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According to Cailian Press on August 30th, following a brief period of enjoying the benefits brought by the layout of photovoltaic silicon wafer manufacturing, Shuangliang Eco-Energy Systems (600481.SH) quickly faced the test of the industry downturn cycle.

The semi-annual report disclosed today shows that the company's net profit attributable to shareholders of the listed company has exceeded 1.2 billion yuan in loss, with a loss of 0.963 billion yuan in the second quarter, marking the largest single-season loss in nearly five years.

Shuangliang Eco-Energy Systems started to lay out the silicon wafer business in 2021, and the silicon wafer production capacity continued to expand. In 2023, the company's 40GW monocrystalline silicon project capacity will gradually increase, and after the third phase of capacity enters the capacity climb, the scale of capacity will rank among the top in the industry.

However, the expanded capacity, facing the overall downward trend of the photovoltaic industry chain prices, instead began to drag down performance. The interim report shows that the company achieved operating income of 6.979 billion yuan during the reporting period, a decrease of 42.45% year-on-year; the net profit attributable to shareholders of the listed company was a loss of 1.257 billion yuan. In the same period last year, a profit of 0.618 billion yuan was achieved.

Regarding the reasons for the loss, the company explained that the intensified market competition in the photovoltaic industry and the continuous decline in the prices of photovoltaic products throughout the industry chain led to a significant decline in gross profit from monocrystalline silicon business and a significant increase in provision for the decline in inventory value, resulting in the company's net profit for the reporting period turning negative.

Cailian Press noticed that due to intensified supply-side competition and inventory pressure, the price of silicon wafers accelerated its decline in the second quarter, with an overall decline of more than 40% in the first half of the year. The company's H1 asset impairment loss was 0.675 billion yuan, mainly due to the provision for decline in the value of photovoltaic inventory.

In terms of financial data, as of the end of June, the company's total assets were 30.36 billion yuan, and the net cash flow generated from operating activities was -1.28 billion yuan. In the mid-year report, the company mentioned that the photovoltaic industry chain had losses in the first half of the year, and the pressure on corporate cash flow increased due to changes in the financing environment, indicating that the industry adjustment space is gradually emerging.

Also influenced by the expansion of the photovoltaic business, the company's debt-to-asset ratio is relatively high in the industry. According to Choice data, as of the first half of 2024, the company's total liabilities reached 24.746 billion yuan, an increase of 50.79% year-on-year, and the debt-to-asset ratio reached 81.5%. In the risk warning, the company stated that if there are significant adverse changes in the company's operating environment and the debt level cannot be maintained within a reasonable range, the company may face debt repayment risks.

However, in the silicon wafer segment, prices have shown signs of recovery after experiencing a period of oversupply followed by correction, and it is currently in fierce competition. According to news from the Silicon Industry Branch this week, after Longi officially increased prices on August 29th, shipments of silicon wafers increased, followed by Zhonghuan, Gaojing, and Shuangliang, with second and third-tier companies all raising their quotes.

But the transaction situation is not optimistic. According to research information from Infolink, the expectation of an increase in silicon wafer prices has caused strong resistance from battery companies. The Silicon Industry Branch pointed out in its analysis that some battery companies have accepted the new prices, and silicon wafer companies are executing new order contracts at the new contract prices. They are no longer accepting price increases and are not delivering. This week, there have been fewer transactions of silicon wafers.

Starting this month, leading silicon wafer company TCL Zhonghuan (002129.SZ) has begun to reduce its operating rates, with the operating rates of the two first-tier companies adjusting to 60% and 65% respectively this week. The Silicon Industry Branch believes that in the medium to long term, the supply and demand pattern of silicon wafers is clearly improving, which will provide certain support for this round of price increases.

Shuangliang Eco-Energy Systems mentioned in the mid-year report that the number of photovoltaic projects put into operation, under construction, and planned in the first half of the year has significantly decreased compared to the same period last year, and there have been frequent cases of project termination, suspension, and delay. With the accelerated elimination of outdated capacity, mergers and acquisitions of small and medium-sized capacity, and the delayed commissioning of new capacity, the supply-side structure of the industry is gradually optimizing.