenue is also within 25%, of which Yangtze River Power and China Nuclear Power have revenue of more than 70 billion yuan. The former achieved a net profit attributable to the parent company of 27.239 billion yuan, and the latter also reached 10.624 billion yuan, which is a leader in their respective fields.
Of course, the special session is called "Clean and Low Carbon", and the content also revolves around this theme. According to the 2023-2024 National Electricity Supply and Demand Analysis and Forecast Report released by the China Electricity Council, the hydropower generation in power plants above designated size in the mainland fell by 5.6% year-on-year last year, and the business development of hydropower enterprises has also been under certain pressure. However, Yangtze Power still relies on the perfect layout of its six cascade power stations to achieve a 5% increase in total power generation, and its performance has also swept away the "haze" of revenue and net profit falling year-on-year for two consecutive years in 2021 and 2022, achieving a growth of more than 10%, coupled with high dividend expectations and the concept of medium and special stocks, the company's share price has also risen by about 25% this year, and has hit a new high in market value since listing in the first quarter, which also shows the foundation formed by mainland hydropower traditional renewable energy enterprises after years of development and layout. At the group briefing, a number of enterprises also emphasized the importance of hydropower for "dual carbon" and energy transition.
Compared with hydropower, more attention is paid to the layout of new energy by various power companies, which not only involves the energy transformation of traditional power enterprises, but also involves the development speed of new energy based on wind power and photovoltaic power in the mainland. On this issue, all companies have shown a more positive attitude. For example, Three Gorges Energy is focusing on offshore wind power, which is considered the "future of wind power", and by the end of 2023, the company had an installed offshore wind capacity of about 5.5 million kilowatts, ranking first in China. Sun Wei, chairman of Huaneng Hydropower, also said that the company adheres to the two key points of hydropower and new energy development, and in 2023, new energy will be put into operation to accelerate the installation scale, and the installed capacity of new energy will reach 1.9281 million kilowatts by the end of the year, and the new energy installed capacity of the entire "14th Five-Year Plan" will reach 10 million kilowatts, and 84 new energy projects are expected to start and continue in 2024, with a planned investment of 13.991 billion yuan. Other hydropower companies have similar plans.
SDIC Power revealed that by the end of the "14th Five-Year Plan", the company plans to install 17 million kilowatts of new energy, accounting for 30%, and the installed capacity will exceed that of thermal power. Wu Hong, general manager of Guangzhou Development, said that the company plans to achieve a "3:3:8" pattern of installed power generation capacity by the end of the 14th Five-Year Plan, that is, 3 million kilowatts of coal power, 3 million kilowatts of gas power and 8 million kilowatts of new energy power generation.
In the field of nuclear power, China's nuclear power in addition to the development of nuclear energy in another boom period, in wind power, photovoltaic, energy storage and other new energy fields are also increasing the layout, the company introduced at the performance meeting that as of March 2024, the company holds more than 21,340,600 kilowatts of new energy in operation, and also holds 679,000 kilowatts of independent energy storage power stations, and more than 14,262,600 kilowatts of new energy under construction; Realize the transformation from a "single" player to an "all-round" player, and the annual planned power generation of new energy will reach 32.4 billion kilowatt hours.
In fact, jumping out of the special performance meeting, the traditional thermal power enterprises in the mainland have finally "recovered" their performance due to the fall in coal prices last year, and their new energy business layout has also been further accelerated. The performance of the five major power generation groups (Huaneng, Huadian, Datang, State Power Investment and National Energy Investment Group) has turned losses into profits or achieved a large increase, on this basis, the installed capacity of new energy has also increased significantly, and the profit contribution of related sectors has become more and more prominent, such as Huaneng International (600011. SH) will increase the proportion of installed wind power capacity to 11.4% in 2023, and photovoltaic power to 9.7%, while the total profit of the former will reach 5.913 billion yuan, more than 13 times that of the coal-fired business, and the total profit of the latter will also reach 2.044 billion yuan, an increase of nearly 80% year-on-year, close to 5 times that of the coal-fired business.
The active layout of power enterprises in new energy installations has made the scale and growth rate of new energy installations in mainland China reach the highest level in history in 2023, of which the installed photovoltaic capacity will reach 216.88GW, a year-on-year increase of 148%. By the end of the 14th Five-Year Plan, it is expected that the annual increase in non-fossil energy generation will meet the new electricity demand of the whole society, which will undoubtedly further stimulate the downstream demand market in the mainland.
Upstream new energy manufacturing enterprises are exploring ways to cope under the pressure of performance
In 2023, the output of the four main links of the mainland photovoltaic manufacturing end will increase by more than 60%, of which the output of modules used for terminal installation will reach 499GW, a year-on-year increase of 69.3%. In terms of price, whether it is photovoltaic, wind power or new energy storage, they are all facing a continuous "price reduction tide", and the competition between enterprises is becoming more and more fierce. In this context, the performance of enterprises in the new energy manufacturing sector is generally under pressure.
On May 7, the Shanghai Stock Exchange held a special performance briefing on the 2023 Science and Technology Innovation Board, and three photovoltaic manufacturing leaders, JinkoSolar (688223. SH), Trina Solar (688599. SH), Canadian Solar (688472. SH) and Shichuang Energy (688429. SH), the main business is wind power, but it is also involved in the photovoltaic field of electric wind power (688660. SH) participated in the briefing.
