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from a profit of 13.2 billion yuan in half a year to a loss of more than 3.1 billion yuan, in just one year, tongwei co., ltd.'s performance fell from the top of the mountain to the bottom of the valley.

on august 31, tongwei co., ltd. finally released its 2024 semi-annual report. data showed that in the first half of 2024, tongwei co., ltd. achieved operating income of 43.797 billion yuan, a year-on-year decrease of 40.87%, and realized a net profit attributable to the parent of -3.129 billion yuan, turning from profit to loss year-on-year.

it is worth noting that tongwei co., ltd., the "king of silicon materials" for domestic photovoltaics, made a profit of 13.27 billion yuan in the same period last year. in just one year, it suffered a loss of more than 3.1 billion yuan. what exactly did tongwei co., ltd. experience in this year?

1 overcapacity is getting worse, and expansioncomponent business causes the company's losses to expand

tongwei co., ltd., which started out as aquatic feed company, has now seen its feed and animal husbandry business become its second largest business. in the market, tongwei co., ltd. is better known as the "king of silicon materials" in china, and has naturally experienced dramatic fluctuations in the supply and price of raw materials in the silicon material market.

in 2022, due to the explosion of market demand, the price of silicon materials continued to rise, from a low of 60,000 yuan/ton to a high of more than 300,000 yuan/ton.

unlike silicon wafers and modules, the time required to build silicon material production capacity is the longest in the photovoltaic industry chain. generally speaking, the time period from construction to smooth production is about 18 months, and it will take another half a year to ramp up production capacity. the extremely long production capacity construction time also allowed silicon material companies to maintain huge profits for a long time.

the huge profits from silicon materials have made many companies jealous, and many companies have begun to enter the silicon material industry regardless of cost.according to forecasts from multiple institutions, the planned domestic silicon material production capacity is likely to reach more than 4 million tons in 2024, which can support the global demand for photovoltaic modules of more than 1,200gw. in fact, the global demand for photovoltaic modules in 2024 will only be around 600gw.

this also means that according to the current production capacity, about half of the silicon materials will be in overcapacity. under this influence, the price of silicon materials has fallen again and again. in august this year, the lowest price of polysilicon fell to 39,000 yuan/ton, and almost all silicon material companies fell into losses.

the same is true for tongwei co., ltd. public information shows that the current silicon material cost of tongwei co., ltd. is about 40,000 yuan/ton. although the company's production cost is at a relatively low level among silicon material companies, it is still unable to achieve profitability when the silicon material price is so low.

what is worrying is that up to now, the expansion speed of silicon materials of major companies has not stopped.according to the plan, by the end of 2024, tongwei co., ltd.'s actual production capacity will reach 850,000 tons.

it is worth noting that tongwei co., ltd.'s sales of high-purity crystalline silicon in the first half of 2024 were only 228,900 tons. in addition, gcl-polymer and daquan energy both have many silicon material projects that will be put into production in 2024. from this point of view, it is difficult for silicon material prices to improve significantly in the short term, and tongwei co., ltd.'s silicon material losses may continue.

unlike gcl-polymer and daquan energy, which focus on silicon material production, tongwei has also expanded into the downstream of the photovoltaic industry chain. in the first half of 2024, tongwei's module sales volume was 18.67gw, ranking fifth in the industry.

as of now, photovoltaic modules have also fallen into overcapacity, prices have continued to fall, and tongwei co., ltd.'s modules are in the red, which is also an important reason why its losses in the first half of 2024 were greater than those of daquan energy and gcl technology.

for tongwei co., ltd., it is crucial when the prices of silicon materials and components can stabilize and rebound. if the prices continue to decline, with tongwei co., ltd.'s existing silicon material and component production capacity, it is likely that the company will suffer "serious damage."

