In the first half of 2024, China's photovoltaic industry is still in a period of cyclical adjustment, presenting a situation of "two extremes" in industry development.

On one hand, major segments of the photovoltaic industry chain have achieved high proportional growth in production. According to the announcement of enterprise information and industry association calculations, the production of polycrystalline silicon, wafers, cells, and modules in the country has all increased by more than 30% year-on-year, and the export volume of photovoltaic modules has increased by nearly 20% year-on-year.

On the other hand, the pressure of declining prices outweighs the increase in production. According to statistics from the China Photovoltaic Industry Association, in the first half of 2024, the prices of polycrystalline silicon and wafers dropped by over 40%, while the prices of cells and modules dropped by over 15%. The output value of domestic photovoltaic manufacturing decreased by 36.5% year-on-year, and the export value decreased by 35.4% year-on-year.

The continuous decline in the price of the photovoltaic industry chain has put significant profit pressure on many photovoltaic companies. According to incomplete statistics, in the first half of 2024, among the 20 mainstream enterprises in the four major segments of the photovoltaic industry chain (silicon material-wafer-cell-module), only 4 companies were profitable, with a total profit of only 3.05 billion yuan. The remaining 16 enterprises all suffered losses, with a total loss of 22.65 billion yuan. Among the 30 photovoltaic listed companies that have disclosed their semi-annual reports, 14 companies including Tongwei Co., Ltd., Hengdian Group DMEGC Magnetics, Jolywood, Cloud Live Technology Group, and Attas have all experienced a decline in revenue and profit.

In the current period of industry cycle adjustment and deep reshuffling of the entire industry chain, Central New Energy (01735) has been able to withstand the cycle and deliver outstanding results, maintaining a strong growth trend. According to the company's performance announcement for the first half of 2024 released on August 30th, the company's operating income for the first half of the year was 2.532 billion Hong Kong dollars, a year-on-year increase of 52.53%, and it achieved a net profit of 60.057 million Hong Kong dollars, a year-on-year increase of 149%. The achievement of this "counter-cyclical" stable growth may be attributed to the company's solid and outstanding R&D capabilities and the far-sighted vision of its management team.

The new energy business has grown across the board, and the industry cooperates to seek new opportunities for development.

Entering the photovoltaic industry, Central New Energy is moving forward in the new energy track and has now grown into a comprehensive new energy enterprise with five main business lines: new energy and EPC, integrated services of green building photovoltaics, smart energy management services, health and medical, and dining supply chain.

In the first half of the year, the company's new energy business has grown across the board. The income of the new energy and EPC division has increased by 150% year-on-year to approximately HKD 1.6814 billion, and its proportion of revenue has increased from about 40.5% to 66.4%; the income of the smart energy management services division has increased by 3218% year-on-year to approximately HKD 36.5 million, becoming the fastest growing sector.

According to reports: during the reporting period, the company's Fengtai Base's advanced components and efficient N-type cells with a total capacity of 2GW and 6GW respectively have been in full production. The first phase of Tongcheng Base, with a capacity of 12GW of efficient N-type cells, has begun mass production on July 6, 2024. It is expected that after the first phase of Tongcheng Base reaches full production, the company's total capacity of efficient N-type cells will reach 18GW. At the same time, the construction of the third phase of 8GW efficient N-type cells at Fengtai County Photovoltaic Industrial Base in Huainan City and the continued progress of the construction of the fourth phase of 8GW efficient N-type cells and 4GW advanced battery components. The construction of 12GW efficient N-type cells in Huainan High-tech Zone has begun, and the comprehensive planning and design of Huainan High-tech Zone's smart zero-carbon demonstration industrial park, including integrated "source, grid, load, storage", artificial intelligence microgrid, and energy management platform, has been completed and construction has begun.

So far, the company's main business covers the research and development, production, and sales of efficient N-type photovoltaic cells and module products, the development, construction, and operation of photovoltaic power plants, and the development, construction, and operation of zero-carbon smart parks, providing customers with one-stop comprehensive energy service solutions.

To seize the development opportunities of technological iteration and industry cycles, Central New Energy has successively signed a series of strategic cooperation agreements with Datang Anhui, China Nuclear Anhui, China Energy Anhui, Sunshine New Energy, Longi Green Energy, Yidao New Energy, and others to jointly promote the development of new productive forces and further improve the industrial ecology.

Taking the strategic cooperation with Sunshine New Energy as an example, Sunshine New Energy is a national high-tech enterprise focusing on the development and utilization of new energy, with a focus on photovoltaics, wind power, integrated fusion of wind-solar-hydrogen storage, and other fields, providing comprehensive solutions for the entire life cycle of new energy development, including system research and development, development investment, design and construction, and operation and management. It ranks among the top in photovoltaic power plant developers, while Central New Energy has achieved industry-leading positions in the research and development and production of efficient N-type solar cells and modules, with remarkable achievements. Taking full advantage of the industrial chain strengths of both parties and seizing the favorable opportunities of technological iteration and industry cycles, they have carried out cooperation in various fields such as business cooperation and technological research and development, and have established the Central-New Energy-Sunshine New Energy Photovoltaic Technology Joint Innovation Laboratory to continuously promote the innovative application of new energy technologies.

