① China Lai Co., Ltd. terminated the silicon-based project with a total investment of 14 billion yuan. Industry analysts believe that at a time when cash is king, it is more important to “survive”; ② The “owning silicon is king” era is over, and production capacity is being cleared at an accelerated pace. If polysilicon prices continue to decline, the profitability of silicon materials factories will decline.
Finance Association, April 23 (Reporter Liu Mengran) In the past, the photovoltaic investment boom has dropped from a high of 300,000 yuan/ton to less than 50,000 yuan/ton now. This evening, China Lai Co., Ltd. (300393.SZ) announced the termination of the silicon-based project with a total investment of 14 billion yuan. Industry analysts believe that the photovoltaic “knockout competition” has spread to the silicon sector. At a time when cash is king, it is more important to “stay alive.”
China Lai Co., Ltd.'s main business includes photovoltaic backpanels, battery modules, and photovoltaic EPC business. In the previous two years, the photovoltaic industry was in an upward cycle, and leading manufacturers began a deep integrated layout to extend production capacity upstream and downstream. The same is true for China Lai shares.
A Financial Services Association reporter noticed that the investment plan terminated by China Lai Co., Ltd. was announced in March 2022. At the time, the company believed that the upstream layout of the photovoltaic industry would help the company to better withstand the risk of price fluctuations in the supply chain. With the gradual expansion of high-efficiency battery production capacity, the company's supply of raw silicon wafers would be further strengthened.
Industrial silicon and polysilicon are the most upstream links in the photovoltaic industry chain. At the time, due to the shortage of production capacity and the explosion of downstream demand, the price of polysilicon remained around 240,000 yuan/ton. Soon after, the price of silicon continued to soar and surpassed 300,000 yuan/ton in July of that year, for more than 5 months.
According to the announcement, China Lai Co., Ltd. planned that the first phase of the project (with an annual output of 200,000 tons of industrial silicon and an annual output of 10,000 tons of high-purity polysilicon) would be completed and put into operation in 2024. However, today's announcement shows that no substantial investment has begun on the project. China Lai Co., Ltd. said that the market environment in the photovoltaic industry has undergone major changes, and the viability of silicon-based projects has undergone major changes.
In fact, at a time when there is overcapacity in all parts of the PV industry chain, terminating investment is nothing new. Previously, a number of listed companies, including Lingda Co., Ltd. (300125.SZ), Sunflower (300111.SZ), and Beijing Express (601908.SH), announced the termination or extension of new production capacity construction. In terms of silicon materials, Daquan Energy (688303.SH) announced in October last year that it would extend the 100,000 tons of silicon production capacity originally scheduled to be put into operation by the end of that year.
However, for China Lai Co., Ltd., the silicon-based materials project has not started, yet it has avoided downside risks in the industry. According to data released by the Silicon Industry Branch last week, the average transaction price of N-type silicon rod-shaped silicon was 52,500 yuan/ton, down 10.41% from the previous month; the average transaction price of P-type dense material was 45,900 yuan/ton, down 5.75% from the previous month; and the average transaction price of N-type granular silicon was 47,500 yuan/ton, down 8.65% from the previous month.
According to reports, this price has fallen below the company's production costs. Industry insiders generally said that prices are unlikely to be repaired until large-scale production is stopped. Polysilicon leader Daquan Energy said in its 2023 annual report that if the industry expands and production capacity continues to be released in the future, causing adverse changes in the relationship between supply and demand, polysilicon prices will decline further, thereby affecting the company's profitability.
Today, China Lai Co., Ltd. simultaneously disclosed its 2023 financial report and this year's quarterly report. Thanks to the acceleration of N-type technology iteration, the share of demand for N-type high-efficiency products continues to rise. The company achieved operating income of about 12.259 billion yuan last year, an increase of 28.01% over the previous year; net profit attributable to listed companies was about 527 million yuan, an increase of 31.18% over the previous year.
However, in the first quarter of this year, the company achieved operating income of 1,288 billion yuan, a year-on-year decrease of 52.43%; net profit loss attributable to shareholders of listed companies was 172 million yuan, a year-on-year decrease of 268.11%; after deducting non-net profit losses of 193 million yuan, a profit of 126 million yuan for the same period last year. The company said that the decrease in revenue was mainly due to a decrease in the company's sales scale during the reporting period. A Financial Services Association reporter noticed that in the first quarter of this year, the company's sales expenses and taxes increased sharply year on year, but the sales scale declined. The company did not give a detailed explanation of this in the quarterly report.