① Longi Green Energy is releasing confidence to investors. Considering that the industry is currently experiencing cash cost losses, the price of silicon wafers will only rise and not fall in the future. ② However, the management believes that each link is currently facing ongoing operating pressure, and while the price is expected to rise, the timing of further adjustments is still unclear.
According to the Caixin report on September 2nd, affected by the significant decline in prices in the industry chain, Longi Green Energy (601012.SH) experienced a decline in both revenue and net income in the first half of the year. At the earnings conference held today, the company's management stated that considering the industry's general cash cost losses, the price of silicon wafers will only rise and not fall in the future.
In the first half of the year, Longi Green Energy shipped 44.44GW of silicon wafers and sold 21.96GW externally. According to previous reports, the company officially adjusted the price of silicon wafers on August 29th, with the average price of various specifications of products increased by 5 cents per piece. At the same time, TCL Zhonghuan (002129.SZ) and other silicon wafer companies followed suit and raised their prices.
The photovoltaic price decline has lasted for nearly a year, and in the wafer segment, the price has dropped by more than 60%. As a leading wafer company, Longi Green Energy has maintained a relatively low factory utilization rate in the first half of the year. Chairman Zhong Baoshen stated to investors that the basic principle of wafer production is not to lose money. In the first half of the year, the prices of upstream silicon materials and wafers continued to decline. When purchasing silicon materials to produce wafers, there will be a significant loss, so reducing production is the most appropriate strategy.
At the earnings conference, Longi Green Energy released multiple bullish signals for the second half of the year. Chairman Zhong Baoshen stated that the company's capacity has stabilized, achieving 100% self-supply, and the outsourced battery cells are also self-supplied by wafer production. At the same time, they can also be sold externally, and there will be a significant improvement in production in the second half of the year.
The reaction of the downstream market to the price increase of silicon wafers varies, and whether the price increase is sustainable is also a concern for investors. Zhong Baoshen believes that the future price will only rise and not fall. After a period of intense competition, the prices of upstream raw materials have stabilized, and companies are generally in a state of loss, so there is basically no room for further price cuts.
Some investors continue to ask whether there will be a turning point in the price trend that can be clearly predicted. To this, Zhong Baoshen believes it is difficult to determine and it is related to industry supply and demand, corporate judgment of the competitive environment, and industry policy adjustments. He believes that each link is currently facing ongoing operating pressure, and while the price is expected to rise, the timing of further adjustments is still unclear.
It should be noted that from the overall scale of silicon wafer production capacity, there are still no clear signs of clearing. Some investors are concerned that after the price increase of silicon wafers, with improved profitability, the previously reduced factory utilization rate will resume production, and the supply side will enter a new round of competitive games.
At the current stage, Zhong Baoshen stated that the production scale of various companies will not increase due to price increases, and companies that have stopped production do not have the motivation to increase production. The small increase is not enough to support their production and earn profits. "Before this silicon wafer price increase, silicon wafer companies were unwilling to produce. The more they produce, the more losses they incur."
It is already a consensus in the photovoltaic industry to accelerate the clearance of production capacity. However, from the performance of the industry chain prices, the pressure of supply and demand mismatch still persists. The industry is hoping that top enterprises will accelerate restructuring and integration to achieve capacity adjustment. In August of this year, Tongwei Co., Ltd. (stock code: 600438.SH) announced its intention to acquire another leading solar cell company, Runyang Co., Ltd.
At the earnings conference, when asked if Longi Green Energy had any plans for acquisitions, Zhong Baoshen said that the company currently does not have a clear plan. It cooperates with partners more in terms of technical support and market development to enhance competitiveness together.
In the component segment, the company achieved a shipment volume of 31.34GW in the first half of the year. According to the financial reports of various listed companies, the company's component shipment volume ranks fourth in the industry. Regarding the progress of HPBC2.0 capacity construction, Zhong Baoshen said that the current annual capacity is 1.5GW, and it is expected to reach 20GW in the first quarter of next year. From the perspective of market selling price, the gross margin of HPBC2.0 has the potential to be about 10% higher than that of TOPCon products.
Longi Green Energy currently has 1.6GW of orders for HPBC2.0 products (Hi-MO9 modules), which are expected to be delivered next year. In response to investors, the company's management stated that as of the end of August, the Hi-MO9 module orders have increased compared to the data at the beginning of July, and significant progress has been made in the promotion of the product in the global market. In addition to the European market, the company has added orders for BC modules in China, Asia-Pacific, Middle East and Africa, and Latin American markets.