(Yicai Global) April 25 -- Tongwei’s stock price slipped after the world's largest supplier of high-purity polycrystalline silicon materials reported slower earnings growth for the first quarter and announced plans for a private placement of shares to raise CNY16 billion (USD2.3 billion) to fund a capacity expansion.

Tongwei [SHA: 600438] closed down 2.2 percent at CNY37.95 (USD5.50) a share today, giving it a market value of CNY170.8 billion (USD24.7 billion).

Net profit jumped 66 percent to CNY8.6 billion (USD1.2 billion) in the three months ended March 31 and revenue rose 35 percent to CNY33.2 billion, both slowing from a year earlier, the Chengdu-based firm's financial report for the first quarter and 2022 showed yesterday.

The company also said it plans a private placement to raise CNY16 billion to fund the construction of two new plants with a total annual capacity of 200,000 tons of high-purity polycrystalline silicon in China’s Yunnan province and Inner Mongolia Autonomous Region. They will nearly double its capacity to turn out high-purity polycrystalline silicon and cement the firm’s position as the top market player.

A private placement, in which additional stock is issued to specific investors, dilutes the number of a listed firm’s outstanding shares, often leading to a short-term decline in the stock price.

For the 12 months ended Dec. 31, Tongwei’s net profit widened 217 percent to CNY25.7 billion (USD3.7 billion) from the previous year, mainly because of the hike in polycrystalline silicon prices, its full-year results showed. Revenue soared 120 percent to CNY142.4 billion.

The upstream segment of the photovoltaic supply chain remained Tongwei's primary source of income. Revenue from the high-purity polycrystalline silicon material business reached CNY61.9 billion in 2022, accounting for 43.3 percent of the total. The business' gross profit margin rose 8.4 percentage points to 75.1 percent.

The company's annual production capacity of high-purity polycrystalline silicon was 260,000 tons as of the end of last year, the report showed.

Tongwei said last August that it would make an extensive foray into the downstream segment of the PV industry. The firm started investment and construction of three new solar panel plants in Zhejiang and Sichuan provinces last year, expecting its total output of these products to jump to 80 gigawatts at the end of this year from 14 GW last December.

“The completion and beginning of production of the new PV module projects will forcefully lend weight to the company's global market expansion in this segment, providing stable and high-quality PV modules to customers,” Tongwei said in its earnings report.

Sales of solar panels surged 226 percent to 7.9 GW last year, enough to place Tongwei among the top 10 companies by sales, according to data from PV industry consultancy InfoLink Consulting.

Revenue from the production of solar cells and panels was CNY53.5 billion in 2022, making up 37.6 percent of Tongwei’s total. The business' gross profit margin improved 1.4 point to 10.2 percent.

Tongwei's annual solar cell production capacity reached 79 GW as of the end of 2022.

Editors: Tang Shihua, Futura Costaglione