Last year, many companies may have had a difficult time, and photovoltaics should be one of the few industries that has been doing well. Our company’s frontline employees have given year-end bonuses for at least 9 months (salary) On April 26th, Mr. Chen, a domestic photovoltaic practitioner, expressed during a communication with reporters.
Practitioners like Mr. Chen, who have been doing well, are just a microcosm of the current vigorous development of the entire industry: favorable policies, rising raw material prices, high overseas sales, and horse racing. For China’s photovoltaic industry, although there have been twists and turns in 2022, the entire industry continues to soar on the path of rapid development.
According to data from the National Energy Administration, in 2022, the cumulative installed power generation capacity in China was approximately 2.56 billion kilowatts, a year-on-year increase of 7.8%; Among them, the newly installed capacity of renewable energy in the whole year was 152 million kilowatts, accounting for 76.2% of the country’s newly installed power generation. It has become the main body of China’s newly installed power generation. The installed capacity of solar power generation is about 390 million kilowatts, an increase of 28.1% year-on-year; The annual power generation of wind and photovoltaic systems has reached 1.19 trillion kilowatt hours, surpassing 1 trillion kilowatt hours for the first time, accounting for 13.8% of the total electricity consumption in society.
As of April 27th, Economic Observer reporters have sorted out the 2022 annual reports of 77 listed companies in the photovoltaic sector. The total revenue has exceeded trillion yuan, reaching 1.26 trillion yuan, an increase of 485.484 billion yuan compared to 2021. Among them, 25 companies achieved revenue exceeding 10 billion yuan, 19 companies deducted non net profit exceeding 1 billion yuan, and 12 companies achieved revenue doubling growth during the period.
The reporter noticed that almost all enterprises in the photovoltaic industry chain are fully reporting to investors in their annual reports about the great opportunities for the future development of the industry, a “time flies” analysis that runs through the upstream and downstream of the industry chain.
The latest power industry statistics released by the National Energy Administration on April 23 also confirm these prospects: as of the end of March, the installed capacity of solar power generation in China is about 430 million kilowatts, a year-on-year increase of 33.7%, and the cumulative average utilization of solar power generation equipment in China is 303 hours, an increase of 3 hours compared to the same period last year; The main power generation enterprises in China have completed an investment of 52.2 billion yuan in solar power projects, a year-on-year increase of 177.6%.
Silicon material, silicon wafer: bowl full
The price of silicon material, like riding a roller coaster, is undoubtedly a key keyword that cannot be avoided in the photovoltaic industry in 2022.
Since the sustained high prices in the first half of last year, the tight production capacity has led many silicon chip and battery manufacturers to sign “skyrocketing” long-term orders with silicon material companies, locking materials in advance to ensure peace of mind.
By the end of the year and the beginning of the year, supply chain prices had continued to decline, and polycrystalline silicon dense materials had once dropped to 168 yuan/kg, which was already “halved” from the high point of 303 yuan/kg hit in August last year. Keywords such as “avalanche, blood flowing into a river” have begun to haunt silicon material companies again.
Putting aside the hustle and bustle of the market, it is evident that in 2022, silicon material companies will undoubtedly be the big winners in the entire industry chain.
The “four giants” of silicon materials, represented by GCL Technology (03800. HK), Daquan Energy (688303. SH), TBEA (600089. SH), and Tongwei Co., Ltd. (600438. SH), achieved a total revenue of 306.057 billion yuan in 2022, a sharp increase of 150.198 billion yuan compared to 2021.
Among them, Longtou Tongwei Co., Ltd. has successfully achieved double growth in revenue, achieving a revenue of 142.423 billion yuan, breaking through the 100 billion yuan mark; Realized a net profit deduction of 26.547 billion yuan, a year-on-year increase of 216.5%. The average year-on-year growth rate of non net profit deduction for the four enterprises reached 217.12%.
Silicon material companies that have made a lot of money have not forgotten to give back to investors and have launched large-scale dividend plans. Daquan Energy has provided a “big red envelope” of 10 pai 36 yuan, with a total planned cash dividend of 7.695 billion yuan. Tongwei Shares has also released a plan of 10 pai 28.58 yuan, with a planned cash dividend of 12.867 billion yuan.
From the annual reports of silicon material companies, the high performance increase in 2022 was mainly attributed to the continuous increase in polycrystalline silicon prices during the reporting period. Tongwei Co., Ltd. pointed out in its annual report that in 2022, due to the largest capacity gap, the price of polycrystalline silicon increased most significantly year-on-year.
TBEA also stated in its annual report that in 2022, China’s polycrystalline silicon market showed a situation where supply was less than demand. Due to the impact of supply and demand, the overall price of polycrystalline silicon in China showed an upward trend in 2022, and has repeatedly set new historical highs.
