Financial Services Association, April 26 (Reporter Wu Chao) Affected by the sharp drop in prices in the photovoltaic industry chain last year, silicon wafers and even Hongyuan Green Energy (603185.SH), which has been expanded and integrated in recent years, have also experienced a decline in performance for the first time since 2020. According to the financial report released by the company, both revenue and net profit declined in 2023. Meanwhile, in the current context where many aspects of photovoltaics have fallen below cost prices, the company has launched a 5.5 billion yuan production expansion plan.

According to the 2023 report, the company achieved operating income of 11.859 billion yuan, a year-on-year decrease of 45.87%; realized net profit of 741 million yuan, a year-on-year decrease of 75.58%; realized net profit without deduction of 568 million yuan, a year-on-year decrease of 77.68%. The Financial Services Association reporter noticed that this decline has almost erased the rapid growth rate of the past three years, causing the company's net profit to fall close to the level of 512 million yuan in 2020.

On a quarterly basis, in the first three quarters of last year, Hongyuan Green Energy achieved profits. However, by the fourth quarter, the company's revenue scale had dropped to 2.281 billion yuan, and the company also experienced its first loss in a single quarter since its listing in 2018, with a net loss of 578 million yuan.

However, looking at the operating conditions of various products disclosed by the company, the equipment sector was still able to maintain a high gross profit margin last year. The gross margins for special photovoltaic equipment and semiconductor equipment were 29.29% and 44.02% respectively, all with little change from the previous year. However, in the silicon wafer and silicon rod business, which accounted for the highest revenue share, gross margin fell to 17.85%, a decrease of 3.56 percentage points from the previous year; the solar modules and batteries, high-purity silicon, and chemical businesses experienced losses, with gross margins of -13.57% and -59.96% respectively.

Hongyuan Green Energy said that in 2023, the company's main business, the monocrystalline silicon wafer business, continued to reduce costs and increase efficiency, but due to the obvious drop in product prices, gross profit was affected to a certain extent, making the company's profit level lower than the same period. At the same time, the company expanded upstream and downstream of the industrial chain, and the new silicon, battery, and component business capacity was put into operation in 2023. The new business is in a phase where production capacity is climbing, which has had a certain impact on the company's business performance.

However, the company believes that when new businesses are delivered one after another, the company's product structure will be adjusted and upgraded, the integrated layout will bring further cost advantages, and the risks caused by industry fluctuations will be reduced in the future.

According to reports, in 2023, Hongyuan Green Energy launched several projects, including: in June, the first film of the company's N-type TopCon high-efficiency cell project was successfully launched; in August, the first phase of the company's N-type TopCon photovoltaic module project was successfully launched; and in August, the first phase of the company's high-purity crystalline silicon project was successfully put into operation.

However, Hongyuan Green Energy has not stopped increasing the pace of expanding production. While announcing the annual report, it also disclosed an announcement on investing in the construction of a 16 GW photovoltaic cell project in Baotou.

According to the announcement, the total investment of the project is estimated to be 5.5 billion yuan, of which the fixed asset investment is about 4.5 billion yuan. The project is being implemented in two phases. The first phase is to build a 10GW photovoltaic cell project, which is expected to be put into operation in 2025, with an investment of about 3.6 billion yuan; the second phase of the 6GW photovoltaic cell project will drive the progress of the project and invest about 1.9 billion yuan according to market conditions.

Regarding the impact of this investment, Hongyuan Green Energy said that since 2019, the company has invested in the construction of photovoltaic monocrystalline silicon production capacity in Baotou. Currently, it has a complete silicon rod production line and supporting chip production capacity locally, providing raw materials for this investment in battery construction, shortening the procurement cycle, reducing transportation costs, forming industrial synergy effects, expanding the company's local production capacity support advantages, improving the company's competitiveness and resilience to risks, and in line with the company's strategic layout in the photovoltaic industry chain.

However, the company also warned that the photovoltaic industry has developed rapidly in recent years, large-scale investment in production expansion has intensified competition in the photovoltaic industry, the price of photovoltaic products has fluctuated greatly, and the relationship between supply and demand in the photovoltaic market has changed greatly. The battery project invested in this investment has certain complexity. The future development of the new project company may be affected by various factors such as the upstream and downstream environment of the industry, industry competition, and technological changes, which may cause the benefits of this project to fall short of expectations.