2 tongwei co., ltd. invested over 64.5 billion yuan to expand productionthe profits of the past ten years

compared with other silicon material companies, tongwei co., ltd. may be more in urgent need of the recovery of the photovoltaic industry, which is related to the company's capital layout in the past few years.

from 2022 to 2023, tongwei co., ltd. made a lot of money due to the sharp rise in silicon material prices.

data shows that tongwei's net profit attributable to the parent company will be 25.73 billion yuan and 13.57 billion yuan in 2022 and 2023 respectively. if the impact of equipment depreciation and asset impairment is deducted, tongwei's actual profit will be higher.

due to the sharp increase in profits, tongwei co., ltd.'s operating cash flow is extremely outstanding. during the same period, the company's operating cash flow net inflow amounted to 43.82 billion yuan and 30.68 billion yuan respectively.

after obtaining such a huge cash flow income, tongwei co., ltd. also distributed dividends of nearly 17 billion yuan in 2022 and 2023. in addition, tongwei co., ltd. chose to invest overseas on a large scale to expand production.

in 2023, tongwei co., ltd. announced an overseas investment of up to 64.5 billion yuan, of which the investment in the construction of green substrate integrated projects in ordos city alone was as high as 28 billion yuan.

it is worth noting that from 2013 to 2022, tongwei co., ltd.'s net profit attributable to the parent company totaled only 46.199 billion yuan in the ten years. even if the net profit attributable to the parent company in 2023 is included, it will only be 59.773 billion yuan.

this also means that in 2023 alone, tongwei co., ltd. will have lost more than ten years of profits.

on august 13, 2024, tongwei co., ltd. signed a "capital increase intention agreement" with runyang co., ltd., shanghai yueda new industrial group new energy co., ltd. and other relevant shareholders of runyang co., ltd., and jiangsu yueda group co., ltd.

the announcement shows that tongwei co., ltd. will acquire no less than 51% of the shares of jiangsu runyang new energy technology co., ltd. at a price not exceeding 5 billion yuan. after the transaction is completed, runyang co., ltd. will become a wholly-owned subsidiary of tongwei.

it is reported that runyang shares is also an integrated photovoltaic enterprise with products such as polysilicon and modules. in 2022, the company's net profit attributable to its parent company once exceeded 2 billion yuan.

due to over-expansion, runyang shares' asset-liability ratio has remained at around 80% for many years. as the prosperity of the photovoltaic industry chain declined, runyang shares were also rumored to have laid off employees and cut salaries."selling itself" to tongwei co., ltd. just solved the urgent needs of runyang co., ltd.

if the transaction is completed, by the end of 2024, tongwei co., ltd.'s polysilicon production capacity will be close to 1 million tons, with a market share of nearly 30%, and its module production capacity will also be further expanded.

however, frequent foreign investment has also led to a rapid expansion of tongwei's fixed assets and projects under construction. as of june 30, 2024, the company's fixed assets and projects under construction totaled 102.88 billion yuan, while in 2021, tongwei's fixed assets and projects under construction were less than 50 billion yuan.

the expansion of fixed assets and production capacity will bring sufficient profits to the company when the industry is on the rise, but it will also eat into the company's profits when the industry is on the decline.

in 2023 and the first half of 2024, the asset impairment amounts caused by asset depreciation and inventory impairment of tongwei co., ltd. were 6.236 billion yuan and 2.255 billion yuan, respectively, which seriously affected tongwei co., ltd.'s profitability.

in addition, due to the active external expansion, the scale of tongwei's interest-bearing debt is also growing rapidly. as of june 30, 2024, tongwei's interest-bearing liabilities exceeded 70 billion yuan, and the company's monetary funds during the same period were only 19.48 billion yuan.

such a huge interest-bearing debt has made tongwei co., ltd. pay a high price. in the first half of 2024, the company's financial expenses alone amounted to 761 million yuan.

under the influence of crazy expansion, tongwei co., ltd.'s asset-liability ratio is also rising rapidly.as of june 30, 2024, the company's debt-to-asset ratio was 67.19%, compared with 53.16% in the same period last year.

the overcapacity in the industry is caused by the joint expansion of production by major companies. however, it is undeniable that as a leading company in the industry, tongwei co., ltd. has expanded its silicon material production capacity in the past few years, which has led to further overcapacity in the industry to a certain extent.

under this circumstance, tongwei co., ltd. is still expanding its production capacity through external mergers and acquisitions. if the photovoltaic overcapacity can be ended as soon as possible, tongwei co., ltd.'s gamble may allow the company to reach a higher level; if the photovoltaic industry continues to be sluggish, the huge debt and excess capacity will cause heavy damage to tongwei co., ltd.'s performance.