According to the relevant data provided in its annual report, the average transaction price of domestic polycrystalline silicon re feeding has risen from 236900 yuan/ton at the beginning of 2022, reaching a new high and reaching the highest price of 308000 yuan/ton in October; Afterwards, with the release of new polysilicon production capacity, it slightly decreased to RMB 247500/ton in December. The annual average price of single crystal re feeding is RMB 273600/ton, a year-on-year increase of 40.74%.
Faced with the soaring prices and continuous exceeding expectations in the downstream market, the four giants of silicon materials all showed a strong drive to expand production last year. According to the Silicon Industry Branch of the China Nonferrous Metals Industry Association (hereinafter referred to as the “Silicon Industry Branch”), the domestic polycrystalline silicon production in 2022 is approximately 811000 tons. According to the annual report disclosure of Tongwei Co., Ltd., only one company plans to achieve a cumulative production capacity of 800000-1 million tons of high-purity crystalline silicon from 2024 to 2026.
Tongwei also stated in its annual report that it will continue to consolidate and enhance the company’s leading scale, technology, and cost advantages in the high-purity crystalline silicon sector, increase market share, and create an absolute global leading position in the high-purity crystalline silicon sector.
On March 28th, Daquan Energy also pointed out in response to investors’ questions at the Shanghai Stock Exchange Roadshow Center that by April 2023, the company’s Inner Mongolia Baotou Phase I 100000 tons of polycrystalline silicon will be put into production, and the Inner Mongolia Baotou Phase II 100000 tons of polycrystalline silicon will be put into production by the end of the year. At that time, the company’s production capacity will reach 305000 tons.
According to incomplete statistics by reporters, TBEA and GCL Technology also plan to have a production capacity of 200000 to 300000 tons put into operation this year.
But the benefits brought about by the structural shortage of production capacity cannot be sustained for too long. In the view of photovoltaic industry observer Zhang Peng, with the continuous implementation of silicon material enterprise expansion plans, silicon material prices will continue to be in a downward trend this year.
In 2008, polycrystalline silicon also experienced a wave of production expansion, resulting in structural overcapacity and many companies disappearing. This trend is somewhat similar to 2008, where everyone’s expansion momentum is very rapid, and these capacities are expected to be released one after another by the middle of the year. In addition, the shortage of quartz sand affects downstream construction, and I am not very optimistic about the silicon material market this year, “said Zhang Peng.
On April 26, the silicon industry branch released the latest price of the domestic silicon material market on the official account. Data shows that the average transaction price for single crystal re feeding in China is 182100 yuan/ton, with a decrease of 5.35% on a weekly basis; The average transaction price of single crystal dense materials is 180700 yuan/ton, with a decrease of 4.89% on a weekly basis.
The Silicon Industry Branch pointed out that the market supply and demand were booming in April, and there was no significant fluctuation in inventory among various companies. From May to June, with the release of production by enterprises such as Zhunte, Daquan, GCL, Dongli, Runyang, and Dongfang Hope, supply continued to increase; During the same period, the operating conditions of silicon wafer enterprises may continue to be limited by factors such as quartz crucibles, resulting in an overall demand growth rate that is lower than the supply growth rate. The market holds pessimistic expectations for the supply and demand relationship in the second quarter, so it is expected that the short-term price of silicon materials will continue to decline.
In terms of silicon wafers, as of April 27th, the reporter has sorted out the operating conditions of 11 disclosed annual reports of silicon wafer enterprises, including Longji Green Energy (601012. SH), TCL Central (002129. SH), and Shuangliang Energy Conservation (600481. SH), achieving a total revenue of 297.046 billion yuan. The average year-on-year growth rate of revenue for 11 enterprises was 90.14%, achieving a net profit deduction of 37.886 billion yuan. Among them, Longji Green Energy achieved a revenue of 128.998 billion yuan in 2022, a year-on-year increase of 60.03%, ranking first; Realized a net profit deduction of 14.414 billion yuan, a year-on-year increase of 63.31%.
From the perspective of production and sales, Longji Green Energy achieved 85.06GW of single crystal silicon wafer shipments in 2022, including 42.52GW for external sales and 42.54GW for self use. During the period of TCL Central, the shipment volume of silicon wafers reached 10.647 billion, equivalent to a production capacity of 68GW. Sales increased by 29.64% compared to last year, production increased by 31.51% compared to last year, and inventory increased by 166.97% compared to last year.
It is worth noting that in addition to the two major leaders of Longji and Zhonghuan, new forces such as Beijing Yuntong (601908. SH), Hongyuan Green Energy (603185. SH), and Shuangliang Energy Conservation (600481. SH) have also made significant progress in the silicon wafer field last year. For example, Shuangliang Energy Saving, which only entered the field of silicon wafers in 2021, achieved sales revenue of 8.605 billion yuan for single crystal silicon rods and silicon wafers last year. According to its disclosure, both the first and second single crystal factories of the company have been put into operation in 2022, and the production capacity of the third single crystal factory is rapidly climbing. By the end of 2022, the actual production capacity can reach 40GW.
