October 31st, Caixin Financial News (Reporter Liu Mengran) - As the disclosure of third quarter financial reports is approaching completion, the performance of listed companies in the photovoltaic sector is generally under pressure due to the significant decline in prices in the industry chain. The main segments of the crystalline silicon industry chain (silicon material, silicon wafer, battery, module) are suffering severe losses, with some links stuck in a situation of 'selling more and losing more'.

After the 'winter' in the second quarter, the photovoltaic industry has not yet completed capacity clearance but has reached the bottom of the cycle, with some module companies beginning to see performance improvement. According to incomplete statistics from Caixin Financial News, among the listed companies in the main photovoltaic industry chain that have disclosed financial reports, Ates, GCL System Integration, Jinko Solar, and Hengdian Group DMEGC have sustained positive net income in the first three quarters; JA Solar Technology, after a loss of 0.874 billion yuan in the first half of the year, achieved a net profit of 0.39 billion yuan in Q3.

At the same time, the ranking of component shipments in the first three quarters has been roughly revealed. Combining corporate information and institutional statistics, the top component manufacturers such as Jinko Solar, JA Solar Technology, Trina Solar, and Longi Green Energy have all shipped over 50GW, totaling over 200GW. Industry analysis indicates that in the extreme market situation of off-peak season, low demand, and price competition, market orders are gradually concentrating on a few high-quality companies.

Five component manufacturers achieved profitability in Q3

In the first three quarters of this year, Jinko Solar shipped 73.13GW of photovoltaic products, a year-on-year increase of 31.29%, with component shipments accounting for 67.65GW. According to third-party institutional statistics, its shipment volume continues to lead the industry.

In terms of performance, Jinko Solar is one of the few component manufacturers that remained profitable in the first half of the year. In the first three quarters of this year, the company achieved revenue of 71.77 billion yuan, a year-on-year decrease of 15.66%; net profit attributable to shareholders of the listed company was 1.215 billion yuan, a year-on-year decrease of 80.88%. Looking at the quarters, Q3 net profit was 14.8742 million yuan, a year-on-year decrease of 99.41%, however, non-GAAP net profit was 0.259 billion yuan, showing a significant improvement quarter-on-quarter. The company's gross margin also increased from 8.1% in the second quarter to 11.8%.

JA Solar Technology's Q3 performance is considered to have exceeded market expectations. Looking at the quarters, the company's net profit attributable to shareholders for the first three quarters of this year were -0.48 billion yuan, -0.39 billion yuan, and 0.39 billion yuan, showing a gradual growth trend and successfully turning losses into profits in the third quarter. In terms of gross margin, the company's gross margin in the third quarter was 8.7%, a significant increase from the first and second quarters.

Ates, Gcl System Integration, and Hengdian Group Dmegc Magnetics had Q3 net profits of 0.716 billion yuan, 38.57 million yuan, and 0.285 billion yuan, respectively. Although there was a year-on-year decrease, they were able to achieve profitability under pressure on profits in each link, demonstrating strong resilience. Among them, Ates' total net profit for the first three quarters was 1.955 billion yuan, the highest among component companies.

Since 2024, due to the continuous impact of the imbalance between supply and demand in the photovoltaic industry, in the process of industry reshuffle, products in various links of the photovoltaic industry chain have been caught in irrational price wars, leading to industry-wide losses for the first time since 2016. However, looking at the layout of the profit-making companies above, early realization of N-type production capacity expansion and continuous consolidation of overseas markets are important factors for component manufacturers to enhance risk resistance during industry downturns.

Jinkosolar's N-type TOPCon shipments accounted for over 85% in the first three quarters, ensuring continuous increase in its market share. The company stated in its third quarter report that it will strive to achieve an annual shipment of 90-100 GW, and better balance shipment volume and profit; at the same time, the contribution of high-margin overseas markets such as the USA and the Middle East has effectively supported the company's profit, with overseas markets contributing to over 70% of revenue as mentioned in the semi-annual report.

According to Jinko Solar's production capacity plan, module production capacity will exceed 100 GW by the end of 2024, with silicon wafer and cell capacity reaching 80% of module capacity, including 57 GW of N-type cell capacity.

Gcl System Integration's 20GW (Phase 1 10GW) N-type TOPCon cell project in Wuhu achieved full production at the end of 2023, with capacity now increased to 12GW through technological upgrades; the newly built 2GW 210R size cell production line also started operation in August this year. In addition to winning multiple component procurement projects this year, the company has also successively secured large orders in the GW scale from overseas markets such as India, resulting in a significant year-on-year growth in overseas market shipments.

Among the top-tier component manufacturers, Longi Green Energy and Trina Solar Co., Ltd. incurred losses in the first three quarters. Longi Green Energy Chairman Zhong Baoshen admitted at yesterday's performance briefing that missing the high-profit US market and mismatched production and sales caused significant losses in the first three quarters. Trina Solar Co., Ltd. stated in its financial report that net profit decreased year-on-year, mainly affected by the supply and demand dynamics in the photovoltaic industry chain, with a year-on-year decline in selling prices of photovoltaic component-related products leading to decreased profitability of photovoltaic products.

Upstream losses are still ongoing.

