Gone are the good days of the PV industry. After a large loss, Tongwei (600438.SH) plans to suspend an investment in the photovoltaic sector.

On the evening of February 14, Tongwei Co., Ltd. announced that it would terminate the intentional capital increase to Jiangsu Runyang New Energy Technology Co., Ltd. (hereinafter referred to as Runyang Co., Ltd.). The capital increase is expected to be no more than 5 billion yuan, and the two parties originally planned to cooperate and optimize the polysilicon business.

At the same time, a number of capital operations led by Liu Shuqi, chairman of Tongwei Co., Ltd., have suffered repeated setbacks, including the withdrawal of the 16 billion yuan fixed increase plan. In the context of the low prosperity of the photovoltaic industry, the operating pressure of Tongwei shares is highlighted. In 2024, the company expects a loss of 7 billion to 7.5 billion yuan, and the stock price has also fallen sharply from its high.

Capital operation has suffered repeated setbacks

As early as November 2024, Runyang's Thailand factory fell into a storm of shutdown. In the same month, Tongwei announced that the above-mentioned matters were still in progress, and the parties to the transaction were still continuing to negotiate on matters related to the transaction, and it was not ruled out that the original transaction plan might be adjusted or terminated. Until now, the dust has settled and the investment plan has collapsed.

Tongwei Co., Ltd. originally planned to increase its capital to Runyang Co., Ltd. in cash, and at the same time acquired the equity of Runyang Co., Ltd. obtained by Jiangsu Yueda Group Co., Ltd. with a capital increase of 1 billion yuan in the early stage, and obtained a total of not less than 51% of the equity of Runyang Co., Ltd. The total amount of the above-mentioned transaction does not exceed 5 billion yuan, and after the completion of the transaction, Runyang will become a holding subsidiary of the company.

Runyang's main business is mainly R&D, production and sales of high-efficiency solar products, and at the same time involved in industrial silicon, polysilicon, silicon wafers, modules and photovoltaic power station business, and has formed a polysilicon production capacity of more than 130,000 tons through Inner Mongolia Runyang Yueda New Energy Technology Co., Ltd. and Ningxia Runyang Silicon Material Technology Co., Ltd.

Tongwei Co., Ltd. once said in the announcement that from 2020 to 2022, Runyang Co., Ltd. ranked among the top three in the world in battery shipments for three consecutive years, and will still maintain the top five in the world in battery shipments in 2023. The transaction will help Tongwei and Runyang achieve industrial chain synergies and consolidate Tongwei's core competitiveness in the global photovoltaic industry, especially in the fields of high-purity crystalline silicon, high-efficiency solar cells and modules. In addition, Runyang's layout in overseas markets will help Tongwei expand overseas sales channels and enhance its global comprehensive competitiveness.

Looking back on the past, after Liu Shuqi became the chairman of Tongwei Co., Ltd., he tried to carry out capital operation many times.

In April 2023, Tongwei Co., Ltd. launched a fixed increase plan of 16 billion yuan for the 200,000-ton high-purity crystalline silicon project in Inner Mongolia and the high-purity crystalline silicon green energy project of Yunnan Tongwei Hydropower (the second phase of the 200,000 tons/year high-purity crystalline silicon project). In September of the same year, the company said that due to changes in the capital market environment, the company's value was significantly undervalued, and it chose to withdraw the private placement plan.

Last year, Tongwei suffered a huge loss of 7 billion to 7.5 billion yuan

The main reason for Tongwei's reduction in investment and expansion is that the prosperity of the photovoltaic industry is still low. In 2024, Tongwei shares will be mired in losses. According to the performance forecast, it is expected that the net profit attributable to shareholders of listed companies will be -7 billion yuan to -7.5 billion yuan in 2024, turning from profit to loss year-on-year.

As early as a few years ago, Tongwei's net profit was at the level of 10 billion. From 2021 to 2023, the company will achieve net profits of 8.208 billion yuan, 25.726 billion yuan, and 13.574 billion yuan respectively.

Regarding the change in performance, Tongwei Co., Ltd. said that in 2024, the main manufacturing links of the photovoltaic industry will show a severe market environment of phased supply and demand imbalance. Under the impact of the sharp decline in market prices in all links of the photovoltaic industry chain, or even continued to be lower than the industry's cash costs, and the impact of the impairment and scrapping of long-term assets of about 1 billion yuan throughout the year, the company still recorded a loss for the whole year despite maintaining a net inflow of operating cash flow.

Affected by the performance, Tongwei's share price fell to the bottom. In the secondary market, the latest share price of Tongwei shares is 21.47 yuan per share, corresponding to a market value of 96.7 billion yuan, almost falling to 1/3 of the high point. In July 2022, the company's share price reached a maximum of 60.04 yuan per share, corresponding to a market value of about 270 billion yuan.

The stock price continued to decline, and Tongwei chose to repurchase shares. In April 2024, Tongwei announced that it planned to repurchase shares with 2 billion yuan to 4 billion yuan of its own funds for the employee stock ownership plan. As of February 2025, the company has repurchased a total of 101 million shares of the company through centralized bidding transactions, accounting for 2.25% of the company's current total share capital, with a total transaction amount of 2 billion yuan. The company's share repurchase has reached the lower limit.

GCL-ET, which uses a granular silicon process, is profitable

According to public information, there are two mainstream polysilicon production routes in the market, namely the modified Siemens method and the silane fluidized bed method, and the product forms are rod silicon and granular silicon respectively.

Among them, photovoltaic enterprises represented by Tongwei Co., Ltd. and Daqo Energy (688303.SH) use the improved Siemens method, which is currently the mainstream; The silane fluidized bed method (FBR) represented by GCL-ET (002015.SZ) and Shaanxi Nonferrous Tianhong Ruike Silicon Materials Co., Ltd. (hereinafter referred to as Tianhong Ruike) is developing rapidly.

In contrast, the improved Siemens process is mature and stable, with high energy consumption, high product quality, and suitable for large-scale production. The silane fluidized bed method (FBR) has low energy consumption, high continuous production efficiency, and environmental friendliness, but has high safety requirements.

As early as the 2022 annual report, GCL-ET announced that it would withdraw from the high-cost Siemens rod silicon production field in an orderly manner and transfer its limited production capacity to granular silicon. Correspondingly, as of the end of 2023, Tongwei Co., Ltd. publicly responded that it did not produce granular silicon products.

In the first three quarters of 2024, GCL-ET achieved a net profit attributable to the parent company of 606 million yuan, a year-on-year decline but still maintained profitability. Tongwei Co., Ltd., which uses the improved Siemens method, lost 7 billion yuan, and Daqo Energy suffered a loss of 2.6 billion yuan to 3.1 billion yuan.

According to a previous report by "Investment Express", in December 2024, it was rumored that Tongwei Co., Ltd. would enter granular silicon with a "high salary", but the company denied it. According to the updated information from the State Intellectual Property Office, Sichuan Yongxiang Energy Technology Co., Ltd. has applied for a patent called "a granular silicon fluidized bed", publication number CN119056352A, and the application date is October 2024. Sichuan Yongxiang Energy Technology Co., Ltd. is a subsidiary of Tongwei Co., Ltd.

When Tongwei shares will get out of the loss quagmire and whether it will turn to the granular silicon production process, "Investment Express" will continue to pay attention.