It is reported that the Central New Energy and Sunshine New Energy Joint Laboratory is located in the Fengtai Base of Central New Energy, led by Dr. Liu Zhifeng, Vice President of Central New Energy and General Manager of Central Low-carbon (Anhui) New Energy Photovoltaic Technology Co., Ltd. The establishment of this joint laboratory shows that the company's technological route, R&D strength, and product performance are at an advanced level in the industry, and also represents the recognition of the company's technological strength and innovation capability by experts, scholars, and leading companies in the industry.

Breaking the efficiency record again, core technological strength escorts the high growth of performance.

In recent years, the photovoltaic industry has undergone a profound transformation in industry capacity and demand, with the technical iteration and upgrading from p-type cells (photovoltaic cells based on p-type silicon wafers) to n-type cells (photovoltaic cells based on n-type silicon wafers).

It is understood that the upgrade path from p-type to n-type mainly includes three sub-directions: n-BC, n-TOPCon and HJT. Among them, n-TOPCon technology has obvious advantages in terms of conversion efficiency, power generation capacity, cost, reliability, and compatibility with traditional PERC (passivated emitter and rear contact) production lines, and has become the mainstream option for n-type photovoltaic cell technology.

In today's world with huge market demand and development potential, the company has always believed that only technological innovation can lead to industry reshaping and fast transformation. Therefore, the company continuously focuses on optimizing and upgrading existing technologies, actively leads the development of frontier new technologies in the photovoltaic field, and lays out for the future.

At the '2024 TOPCon Solar Cell Technology Development Trend Seminar' held in Shanghai in August, many leading companies and industry insiders generally believe that TOPCon technology will maintain its dominant position in the next five years. According to Chen Yifeng, Vice President of Trina Solar, compared to PERC cells, TOPCon can achieve an absolute efficiency increase of more than 1.5 percentage points, power output increase of more than 30W, and reduce BOS costs, and also has other advantages such as high bifaciality, high low-temperature coefficient, and low degradation value.

In June, at the 17th International Solar Photovoltaic and Smart Energy (Shanghai) Conference and Exhibition, Central New Energy's N-type TOPCon 'C-STAR' series products and green low-carbon solutions received the main European standard certification. This indicates that the 'C-STAR' series products have been acknowledged and highly praised by international standardization organizations and the industry.

It is understood that the 'C-STAR' series products utilize various technologies including low light-induced super-fine positive electrode, front surface multilayer anti-reflective passivation film, ultra-low compound emitter, high-life n-type silicon substrate, rear surface stacked passivation contact, SMBB and 0BB main gate technology, greatly improving the performance and efficiency of the cells. Through laser-assisted sintering technology (star flash technology), poly-finger passivation technology (star shine technology), and half-cell edge passivation technology (star guard technology), the efficiency of the cells has been significantly improved, achieving gains of more than 0.4%, 0.15%, and 0.20%, respectively. Compared to the mainstream 585Wp n-TOPCon modules, Central New Energy's 'C-STAR' products provide more than 1.5% additional income in terms of BOS and LCOE, with higher, more stable, and more reliable long-term power generation earnings.

In just one and a half years, the company has achieved four major leaps in N-type TOPCon conversion efficiency, steadily increasing from 26.06%, 26.31%, 26.66% to the current 26.72%. The deep technical moat and leading commercial progress will provide solid support for the company's high-quality development.

As of July 6, 2024, Central New Energy's Tongcheng Photovoltaic Industrial Base has officially started production of 12GW n-TOPCon cells, and the Fengtai Phase III and Phase IV 16GW factories are also progressing smoothly. The rapid increase in production capacity not only verifies the company's strength in technological research and development but also injects strong momentum into future performance growth.

In addition, in the technical routes of BC batteries and perovskite tandem solar cells, as well as the layout of the hydrogen energy industry chain, central new energy is also actively promoting forward-looking strategic layout, continuously leading technological innovation, cultivating new production capacity of photovoltaic new quality, seizing the opportunity of industry iteration and upgrading.

Global market demand exceeds expectations, and the high level of prosperity is expected to help boost performance.

At a time when the photovoltaic industry is under overall pressure, many research institutions are still optimistic about the industry's prospects. For example, BOC International points out that from January to June 2024, domestic photovoltaic installations grew steadily, and with the intensive production of UHV projects in 2025-2026, it is expected that the installation of central and western concentrated power plants will open upward space.

