In the first three quarters of this year, LONGi Green Energy achieved operating income of 58.593 billion yuan, a year-on-year decrease of 37.73%; The net profit attributable to the parent company was -6.505 billion yuan, a year-on-year decrease of 155.62

Dolma, researcher at Punctuation Finance and Investment Time.com

Huge losses for giants!

According to the report card of the third quarter report of LONGi Green Energy Technology Co., Ltd. (hereinafter referred to as LONGi Green Energy, 601012.SH), in the first three quarters of this year, the company achieved operating income of 58.593 billion yuan, a year-on-year decrease of 37.73%; The net profit attributable to the parent company was -6.505 billion yuan, a year-on-year decrease of 155.62%.

Researchers from Punctuation Finance and Investment Time Network noticed that among the 92 companies included in the Wind photovoltaic sector, LONGi Green Energy's loss in the first three quarters ranked first among all companies, followed by TCL Zhonghuan New Energy Technology Co., Ltd. (hereinafter referred to as TCL Zhonghuan, 002129.SZ), which lost 6.061 billion yuan in the first three quarters, which is also the only two photovoltaic companies with a loss of more than 6 billion yuan.

As of the close of trading on November 7, LONGi Green Energy closed at 19.18 yuan per share, and its share price has fallen by about 15% since the beginning of this year, and the company's current total market value is about 145.3 billion yuan.

LONGi Green Energy's stock price trend since its listing (yuan).

Source: Wind

The loss in the first three quarters exceeded 6.5 billion yuan

According to the financial report, LONGi Green Energy achieved operating income of 58.593 billion yuan in the first three quarters of this year, a year-on-year decrease of 37.73%; The net profit attributable to the parent company was -6.505 billion yuan, a year-on-year decrease of 155.62%. Among them, the company achieved revenue of 20.064 billion yuan in the third quarter, a year-on-year decrease of 31.87%; The net profit attributable to the parent company was -1.261 billion yuan, a year-on-year decrease of 150.14%.

LONGi Green Energy said at the performance briefing that in the first three quarters of 2024, the global photovoltaic market demand will continue to maintain a steady growth trend, of which the Chinese market, as the main engine of the global photovoltaic industry, added 160.88GW of photovoltaic installed capacity from January to September this year, a year-on-year increase of 24.8%; From January to September this year, China's module exports increased by more than 20% year-on-year, mainly to Europe, Asia-Pacific, Latin America and the Middle East.

However, at the same time as the demand is growing, due to the continuous impact of the mismatch between supply and demand in the photovoltaic industry, the prices of products in all aspects of the photovoltaic industry have fallen sharply, and the industry as a whole still continues the trend of "sales growth, price decline", and LONGi Green Energy has suffered a phased operating performance loss.

In terms of product shipments, LONGi Green Energy said in its third quarterly report that the company strategically adjusted shipments according to market changes, and shipped 82.80GW of silicon wafers (including 35.03GW of external sales) from January to September this year, a year-on-year decrease of 4.22%; Monocrystalline cell sales reached 4.16 GW, and module shipments reached 51.23 GW (including 13.77 GW of BC modules), up 17.70% year-on-year.   

It is worth mentioning that, in addition to attributing the decline in performance to external factors, Zhong Baoshen, chairman of LONGi Green Energy, said at the performance briefing that the company has also made deep introspection and summary, and its own operation and management has not been done well is a key factor in the loss.

He believes that there are two main points, one is that LONGi Green Energy has gained less in the high-profit market in the United States this year, "We have not done very well in the American market, and the company shipped about 1.6GW in the American market in the first three quarters of this year, which is a big gap compared with before"; The second is that LONGi Green Energy's BC generation products encountered difficulties in mass production in 2023, and there was a mismatch between production and sales time, resulting in a large inventory of BC products at the end of 2023, and with the sharp decline in product prices in the fourth quarter of 2023, a large amount of impairment was made for these inventories.

LONGi's main performance in the first three quarters of this year

Data source: the company's 2024 third quarter report

The market value shrank by more than 400 billion yuan

In recent years, in the context of the energy transition brought about by the global consensus on carbon neutrality, the photovoltaic industry has ushered in leapfrog development, but this has also led to the rapid development of new photovoltaic expansion investment projects, the influx of a large number of cross-border players, the rapid increase in the production capacity of each link in the short term, and the contradiction between supply and demand imbalance in stages is prominent.   

In 2023, the price of photovoltaic products will fall sharply. According to InfoLink data, polysilicon (polycrystalline dense material) prices will drop by about 70%, wafer and cell prices (PERC 182) by about 60%, and module prices (PERC 182) by about 50% in 2023.

Since the fourth quarter of 2023, the prices of polysilicon, wafers, cells, and modules have continued to fall. According to Solarzoom, the trading price of polysilicon on October 30 was RMB 41/kg, unchanged from the previous month. The transaction price of silicon wafers was RMB 1.03/pc, down RMB 0.02/pc month-on-month. The transaction price of the battery was 0.27 yuan/W, flat month-on-month; The transaction price of modules was RMB 0.73/W, unchanged from the previous month.