3 the stock price was halved, the debt pressure increased,liu shuqi leads the company to run wild

from an industry perspective, it is undoubtedly a difficult time for all major photovoltaic companies, including tongwei co., ltd. this is undoubtedly a huge challenge for liu shuqi, the daughter of sichuan's richest man who is only 35 years old and has been in business for less than 18 months.

in addition to being the daughter of liu hanyuan, the richest man in sichuan and the actual controller of tongwei co., ltd., liu shuqi is also talked about for her beauty and the fact that she took over the business at the age of less than 35.

on march 22, 2023, tongwei co., ltd. issued an announcement that on march 19, the company received a written resignation letter submitted by chairman xie yi, who applied to the company to resign from the positions of chairman and director of the company's eighth board of directors for personal reasons.

after his resignation, xie yi will no longer hold any other position in the company. at the same time, the company elected liu shuqi as chairman of the board of directors and concurrently ceo of the company.

liu shuqi's succession surprised the outside world a little, after all, it is not common for a "second generation" to take over at the age of 34. after taking over, liu shuqi also achieved some results. for example, on may 10, 2024, tongwei co., ltd. signed a 39.1 billion pure crystalline silicon product sales contract with longi green energy and its subsidiaries.

in addition, after he took over, tongwei co., ltd.'s pace of external expansion further accelerated, such as the 28 billion yuan silicon material project in december 2023 and the recent 5 billion yuan acquisition of runyang co., ltd.'s equity.

although the company is expanding rapidly, it is undeniable that the acquisition of runyang shares at a cost of 5 billion yuan may further aggravate tongwei co., ltd.'s debt pressure.

previously, zhong baoshen, chairman of longi green energy, said that the assets available for acquisition at this stage usually have a high debt burden, and any acquisition may bring a large debt burden to the company. this is also true for tongwei co., ltd.

although liu shuqi led tongwei co., ltd. to a rapid growth, the current situation of tongwei co., ltd. is far from as prosperous as it was from 2022 to 2023.

the continued decline in silicon material and component prices is eroding the company's profits, and the ever-expanding production capacity is facing the embarrassing situation of being unable to digest it.

data shows that as of june 30, 2024, tongwei co., ltd.'s inventory size was 11.22 billion yuan, an increase of nearly 3.5 billion yuan from the end of 2023.

when tongwei's financial pressure and operating performance will improve in the future depends on when the photovoltaic industry chain improves. however, judging from the current production capacity of the entire industry chain, it is difficult to see an industry reversal in the short term. tongwei under liu shuqi's leadership may face losses for a long time in the future.

in addition, due to the decline in performance and changes in market investor preferences, since liu shuqi took over, tongwei co., ltd.'s stock price has nearly halved, and its market value has evaporated by more than 70 billion yuan.

to this end, tongwei co., ltd. has also launched a share repurchase plan of 2 billion to 4 billion yuan, and the company's controlling shareholder, tongwei group, also plans to increase its holdings by 1 billion to 2 billion yuan.

the scale of such repurchase and increase in holdings ranks among the best in the photovoltaic industry. from this move, both tongwei co., ltd. and tongwei group are using real money to support liu shuqi's work. however, in the context of the continued downturn in the photovoltaic industry, whether such a huge amount of money spent on repurchase can save consumer confidence and stimulate the stock price to rise remains to be seen.

as for tongwei co., ltd., under the leadership of liu shuqi, tongwei co., ltd. is accelerating. if the photovoltaic industry can reverse in the short term, liu shuqi is likely to write an extremely brilliant chapter in the history of photovoltaics. if the photovoltaic industry continues to be sluggish, tongwei co., ltd.'s huge production capacity and high debt scale will inevitably cause the company to suffer "serious injuries".

all this depends on when the photovoltaic industry’s “involution” will end.