PV Industry: Is the Turnaround Finally Here?

The solar photovoltaic industry's recent performance review unveils a grim reality for most companies involved, showcasing a pervasive trend of losses regardless of whether they are traditional solar enterprises or newer entrants that expanded into the sectorWhile it's highlighted that almost all have suffered, there's a notable exception—a single company that appears to have weathered the storm, albeit likely through financial adjustments.

In 2024, the focus shifts to component shipment volumes among major solar companies, where JinkoSolar stands prominently at the forefront with a shipment scale anticipated between 90GW to 100GWMeanwhile, Trina Solar and JA Solar seem to be neck and neck, each with shipment projections hovering around 75GW, although some uncertainties linger regarding the exact figures.

For LONGi Green Energy, a slip from second to fourth place in 2024 shipment rankings reflects broader strategic shiftsAs the company transitions to a newer technology type—bifacial cells (BC)—concerns abound regarding its ability to swiftly capture market share in this arena, raising the stakes for its future positioning.

Should bifacial technology gain significant traction among consumers, however, LONGi could potentially re-emerge as a market leader, reversing the recent downward trend.

Tongwei Co. maintains its fifth-place standing in the rankings but records a noteworthy increase in shipments, reaching nearly 50GW—an impressive growth of about 65% compared to the previous yearIf this upward momentum continues, it could challenge the existing top three companies.

Reflecting on previously projected goals for 2024, only Tongwei has met its target, aiming for 50GW in shipments; other firms have fallen short of their ambitious forecasts, including LONGi and Trina Solar, which had set expectations above 100GW and 90GW respectively.

The so-called "big three"—JinkoSolar, Trina, and JA Solar—have solidified their places in the market over the past decade, with LONGi climbing to the top spot after displacing Hanwha in 2019. Tongwei has recently broken into the top five by surpassing Canadian Solar in 2023, suggesting that this competitive landscape is likely to remain stable for some time.

Achieving shipment volumes of 50GW is often viewed as a significant benchmark in the industry

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Contemporary updates show that First Solar is on track to surpass 40GW, an approximate 43% growth, which positions them favorably as they aim to cross this threshold.

Yet, on a broader assessment of 2024's financial results, the findings are overwhelmingly dismal across the boardBeginning with LONGi Green Energy, predictions indicate catastrophic losses of between 8.2 billion and 8.8 billion yuan, suggesting a staggering dip during the fourth quarter with losses potentially exceeding 1.7 billion yuan—an expansion of previous losses, albeit slightly better than the first half of the year.

An interesting perspective arises when evaluating LONGi's projected losses against earlier expectations which anticipated losses surmounting 10 billion yuan through customary year-end financial adjustments.

Contrastingly, state-owned TBEA has been aggressive in adjusting its financials amidst a backdrop of lower operational capacity and potential technological upgrades that necessitate asset write-downs.

For LONGi, the heavy losses stem from two core aspects: reduced factory utilization due to lower demand and the perceived obsolescence of various manufacturing lines due to technological updates.

It's worth noting that LONGi forecasts achieving 70GW of production capacity for BC cells by 2025, with a full transition planned by 2026, casting uncertainty on the actual conversion losses faced during this transition.

Communications with industry insiders suggest that the losses during the transition period could be substantial, leading to speculations that LONGi's financial adjustments may be more strategic than originally perceived.

Moreover, LONGi's stakes in silicon material companies have also contributed to its financial woes amidst an overarching trend of losses throughout the photovoltaic production cycle.

On the flipside, Tongwei is also poised to record staggering losses

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Expectations sit at around 7 billion to 7.5 billion yuan, positioning it closely alongside LONGi in this unfortunate league of losses.

Interestingly, a notable portion of Tongwei's losses appears to be operational rather than from asset write-downs, indicating a calculated risk amidst plunging demand.

With a staggeringly large capacity but remaining operational at a significantly lower productivity rate, Tongwei's strategic adjustments to its financials may similarly be viewed as an optimization.

In fact, as the industry grapples with losses, the ongoing plight could inadvertently serve to elevate Tongwei's standing in the market since prolonged periods of inefficiency across the board could pave the way for consolidation.

In 2024, a wave of industry consolidation appears to be on the horizon, with a number of previously recognized companies facing closures or significant downsizing.

Enterprises like Lingda Co., which made considerable investments in producing TOPCon, have abruptly halted operationsSimultaneously, a cluster of lesser-known newcomers to the sector are similarly struggling—companies such as Shuangliang Energy, Hanergy, and Shandong Coal International are among those hit hardest by the ongoing adverse market conditions.

Notably, firms entering the photovoltaic market with varying levels of solid backing are experiencing unequal fates; those with stronger foundations may weather the storm, while those with less capital could very well face dire consequences.

The struggle for survival among these newer entrants signals a second wave of consolidation, reinforcing the idea that the industry must undergo a significant realignment to restore competitiveness and viability.

