Finance Association, January 14 (Reporter Wu Chao) A new wave of investment in the photovoltaic industry is surging. Mubang Hi-Tech (603398.SH) announced today that it has signed a “Project Investment Agreement” with the Tongling Lion Rock High-tech Industrial Development Zone Management Committee and Tongling Hi-Tech Development Investment Co., Ltd. The project plans to invest a total of about 7 billion yuan to build a production base project with an annual output of 10GW-N high-efficiency batteries and 10GW slices. However, under the dual challenges of financial pressure and market competition, whether the company can successfully complete project construction and achieve the expected benefits has yet to be further tested by the market.

According to reports, the construction of this major project will be divided into two phases. The first phase of the project will build a production line for 5GW-N high-efficiency cells and 5GW slicing projects with an annual output of about 4 billion yuan, of which the fixed asset investment will reach 3 billion yuan. Meanwhile, the second phase of the project is planned to start after the first phase is put into operation, and to build a production line for 5GW-N high-efficiency cells and 5GW slicing projects per year, with an estimated investment of 3 billion yuan, of which 2 billion yuan will be invested in fixed assets.

The project was located in the Tongling Lion Mountain High-tech Industrial Development Zone, covering an area of about 330 acres. In order to ensure the smooth progress of the project, Mubang Hi-Tech is required to register and establish a project company at the project site within 10 working days after the project investment agreement comes into effect, and promises to operate in the Shizishan High-tech Zone Park for at least 10 years after the project is put into operation.

It is worth mentioning that the agreement also puts forward clear requirements on the construction progress, investment intensity, and operating indicators of the project. The Shizishan High-tech Zone will be responsible for completing the construction tasks of the project building by the end of June 2024, while Mubang Hi-Tech will be required to complete the installation, commissioning and production of the equipment within 3 months after completion, acceptance and delivery of the main plant. Furthermore, within 3 years after the start of the project, the cumulative fixed asset investment should be no less than 5 million yuan/mu.

In terms of operating indicators, the agreement also sets high standards. In the first operating year after the first phase of the project was put into operation, the project's sales revenue must reach no less than 1.5 billion yuan, and the tax revenue for the second business year should not be less than 2.5 billion yuan, and the tax revenue for the third business year should not be less than 4 billion yuan, and tax revenue should not be less than 250 million yuan; and for the 4th to 8 business years after the project was put into operation, the average annual tax must remain above 300 million yuan.

Photovoltaic industry insiders told the Financial Federation reporter that Mubang Hi-Tech has invested heavily in photovoltaic projects. From the perspective of strategic layout, the company is clearly very optimistic about the prospects of the new energy market, especially the photovoltaic sector. However, investing always involves risk. First, the source of funding for this huge investment project is a major challenge. Second, market competition is also a factor that cannot be ignored. The photovoltaic industry has entered a stage of intense competition, and major enterprises are increasing their investment efforts to improve production capacity and technology levels. If Mubang Hi-Tech wants to stand out from the fierce competition, it still needs to make more efforts.

According to financial data disclosed by the company, the company's audited monetary fund balance at the end of 2022 was only 51 million yuan, and the company's monetary fund balance at the end of the third quarter of 2023 was only 168 million yuan (unaudited). Although the Tongling Lion Rock High-tech Industrial Development Zone Management Committee has promised to provide some financial support and related subsidies, the agreed investment amount for the project is still far higher than the company's book monetary capital level.

Currently, Mubang Hi-Tech has not specified the financing arrangements for this phase of the project. The company said that in the future, if funds are tight during the specific implementation of the project, it may affect the investment amount and investment progress of the project. If it is necessary to resolve financial issues through bank financing or other means, it may lead to an increase in financial expenses, which in turn will adversely affect the company's net profit.

It is worth noting that this is not the first time that Mubang Hi-Tech has invested in the photovoltaic field. Previously, the company had announced a number of photovoltaic projects with an investment amount of several billion yuan. Among them, the 10GW high-efficiency photovoltaic cell project invested in cooperation with the Wuzhou Municipal Government is progressing smoothly. At present, civil construction work has basically been completed, and production lines and related auxiliary equipment are being installed and commissioned one after another. Meanwhile, the 10GW TopCon photovoltaic cell production base project investment strategic cooperation framework agreement signed with the Echeng District Government of Ezhou City, Hubei Province, has been terminated. In addition, the company also signed an investment strategic cooperation framework agreement with the Anyi County People's Government in Jiangxi Province for the 8GW TopCon photovoltaic cell production project, but it has also been terminated.