Apart from integrated component manufacturers still having room for maneuvering, the silicon material and wafer segments are still generally experiencing losses. Tcl Zhonghuan Renewable Energy Technology (002129.SZ) is one of the leading companies in the wafer segment, with a shipment of approximately 94.86 GW of photovoltaic materials in the first three quarters of this year, an 11.4% year-on-year increase. However, in terms of performance, both revenue and net profit have seen significant declines.

The company's revenue in the first three quarters was 22.582 billion yuan, a year-on-year decrease of 53.59%; the net income attributable to the mother was -6.061 billion yuan, a year-on-year decrease of 197.95%. In the third quarter, the net income attributable to the mother increased to a loss of 2.998 billion yuan, and has been in a continuous loss for four consecutive quarters.

The company stated in the financial report that the photovoltaic industry is still in a state of supply and demand imbalance in the third quarter. Although prices stabilized after the end of August, prices and costs are still inverted in various links of the main industry chain. The company's new energy materials have leading industry cost per watt, but due to product prices and inventory effects, the total loss has increased.

Due to the continuous decline in silicon wafer prices, there is significant pressure on the impairment of inventory in the silicon wafer segment. TCL Zhonghuan recognized 2.439 billion yuan in asset impairment losses in the first three quarters, impacting actual profits by 0.47 billion yuan.

The silicon wafer segment is the most pressured part of the industry chain. Several 'silicon wafer rookies' had losses of over 1 billion yuan in the first three quarters. Shuangliang Eco-energy (600481.SH), Hoyuan Green Energy (603185.SH), and Beijing Jingyuntong (601908.SH) reported net losses of -1.339 billion yuan, -1.63 billion yuan, and -1.409 billion yuan, respectively. Many companies stated that performance losses were greatly influenced by market demand and fluctuations in product prices; due to changes in the overall industry environment, companies are facing significant operational pressures.

Tongwei Co., Ltd. (600438.SH) is a leader in polycrystalline silicon and solar cell production, with losses of 3.973 billion yuan in the first three quarters; GCL Tech (03800.HK) reported losses of approximately 2.971 billion yuan in the first three quarters; Daquan Energy (688303.SH) had losses of 1.099 billion yuan in the first three quarters; Xinte Energy (01799.HK) reported losses of 1.405 billion yuan in the first three quarters.

However, several silicon material companies narrowed their losses in Q3. Tongwei Co., Ltd. reported a loss of 0.844 billion yuan in Q3, GCL Tech reported a loss of 1.492 billion yuan in Q3, and Daquan Energy reported a loss of 0.429 billion yuan in Q3, all showing a narrower loss compared to Q2.

A spokesperson for GCL Tech informed the Securities Times that the company's cash cost for granular silicon in the first three quarters was respectively 37.84 yuan/kg, 35.19 yuan/kg, and 33.18 yuan/kg (including R&D costs). Against the backdrop of continuous decline in average selling prices, the company narrowed its Q3 losses compared to Q2 by reducing costs, increasing efficiency, and improving quality.

Due to the sustained substantial losses in the first three quarters, several leading photovoltaic companies are still facing the risk of their first annual losses in the annual report. Liu Hanyuan, Chairman of Tongwei Group, recently stated publicly that if the full-year performance remains in the red, it will mark Tongwei's first annual loss in its 23 years of listing on the A-share market and its first loss in 42 years of operation.

Can industry 'self-discipline' accelerate the bottoming out of the cycle?

Entering the fourth quarter, in the face of the current situation of ineffective capacity clearance, the industry's 'self-discipline' is frequently mentioned. On October 14th this year, a symposium led by the China Photovoltaic Industry Association to prevent vicious competition within the industry was held in Shanghai. After the meeting, 14 leading photovoltaic companies engaged in full exchanges on 'strengthening industry self-discipline, preventing vicious competition, enhancing market survival of the fittest mechanism, and facilitating the exit of backward and inefficient capacity,' as well as promoting the healthy and sustainable development of the industry, reaching a consensus.

According to insiders, in the afternoon of October 28th, under the organization of the China Photovoltaic Industry Association, leading silicon material companies held another internal meeting to discuss production restrictions in areas such as silicon materials and solar cells. Analysts from China Merchants Securities and other institutions believe this is a positive signal. Although specific production restriction plans may not be immediate, it is highly probable that some consensus will be reached later on. If the most severe and operationally challenging production restrictions in the silicon material segment are implemented, the prices in the industry chain from silicon material to components may quickly recover.

It is worth noting that several industry insiders emphasize the difficulty of achieving industry self-discipline. Zhong Baoshen believes that too many operators will always be the biggest challenge to industry self-discipline. The more operators there are, the difficulty of coordination and self-discipline will multiply. He suggests that industry consolidation through raising technical standards and quality standards, reducing the number of industry operators, and moderating the reduction of industry operators will be beneficial for industry self-discipline and healthy development.

The good news is that several leading photovoltaic component manufacturers have recently announced price adjustments, with adjustments ranging from 0.01 yuan/W-0.03 yuan/W. Following the China Photovoltaic Industry Association's publication of a 0.68 yuan/W 'reference price,' the overall bidding price range for recent group procurement has also been adjusted upward. According to analysts interviewed by Caixin, leading component manufacturers are actively responding to policy guidance and industry self-discipline measures, gradually alleviating the phenomenon of price undercutting.