The

deep involution of the industry is reflected in the stock price, which is that the share price of LONGi Green Energy has entered a continuous downward range since the intraday reach of 66.28 yuan/share on July 1, 2022, and once reached a four-year low of 12.63 yuan/share on July 9 this year, down 82.38% from the all-time high of 71.68 yuan/share reached on November 1, 2021, and the market value has also shrunk by more than 400 billion yuan from the all-time high.

Against the backdrop of lower stock prices, on October 30, 2023, LONGi Green Energy issued an announcement on the chairman's increase in the company's shares, stating that based on his confidence in the company's sustainable and stable development in the future and recognition of its long-term investment value, Zhong Baoshen intends to use its own funds and self-raised funds to increase its holdings of the company's shares by no less than 100 million yuan and no more than 150 million yuan in the next 12 months. In addition to supporting the company with practical actions, Zhong Baoshen also proposed that LONGi Green Energy carry out share repurchases.

At the same time as the release of the third quarter report of this year, LONGi Green Energy announced the latest progress of increasing holdings and buybacks. As of October 30 this year, Zhong Baoshen's shareholding increase plan has expired, and he has increased his holdings of LONGi Green Energy by 6.2897 million shares, accounting for 0.08% of the company's total share capital, with a cumulative increase of 102 million yuan. After the completion of this increase, Zhong Baoshen holds 105 million shares of LONGi Green Energy, accounting for 1.38% of the company's total share capital.   

At the same time, as of the end of October, LONGi Green Energy has repurchased a total of 20,177,600 shares, accounting for 0.27% of the company's total share capital, with a repurchase price range of 13.23 yuan/share to 19.11 yuan/share, and a total repurchase amount of 303 million yuan (excluding transaction costs).

The policy side and industry associations are making efforts

Researchers from Punctuation Finance and Investment Time Network noticed that LONGi Green Energy is not the only one affected by the decline in the price of photovoltaic products, and most of the listed photovoltaic companies performed poorly in the first three quarters.

According to Wind data, among the 92 companies included in the photovoltaic sector, 33 companies lost money in the first three quarters, 13 companies had a net profit of less than 100 million yuan in the first three quarters, and 23 companies had a net profit of less than 500 million yuan in the first three quarters.

Among them, the highest loss is LONGi Green Energy, second only to LONGi Green Energy is TCL Zhonghuan, with a loss of 6.061 billion yuan in the first three quarters, and they are also the only two companies among the 92 companies with a loss of more than 6 billion yuan. In addition, Tongwei (600438. SH) lost 3.973 billion yuan in the first three quarters, and Aiko (600732.SH) lost 2.831 billion yuan in the first three quarters.

In fact, in the face of the endless ups and downs in the price of photovoltaic products, the policy side and industry associations are making efforts.

On October 14, in order to prevent "involution" vicious competition, maintain the order of fair competition in the photovoltaic market, and guide the healthy and sustainable development of the industry, the China Photovoltaic Industry Association convened a conference including LONGi Green Energy, TCL Zhonghuan, JinkoSolar (688223. SH), JA Solar (002459. A total of 16 photovoltaic companies, including SZ and Tongwei Co., Ltd., held a symposium in Shanghai to prevent "involution" vicious competition in the industry.

On October 18, the China Photovoltaic Industry Association issued a document on its official WeChat public account saying that winning the bid below cost was suspected of violating the law, and gave the production cost price of N-type M10 double-glass photovoltaic modules, and the final production cost of the module including tax (excluding transportation and miscellaneous expenses) was 0.68 yuan/W.   

The association calls on manufacturing enterprises to participate in market competition in accordance with the requirements of the relevant meeting to "strengthen industry self-discipline and prevent 'involution' vicious competition", and do not carry out sales and bidding below cost. Bidding below cost will only lead to a decline in the quality of products and services, which is ultimately detrimental to the long-term and stable operation of the project. The tenderer should also respect the laws of the market, abide by the law, and formulate a reasonable bidding plan by setting the minimum price, reducing the proportion of price scores, and increasing the proportion of service and quality scores, so as to guide the bidders to shift the focus of bidding to improving the quality of products and services and improving the ability to perform the contract.

In response to the actions of the above-mentioned industry associations, LONGi Green Energy said at the performance briefing that at present, all enterprises hope that the entire industry can have a certain degree of self-discipline. Regarding LONGi's future price strategy, the company said that the company will first comply with the relevant regulations of the industry and fulfill its commitments; Secondly, in the bidding activities, the company will analyze the time and the matter on a case-by-case basis. The company also stressed that LONGi Green Energy's goal is to maintain market share while being within a reasonable range above the average market price.

The policy side is also making efforts. On October 30, the National Development and Reform Commission and other six departments jointly issued the "Guiding Opinions on Vigorously Implementing Renewable Energy Substitution Actions". The "Opinions" encourage the acceleration of the construction of large-scale wind power and photovoltaic bases focusing on deserts, Gobi and desert areas, and promote the cluster development of offshore wind power. At the same time, the "Opinions" pointed out that the integrated application of renewable energy in buildings should be deepened, the installation of photovoltaic systems on the roofs of existing buildings should be promoted, and the installation of photovoltaic systems in new factories and new public buildings should be promoted.

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