The competition in the silicon wafer industry is intensifying, and the production and sales concentration of leading silicon wafer manufacturers such as Zhonghuan and Longji is rapidly decreasing. There should be 20-30 domestic enterprises that can achieve GW level silicon wafer production capacity now, “said Sun Xing, a product expert from a domestic leading component listed company, to reporters.
Like silicon materials, the price of silicon wafers has recently begun to decline in the context of capacity release and intensified competition. On April 27th, InfoLink, a well-known consulting firm in the photovoltaic industry, released a weekly price analysis. The average price of 182mm single crystal silicon wafers was 6.26 yuan/piece, a decrease of 1.9% month on month. The average price of 210mm single crystal silicon wafers was 8.01 yuan/piece, a slight decrease of 0.5% month on month.
InfoLink pointed out that the current overall supply of single crystal silicon wafers has entered a significant acceleration range, coupled with the need for holiday stocking, which has exacerbated the difficulty of price negotiations due to the fear of a downturn. Some companies have even suspended buying and are waiting for a new round of price adjustments.
With the increase and release of silicon wafer prices on the supply side, as well as the decrease in silicon material costs in the early stage, the profit margin of the silicon wafer segment rebounded to a good level from March to April, with significant profit margin. It is expected that various specifications will still have downward momentum in May, “InfoLink said.
Against the backdrop of price easing, there have been many reports of expansion in the silicon wafer industry since April. On April 7th, TCL Central announced its plan to issue convertible bonds of no more than 13.8 billion yuan for the annual production of 35GW of high-purity solar ultra-thin monocrystalline silicon smart factory project and TCL Central’s 25GW N-type TOPCon high-efficiency solar cell industry 4.0 smart factory project. On April 12th, Gaoce Co., Ltd. announced that it plans to invest 5 billion yuan in the construction of a 50GW photovoltaic large silicon wafer project in the Yibin High tech Industrial Park in Sichuan Province.
The surplus of silicon wafers and silicon materials may only be a matter of time, and once the prices of raw materials enter the downward channel, there will be a river of blood. The game in 2023 will be more intense, and integration should become the main strategy of top enterprises, “Zhang Peng analyzed.
Components and inverters: pattern changes
Compared to the silicon wafer and material companies that make a lot of money, Xu Shengqiang, the deputy general manager of a photovoltaic module company in Anhui, is more willing to describe 2022 as “everyone else’s business is bustling, making hard money”. During the period when the silicon material price hit an outrageous high of 300 yuan/kg in August last year, the reporter interviewed the head of this local component enterprise.
At that time, he complained to reporters that the soaring prices of silicon materials were constantly eroding the profit margins of his company. The price of silicon materials has been constantly rising, and we have to adjust the price accordingly. We can only say that we should not increase too much for a period of time. If silicon materials increase significantly, we will increase slightly. “Xu Shengqiang told reporters in an interview last year.
However, with the changes in market structure, Xu Shengqiang is still very happy to summarize 2022 from the current perspective. “Last year, he won several bids for large-scale power plant projects in the northwest, and his gross profit may have been affected, but the overall business momentum is still very good.” On April 26, he told reporters by phone.
The reporter also sorted out the business performance of 17 component listed companies last year. The 17 companies achieved a total revenue of 692.964 billion yuan, an increase of 242.938 billion yuan compared to 2021, and achieved a net profit deduction of 54.585 billion yuan. Among them, four companies have negative net profit deductions, namely Aerospace Electromechanical (600151. SH), GCL Integration (002506. SZ), Aikang Technology (002610. SZ), and Lingda Co., Ltd. (300125. SZ). The top three companies in terms of revenue are Longji Green Energy, Trina Solar, and Jingke Energy, with a total revenue of 297.125 billion yuan, accounting for 42.8% of the total revenue of the 17 companies.
From the perspective of production and sales, the overall shipment volume of top component manufacturers increased significantly last year. In 2022, Longji Green Energy achieved a single crystal component shipment volume of 46.76GW, including 46.08GW for external sales and 0.68GW for self use. The annual shipment volume of solar modules from Trina Solar achieved 43.09GW. Jingke Energy’s component shipments exceed 44GW.
According to the “2022 Global Component Shipment Ranking” report released by InfoLink on April 17th, Longji Green Energy, Jingke Energy, and Trina Solar are respectively the top three manufacturers in terms of global component shipment volume. Artes, Dongfang Risheng (300118. SZ), Chint, First Solar, Tongwei, and Hanhua Q Cells are ranked 5-10, respectively.
