TCL Zhonghuan Renewable Energy Technology, the world's largest supplier of photovoltaic monocrystalline silicon wafers, made a loss in the first three months as new capacity in the solar industry continues to come online, dragging down prices.
TCL Zhonghuan racked up losses of CNY880 million (USD121.4 million) in the three months ended March 31, the Tianjin-based firm said in its latest earnings report released yesterday. The company has lost around CNY3.7 billion (USD510 million) in the past six months, it added. And net profit in 2023 halved from the year before to CNY3.4 billion (USD469.2 million).
After three years of growth, the PV industry entered a downturn in the third quarter last year, and the industrial environment has fundamentally changed, the report said. The earlier rapid growth of the sector attracted much investment, which has resulted in a big expansion in production capacity, it added.
Global production capacity in the PV industry was between 900 gigawatts and 1,000 GW as of the end of 2023, more than 80 percent of which came from China. But this brought about a severe imbalance in supply and demand, with a supply-demand ratio of 2:1, up from a ratio of 1.02:1 in June 2023.
The oversupply caused product prices to slump. The price of silicon wafers more than halved last year from the year before, after price climbed steeply in 2021 and 2022, according to data from stock comparison platform Straight Flush. The price of solar panels also halved to CNY0.90 (USD0.12) at the end of last year from the beginning of the year.
These are TCL Zhonghuan’s two biggest business segments, with silicon wafers accounting for 70 percent of revenue and PV modules around 20 percent.
The PV industry may remain in the doldrums this year due to the severe imbalance between supply and demand, TCL Donghuan Chairman Li Dongsheng said. But technological upgrades will help remove obsolete production capacity.
The losses did not affect the company’s share price though. TCL Zhonghuan [SHE: 002129] closed up 4.8 percent at CNY10.44 (USD1.44) today. Earlier in the day it surged 5.9 percent to CNY10.55.
The firm’s stock price soared 11-fold between 2018 and 2022, reaching a record market capitalization of over CNY200 billion (USD27.6 billion) in July 2022. But since then the wafer giant’s valuation has crumbled to less than a quarter of the peak at CNY42.1 billion (USD5.8 billion).
