When facing thousands of listed company announcements every day, which ones should you read? What are the key points to take away from the dozens or hundreds of pages of material announcements? Are the many professional terms in the announcements bullish or bearish? Check out Caixin's "Quick Read Announcement" column, where our reporters across the country will provide you with accurate, fast and professional interpretations on the night of the announcement.

The largest-scale merger and reorganization in the photovoltaic industry in recent years has arrived.

Tonight, Tongwei Co., Ltd. (600438.SH) announced that it intends to increase its investment in Runyang Co., Ltd. and acquire its controlling rights. According to public data, Tongwei Co., Ltd. and Runyang Co., Ltd. have ranked among the top five in the industry in terms of battery cell shipments for consecutive years. Infolink data shows that in 2023, Tongwei Co., Ltd.'s battery shipments ranked first, and Runyang Co., Ltd.'s battery shipments ranked fifth.

Why did Tongwei Co., Ltd. choose Runyang Co., Ltd.? Industry analysts believe that from the production capacity perspective, the two have a very high degree of overlap and basically realize integrated layout, but it is nothing more than "big fish eat small fish". Although the scale effect of photovoltaic manufacturing can bring cost advantages, in the current situation of supply and demand mismatch, the burden brought by expansion cannot be ignored.

Some executives of listed companies told Cailian Press that Runyang Co., Ltd.'s more important advantage may lie in its overseas production capacity and channel layout. According to Runyang Co., Ltd.'s prospectus, the company added battery and module production lines in Thailand in 2022. Currently, the company's large-size battery production capacity overseas has exceeded 5GW and has built 2GW of large-size module production capacity, effectively improving its international market share.

In July of this year, the person in charge of Runyang Co., Ltd. stated in an interview with the media that the European Union, the United States, South America and other regions are the company's advantageous areas. Europe and the United States account for more than 80% of Runyang’s shipments, and "RUNERGY" has become a brand that has successfully entered the top five photovoltaic component manufacturers in the United States. The company is also laying out other key overseas markets. It is expected that the company's target for overseas component shipments in 2024 will be around 6.5GW.

In the intention of capital increase, Tongwei Co., Ltd. stated that after many years of development, Runyang Co., Ltd. has also established a competitive production capacity layout in some overseas markets such as the United States, Thailand, and Vietnam, which can meet the requirements of tracing the source in overseas markets.

In July of this year, Runyang Co., Ltd., which had been running for nearly two and a half years for IPO, failed to issue shares due to invalid approval documents. Subsequently, Runyang Co., Ltd. chose to be listed in the "curve", that is, be incorporated into a listed company. According to Tongwei Co., Ltd.'s announcement, the company intends to sign an "Intention of Capital Increase Agreement" with Runyang Co., Ltd., Shanghai Yueda Xinsi Industry Group New Energy Co., Ltd. and other related shareholders of Runyang, Jiangsu Yueda Group Co., Ltd., and make a cash capital increase of RMB 1 billion to Runyang Co., Ltd. after the aforementioned agreement is signed.

After the company completes the due diligence, audit, evaluation, and formal capital increase specific plan with all parties, it will use its own or self-raise funds to increase Runyang Co., Ltd.'s cash capital, while cash acquisition of the aforementioned RMB 1 billion capital increase of Jiangsu Yueda Group Co., Ltd. in Runyang Co., Ltd., totaling more than 51% of the equity of Runyang Co., Ltd.

The total amount of the above transaction does not exceed RMB 5 billion. After the transaction is completed, Runyang Co., Ltd. will become a wholly-owned subsidiary of the company. The price is preliminarily negotiated, and specific transaction details still require further negotiation by all parties based on audit reports, evaluation reports, etc. issued by intermediary agencies.

It is worth noting that if the transaction is successfully completed, it may be the largest merger and reorganization in the photovoltaic industry in recent years, and the overall production capacity scale of Tongwei Co., Ltd. will be further improved.

Tongwei Co., Ltd. is the dual leader of polycrystalline silicon and battery cells in the photovoltaic crystal silicon industry chain. As of the end of 2023, the company has a production capacity of 0.45 million tons of high-purity silicon, and a planned production capacity of 0.4 million tons; In terms of battery cells, the company's battery sales in 2023 are 80.66GW (including self-use), a year-on-year increase of 68.11%, and it has been the first in the InfoLink Consulting solar cell shipments for seven consecutive years. Jiangsu Runyang's battery cell shipments also rank among the top for years. From 2020 to 2022, Runyang Co., Ltd. ranked among the top three in global battery shipments for three consecutive years, and still maintained the top five battery shipments globally in 2023.

From the perspective of production capacity layout, Jiangsu Runyang is not a single solar cell manufacturer. At present, it has formed industrial silicon production capacity of 0.055 million tons, polycrystalline silicon production capacity of 0.13 million tons, ingot production capacity of 7GW, and wafer production capacity of 10GW in the upstream of the industry chain; in the middle of the industry chain, it has formed efficient solar cell production capacity of 57GW; in the downstream of the industry chain, it has formed module production capacity of 13GW, and appropriately laid out some photovoltaic power station businesses. Based on this calculation, after the completion of this acquisition, Tongwei Co., Ltd.'s total cell production capacity in the cell link is expected to exceed 130GW.

At the PV industry review and outlook seminar for the first half of 2024 held in July this year, a person in charge of the China Photovoltaic Industry Association said that adjustment is appropriate and urgent for the PV industry. Currently, the competition inside and outside the industry is fierce. The industry needs to "travel light". The integration time should not be too long. We need to promote the elimination of backward production capacity and encourage enterprise mergers and reorganizations.

Tongwei Co., Ltd. stated in the announcement that this transaction is in line with the relevant opinions of the departments concerned regarding guiding the orderly and healthy development of the photovoltaic industry, and is conducive to promoting the integration of high-quality resources in the photovoltaic industry, reducing waste of social resources and inefficient competition in the industry, and improving the overall efficiency of the photovoltaic industry.