InfoLink pointed out that the trend of ranking changes in the component segment highlights the clear division of watersheds between manufacturers. The previous manufacturers are similar to last year, but there has been a significant shift in ranking in the latter segment.
The shipment volume of TOP4 manufacturers is significantly different from that of subsequent ranked manufacturers. TOP4 vertically integrated factories rely on their own size, cost advantages, and overseas channels to suppress the second tier component manufacturers. Observing data from 2022, the single shipment volume has reached over 40GW, a gap of over 20GW compared to the manufacturers starting from the 5th place. According to InfoLink statistics, the shipment volume of TOP 10 components is about 252GW, an increase of 166% compared to last year’s TOP10 manufacturers. TOP4 manufacturers also occupy the global market The volume with a share of about 60% -65% shows a significant trend towards Evergrande.
In Sun Xing’s view, with the continuous decline in upstream raw material prices this year, the component sector will experience substantial benefits, and the company’s profit performance is expected to improve.
Xu Shengqiang told reporters that there is currently a “price war” in the photovoltaic module sector, and frontline enterprises will choose to transfer the reduced upstream costs to downstream customers in order to obtain more orders and increase market share. “The highest component price last year was even 2 yuan/w. However, after the opening of many large projects this year, the price has reached the level of 1.6 yuan/w. Some companies can even offer a quotation of around 1.5 yuan/w
Zhang Peng also stated that the occasional disorderly price war in the current component field is not beneficial for the development of the industry, especially for small and medium-sized component enterprises. He believes that top manufacturers who rely on brand and channel advantages will not overly favor the behavior of low price order grabbing. In addition, the prices of 1.5 yuan and 1.6 yuan have little impact on the revenue of power station construction. A disorderly price war will only harm peers and increase the quality concerns of major customers about related brands.
As of April 27th, the reporter has sorted out the data of 7 listed companies that have disclosed their 2022 annual reports or performance reports in the inverter sector. Seven inverter companies, represented by Sunshine Power (300274.SZ), Jinlang Technology (300763. SZ), and Keshida (002518. SZ), achieved a total revenue of 61.942 billion yuan in 2022, an increase of 25.017 billion yuan compared to 2021. Among them, the revenue of Sunshine Power alone reached 40.257 billion yuan, accounting for 65.0% of the overall revenue of the seven enterprises; In terms of non net profit deduction, 7 companies achieved a total of 6.454 billion yuan in non net profit deduction.
As the absolute leader in the field of photovoltaic inverters, Sungrow Power’s photovoltaic inverter products had a global shipment volume of 77GW last year, with 900000 units shipped through channels. The cumulative installed capacity of its inverter equipment worldwide has exceeded 340GW.
During the reporting period, the company increased its presence in channel markets in Europe, the Americas, Australia, and China, with over 370 service outlets worldwide, including 85+global service centers and 280+authorized certification service providers. At the same time, with a customer-centric approach, the company established good cooperative relationships with global customers and continuously signed several GW level inverter orders. The distributed market performance continued to maintain high growth, and the global mainstream market share remained the top. “Sunshine Power stated in its annual report.
In addition, in the second tier, Shangneng Electric (300827. SZ) and Hemai Co., Ltd. (688032. SH) ranked first and second in terms of revenue growth during the period. Among them, Shangneng Electric achieved production and sales of 13719.18 MW and 10087.77 MW of photovoltaic inverter products in 2022, with a sales revenue of 935 million yuan, an increase of 47.11% compared to last year. Hemai Co., Ltd. focuses on the micro inverter track, with a sales revenue of 1.24 billion yuan for micro inverters and monitoring equipment during the period. Among them, the sales of micro inverters are about 1.1641 million units, and the sales of monitoring equipment are about 196500 units.
Zhang Peng believes that the current industry landscape of photovoltaic inverters is relatively stable, and centralized power stations in the domestic market are mainly based on bidding, with many winning companies being large and leading enterprises. In terms of overseas markets, Huawei, Sunshine Power, and Jinlang Technology each have their own channel and product advantages, and the competition is relatively fierce.
Mr. Yuan, the product manager of an inverter enterprise in Guangdong, told reporters that according to the predicted data of the China Photovoltaic Industry Association, the global new installed capacity of photovoltaics will reach 1050-1295GW from 2021 to 2025. Among them, China’s new installed capacity from 2021 to 2025 will reach 355-440GW. The growth space of inverter enterprises is confirmed to be safe, and future industry variables may appear in the field of product form.
The penetration rate of micro inverters is continuously increasing. Compared to traditional series products, these products have high safety, good power generation efficiency, and low difficulty in operation and maintenance. Therefore, their expansion speed has been rapid in the past two years. In addition, there are new products such as modular inverters and energy storage inverters that cater to different needs. The future competition focus of the inverter market will still be on technology and product form. Who can better reduce costs, improve safety, and improve efficiency, Who can take the order Mr. Yuan told reporters.