Shares of Tongwei dropped after the Chinese solar silicon supplier said its net profit shrank by nearly half last year, mainly because of the decline in prices across the photovoltaic industry supply chain and the impact of fixed asset impairment.
Tongwei [SHA: 600438] closed down 3.5 percent at CNY21.70 (USD3) in Shanghai today, after earlier plunging as much as 5.2 percent.
Net profit was CNY13.6 billion (USD1.9 billion) in the 12 months ended Dec. 31, compared with CNY25.7 billion the year before, the Chengdu-based company said in its latest annual report released yesterday. Revenue fell 2.3 percent to CNY139.1 billion (USD19.2 billion).
Prices across four segments of the PV industry chain sank 45 percent to 80 percent last year, Tongwei’s Board Secretary Yan Ke said during the earnings conference call. Moreover, the firm reported CNY5 billion (USD690 million) in total impairment on fixed assets, mainly because of the devaluation or scrapping of obsolete passivated emitter and rear cell production lines, Yan added.
As of the end of last year, Tongwei had dealt with the book value of its PERC capacity, Yan pointed out, noting that the company’s capacity of tunnel oxide passivated contact solar cells replacing that of PERCs will be at around 80 percent this year.
Tongwei was initially a polycrystalline silicon and solar cell manufacturer but later expanded its business to PV modules. Last year was the first full operating year since the firm completed its business expansion.
Tongwei sold 31.11 gigawatts of PV modules last year, up 292 percent from the previous year, becoming one of the world’s top five companies by shipments, according to data from InfoLink Consulting.
Meanwhile, Tongwei’s shipments of high-purity crystalline silicon and solar cell products continued to rank first worldwide. Its sales of solar cells soared 68 percent to 80.66 GW last year from the previous one. Its capacity of high-purity crystalline silicon rose 51 percent to 387,200 tons in the period, seizing a 25 percent share of the market.
With intensified competition in the supply chain and rapid decline in prices, the trend of the PV industry has shifted to the survival of the fittest, Tongwei said in the annual report, adding that the space for small- and medium-sized enterprises will be further squeezed in the future.