BOC International believes that economic viability is the core driving force to support the increase in photovoltaic installations, although the integration problem restricts the sustained high-speed growth of photovoltaic installations in stages, energy storage development and power grid transformation can effectively alleviate the integration problem. Overall, the high level of overseas market demand is expected to continue, with global photovoltaic installations reaching 524GW, 622GW, and 717GW respectively in 2024-2026, with year-on-year growth rates of 30.51%, 18.78%, and 15.18%.

Huaan Securities also pointed out in a recent research report that the photovoltaic sector is expected to enter the final stage of the current downward cycle in the second half of the year. At present, the sector's bearish factors have been fully digested by the market, and the subsequent bullish factors will gradually accumulate. Huaan pointed out that as capacity continues to be cleared, prices are expected to stabilize in the second half of the year, and industry prices and capacity will gradually bottom out, marking the turning point of the current downward cycle.

Under such opportunities, Central New Energy's management's 'global' perspective highlights its forward-looking nature: as early as the beginning of the production of its Fengtai base Phase I and II, the company has frequently made contact with overseas resources, attempted to layout overseas operations, and has attracted attention from relevant national governments and overseas industry counterparts on several occasions. During his visit to China, the Minister of Energy of South Africa, Gwede Mantashe, specifically visited the company's Shanghai headquarters, and Mr. Yu Zhuyun, Chairman of the Board of Directors of the company, was specially invited to attend the 28th Conference of the Parties (COP28) to the UNFCCC, which all demonstrate the company's industry-leading position and a certain international influence. It is reported that during the reporting period, the company has actively expanded its overseas sales business in the Middle East, Africa, and Spain. There are reasons to believe that the overseas business of Central New Energy may achieve a breakthrough at the beginning of the next reporting period! In the future, as the photovoltaic industry bottoms out and rebounds, Central New Energy not only has the potential to achieve double growth in performance and stock price, further expand industry visibility and brand influence, but also accelerate the technological innovation to promote the photovoltaic industry towards a more efficient, greener direction of transformation and upgrade, and embark on the path of high-quality sustainable development, achieving higher quality development in the context of increased global market space.

The business model serves as a surprise weapon, and the differentiated marketing of 'internal and external repair' avoids internal competition.

"Win at the starting line." This is the accurate positioning of Central New Energy in the photovoltaic industry by many industry leaders. Without the burden of P-type cell capacity clearance or shutdown, the company has comprehensively deployed efficient N-type technology route cells and chosen Dr. Liu Zhifeng's team, who leads the "domestic efficient N-type cell first echelon". The company's decision to enter the industry fully complies with the current industry technology roadmap and product demand, making it a leader in the industry!

"Practice internal skills and reduce costs and increase efficiency." Central New Energy not only has a strong start in the high-end manufacturing industry, but also leverages the synergies within the group to provide smart energy management services to Fengtai and Tongcheng bases. Through various system integration and technical solutions such as multi-energy complementarity and energy coupling, and the use of artificial intelligence and big data platforms, the company can reduce energy consumption costs by about 20%, giving its efficient N-type cells and advanced battery modules a natural cost advantage and highlighting their market competitiveness. It is reported that the company's smart energy management services have evolved into the development and construction of "zero-carbon smart parks", which can not only help customers reduce costs and increase efficiency, promote efficient use of energy, and improve corporate profits, but also help local governments strengthen green economic construction, achieve greenization of local industries, digitalization of operations, and greening of debt, truly realizing the major development of new productive forces!

"Adapting to local conditions" for stable development. Looking back at the choices made by Central New Energy in the landing of its industry, it is not difficult to see that it has always followed the "scientific development concept" in its business strategy: only choosing areas with abundant power station resources and industry-intensive areas for landing, from consumption to capacity promotion, and steady expansion. For example, in Fengtai, Anhui Province, the company used industrial order exchange to adapt to local conditions and make use of the abundant coal mine subsidence water resources formed in abandoned coal mining areas to build distributed photovoltaic power stations on water surfaces. This not only digested capacity but also turned waste into treasure, helping traditional energy regions to transition to the new energy industry. Synergistic zero-carbon park construction for common development, with the development and construction of multiple platforms such as distributed power stations, smart energy storage, zero-carbon management platforms, and comprehensive energy services, creating a closed-loop of differentiated business models by further creating and expanding industrial-side consumption through "source, grid, load, and storage".

In fact, Central New Energy has already initially built industry barriers. Based on the advantages of Anhui's industry and geography, and with the advanced N-type cell technology complemented by the zero-carbon industry platform solution, it has opened up a new path in the fiercely competitive photovoltaic industry through differentiated operation. Once the industry's downward cycle ends, Central New Energy, with its unique business model and leading technology roadmap, may have the opportunity to reshape the photovoltaic industry and become one of the most important leading players in the new energy industry, thus bringing long-term, stable, and high-quality investment returns to investors.