Regarding the current situation of the industry, Li Xiande, chairman of JinkoSolar, said that at present, the price of the domestic photovoltaic industry chain is at a low level, and the profitability of the whole industry is under pressure. The first quarter of the market competition was particularly fierce, and it is expected that some uncompetitive production capacity will be phased out at an accelerated pace. In fact, the performance of these three leading companies in the photovoltaic sector from last year to the first quarter of this year has been regarded as the leading echelon of "top students", in 2023 to maintain both revenue and net profit, although the first quarter of this year declined year-on-year, but still maintained profitability, while other leading companies such as Tongwei shares (600438. SH), TCL Zhonghuan (002129.SZ) and other companies suffered a decline in revenue and net profit last year, and fell into a loss in the first quarter of this year, with Tongwei losing 787 million yuan, TCL Zhonghuan losing 880 million yuan, and JA Solar Technology (002459. SZ) lost 480 million yuan, and LONGi Green Energy (601012.SH) suffered a big loss of 2.35 billion yuan.
In this context, various companies have also talked more about how to deal with them, among which "going overseas" and "N-type substitution" have become key words.
In terms of going overseas, the focus is on overseas vertically integrated production bases in Southeast Asia and the United States, which is a high-profit highland. Trina Solar said that the company has built 6.5GW of integrated production capacity of silicon wafers, cells and modules in Southeast Asia, and will further deepen its overseas production capacity layout in 2024, with 5GW of US module production capacity already under construction and expected to be put into operation in the fourth quarter of this year, in addition to 5GW of wafer cell production capacity in Vietnam and 1GW of cell module production capacity in Indonesia will also be built and put into operation as planned. Jinko also disclosed that the company's 1GW expansion of N-type module production capacity in the United States has been put into operation in the first quarter of this year, which will play an important role in shipping to the US market. Canadian Solar's layout is more extensive, not only covering Europe, the United States, but also Japan, Australia, Latin America and other places have in-depth business layout, the company's board secretary Xu Xiaoming said that the company's main profit contribution in the first quarter came from overseas markets, and in 2024, it will continue to improve its global layout capabilities.
"Technology upgrading" and "N-type substitution" are recognized as another big opportunity, and the above three leading companies are also early companies in N-type technology, and Jinko also regained the global module "sales champion" position by "counterattacking" LONGi with the increase of N-type production capacity last year. All three companies said that 2024 is the year of technological upgrading, and believe that the performance of N-type products will determine the future industry pattern to a certain extent. It is worth mentioning that the three companies are currently mainly developing TOPCon technology in N-type, and for the high-profile technical route dispute, Qu Xiaohua, chairman of Canadian Solar, said that TOPCon has received the attention of most first-tier enterprises in the past two years, and it is expected to remain the mainstream in the short term, and with the passage of time, HJT, BC, perovskite and other applications are estimated to have suitable application scenarios and development space.
The performance pressure of the wind power industry, another major force of new energy, has appeared as early as two years ago, and the situation is even more severe this year 002202. SZ), Mingyang Intelligent (601615. The company said at the briefing that in addition to doing a good job in the main business of wind power, it will also build a high-efficiency heterojunction photovoltaic cell and module production base with a capacity of 1.2GW through its subsidiaries to enhance its diversification capabilities. Previously, Titanium Media APP also mentioned in the article (wind power manufacturers under pressure on performance began to look for a new way out) that wind power companies are constantly exploring diversified layouts in energy storage, hydrogen energy, zero carbon and other fields.
In addition, the Shanghai Stock Exchange also held a special performance briefing on the battery of the Science 688567 and Technology Innovation Board on May 9. SH), Huasheng Lithium (688353. SH), Paineng Technology (688063. SH) and other lithium battery companies participated in the meeting. Last year, the demand market for lithium batteries continued to grow high, but the competition in the upstream manufacturing industry also tended to be white-hot, facing problems such as price reductions, performance pressure, and low stock prices. Among them, the Ministry of Industry and Information Technology issued on May 8 the "lithium battery industry standard conditions (2024 version)" (draft for comments) and "lithium battery industry standard announcement management measures (2024 version)" (draft for comments) caused heated discussions, and many companies said that the relevant documents are important policies in the industry, which can promote production capacity clearance, eliminate low-end production capacity, and guide enterprises to upgrade technology and standardize development. In addition, new technologies and new formats have also become the keywords in the development planning of various enterprises, such as Yifei Laser (688646. SH), Li Yuanheng (688499. SH) and others mentioned the R&D layout of new technologies such as solid-state batteries and sodium batteries, and Funeng Technology also mentioned the development of the eVTOL market.
It is worth mentioning that although the new energy manufacturing industry has encountered a certain predicament, most of the companies participating in the performance briefing expressed optimism, and Tan Wen, president of Peneng Technology, believes that the inventory situation of the energy storage industry has gradually improved, and it will enter a rational development after the competition and industrial reshuffle cycle. Funeng Technology also said that the performance in the first quarter of this year showed optimistic signals. Jinko, Trina Solar, and Canadian Solar all said that they have sufficient orders in hand, while the price of the industry chain has been at a low level, and the probability of continuing to decline irrationally is small, and the relationship between supply and demand is expected to gradually improve in the future.
On the evening of May 10, Tongwei Co., Ltd. announced that it had signed an order for 862,400 tons of polysilicon with LONGi, setting a new high for polysilicon orders this year (based on the current average price of polysilicon, the order is worth about 39.1 billion yuan). (This article was first published on Titanium Media APP, author|Hu Jiameng, editor|Liu Yangxue)
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