As industry losses worsen, the probability of hastened market corrections becomes more tangible, ultimately benefiting Tongwei.

For Tongwei, high debt levels have created immense pressure to expedite resolution of these financial difficulties

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Five years ago, the company faced approximately 30 billion in liabilities; today, that figure has skyrocketed to over 136.6 billionEven when stripping away deferred tax liabilities, tangible liabilities surpass 130 billion, heightening the urgency for remedial financial actions.

Balancing short-term versus long-term loans, Tongwei has managed to keep short-term debt within reasonable limits; nonetheless, escalating interest payments—exceeding 1.5 billion—raise concerns over sustained profitability.

A continuous burden of nearly 20 billion in interest payments poses a significant threat to overall profitability, further compounded by substantial assets and the costs associated with maintaining them through depreciation and impairment.

This overarching financial landscape has left Tongwei in a deeply anxious position, necessitating swift resolution of ongoing challenges.

The complexity of the silicon material segment further complicates matters, particularly given that Tongwei's output alone projects to satisfy approximately 70% of industry demand, leaving competitors in a precarious position.

Furthermore, Daybreak Energy, a company, finds itself relegated to the background with losses projected between 2.6 billion to 3.1 billion yuan for 2024, although the company has not yet disclosed potential asset impairments that could amplify these losses.

The hesitancy of Daybreak to discount prices to capture market share underscores a delicate balancing act; significant reductions in volume have directly impacted production lines, further necessitating impairment considerations.

Overall, the long-term outlook raises questions about whether regaining market share will be viable for these companies if they choose to adopt a more reserved approach amidst strain.

Compounding these obstacles, Daybreak's recent announcements have highlighted a pronounced talent drain; a core technology leader has departed, increasing uncertainty regarding future capabilities.

While the circumstances surrounding this departure may seem discouraging, the potential for an eventual return to market prominence remains a possibility, albeit with the caveat that the road ahead will likely be long and fraught with challenges.

Although Daybreak's long-term strategy may involve leveraging financial resources to initiate a resurgence, the notion doesn’t escape that human capital remains a crucial aspect of sustainable growth.

In a different perspective, Trina Solar and JA Solar have yet to announce their earnings projections

JinkoSolar, however, defies the downward trend with projected profitability for 2024, marking an impressive feat in a sea of losses.

Showing adaptability in the face of challenges, JinkoSolar estimates the 2024 net profit for shareholders to fall between 80 million to 120 million, a sharp decline from last year's 7.4 billion yuan profit, but at least still a profit.

Curiously, Jinko’s remaining profits may also be a product of strategic financial adjustments, given the immense scale of operations they maintain; leveraging increments in profit through minor adjustments is increasingly plausible.

Amid the ongoing uncertainty, it seems essential that JinkoSolar, Trina, and JA Solar all align together dynamicallyWith industry benchmarks contracting, navigating downward pressures represents an ongoing challenge.

JinkoSolar stands as the sole titan unblemished by losses for the last decade, showcasing resilience amidst the challenges faced by the solar sector.

Thus, even while profits for 2024 represent the lowest point in a decade, the very existence of profit serves as a beacon amidst widespread disarray within the industry.

Regardless of how the numbers come about, it's evident that JinkoSolar's financial foundation remains solid compared to its peers.

As evidenced by third-quarter reports, Jinko possesses cash equivalents totaling 26.7 billion yuan, alongside manageable levels of long-term liabilities, which provides a cushion in these turbulent times.

In essence, JinkoSolar has emerged as a resilient entity, bringing a touch of honor back to the bedraggled solar industry, something commendable to note.

For companies such as Risen Energy and Hongyuan Green Energy, positioned outside the top five, the narrative largely remains clouded by losses—further justifying limited discourse on their situations.

Despite various challenging circumstances, an acknowledgment is due for LONGi Green Energy for illuminating certain aspects of the unfolding narrative within the photovoltaic sphere.

It is essential to clarify that while I have had discussions with LONGi, our conversations were purely professional; my stance has neither advocated nor counter-indicated investment in their stock.

In reality, my communication spans numerous listed companies, reflecting a core practice of inquiry when faced with critical questions.

After skimming through a recent publication provided by LONGi, I found content that piqued my interest, suggesting it holds relevance for those invested in power industry matters.

I plan to delve further into this literature over the coming days and will share insights in my column if they prove worthwhile.

Given the intricate nature of the power industry value chain, it warrants ongoing attention and scrutiny moving forward.

Ultimately, losses within the solar sector may be viewed through a constructive lens, as they catalyze the necessary restructuring to pave the way for a healthier future.

Therefore, as we enter 2025, one might opine that the observed reluctance to acknowledge significant asset devaluations across many companies serves only to prolong these challenges; a candid approach might encourage more effective recalibrations toward sustainable profitability.

With overall installations not expected to explode in 2025, expecting market turbulence to yield immediate opportunities would be unwise

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