Kunpeng Project
Produced by |Bullet Finance.
Author |Duan Nannan.
Edit |Feng Yu.
American Editor |Qianqian.
Audit |Ode.
After continuous losses, in 2022, photovoltaic cell company Zhejiang Hongxi Energy Co., Ltd. (hereinafter referred to as "Hongxi Energy") successfully turned losses into profits.
In the first three quarters of 2023, in the context of the surplus of the whole photovoltaic industry chain, Hongxi Energy's performance further increased, achieving an operating income of 201.6 billion yuan, a year-on-year increase of 1854%, and the net profit attributable to the parent company was 30.3 billion yuan, a year-on-year increase of 15134%。
In the context of continuous growth in performance, on January 16, 2024, Hongxi Energy submitted a prospectus (declaration draft) to the Shenzhen Stock Exchange, planning to be listed on the GEM.
As early as 2015, Hongxi Energy, which had been listed in the first place, proposed to transfer to the board, but was vetoed by the regulator because it involved issues such as low-cost transfer of equity. Since then, Hongxi Energy has sought to go public, but all of them have failed.
Compared with other large-scale photovoltaic cell companies, Hongxi Energy is far from each other in terms of product technology and business scale. Can the company buck the trend when the industry is down?
According to public information, Hongxi Energy was established in May 2008 and was jointly initiated by Li Jian, Li Feng, Jiang Mengxue, Zhang Weiming, Li Jinxi and Hua Qing.
From the perspective of shareholding structure, Hongxi Energy is a typical family business. As of the signing date of the prospectus, the actual controllers of Hongxi Energy are Li Jian, Li Jinxi and Zhang Weiming. Among them, Li Jinxi and Zhang Weiming are husband and wife, and Li Jian is the son of Li Jinxi and Zhang Weiming.
Li Jian directly holds 4473% of the shares, Li Jinxi directly holds 900% of the shares, Zhang Weiming directly holds 900% of the shares, the three indirectly control the company through the Jin Jianfeng Group 057% of the shares, the total proportion of the shares directly or indirectly controlled by the three people is 6330%。
Figure Hongxi Energy Prospectus).
There are pros and cons to a family-owned business. Due to the relatively concentrated shareholding, the interests of family members are the same when making business decisions, and the company tends to grow faster. But in the absence of oversight from other shareholders, many of the decisions made by the company are puzzling.
In December 2016, Hongxi Energy submitted relevant materials to the China Securities Regulatory Commission and planned to be listed on the main board of the Shanghai Stock Exchange. However, due to many problems in the company, Hongxi Energy's first submission to the listing was not approved.
According to the prospectus, in 2011, in the fourth capital increase of Hongxi Energy, the company took 12115 yuan shares totaled 26.7 billion yuan**, an additional 22 million shares were issued to many institutional investors.
Figure Hongxi Energy prospectus (submitted in 2016)).
Interestingly, the capital increase in the company ** was as high as 12In the case of 115 yuan shares, from June 5, 2012 to August 11, 2013, 9 shareholders including Gong Danhong and Wang Licui transferred their equity holdings to Zhang Weiming, one of the actual controllers of the company, for 1 yuan share**.
On June 19, 2015, Li Jinxi, one of the actual controllers of the company, took another 41 yuan share**, 800,000 shares will be transferred to the company's deputy general manager Zhou Xiping. Interestingly, on the same day, Shanghai Rongding, another shareholder of the company, won 12115 yuan shares**, transfer the equity held to others.
Such a transfer of equity has also caused the outside world to question its reasonableness. Because of this, Hongxi Energy's first IPO ended in failure. In this IPO, in the latest prospectus, Hongxi Energy did not disclose in detail the actual controller's acquisition of other shareholders' equity at a low price. As a general illustration, the company has experienced a number of equity changes during this period.
Figure Hongxi Energy Prospectus).
When applying for an IPO, companies often disclose the history of the company's equity change in very much detail in the prospectus. It is relatively rare for Hongxi Energy to omit the history of equity transfer in this way. Hongxi Energy's low-price transfer of equity was once questioned by the China Securities Regulatory Commission (CSRC) about the existence of share holding or benefit transfer, which may be one of the reasons why it omitted this situation in the latest prospectus.
In addition to the transfer of equity at a low price, the backward technology of existing products is also one of the dilemmas that Hongxi Energy needs to face. From the perspective of the company's revenue, as of the first half of 2023, Hongxi Energy is 9110% of revenue** from the solar cell business.
Figure Hongxi Energy Prospectus).
In terms of product types, solar cells are mainly divided into p-type cells and n-type cells. Due to the low photoelectric conversion efficiency, it is only a matter of time before p-type cells are replaced by n-type cells.
Compared with p-type cells, the photoelectric conversion efficiency of n-type cells can theoretically reach 287%, compared to 24 for P-type batteries5% is a big increase.
In 2022, domestic n-type battery shipments will account for only about 10%. According to PV Infolink's estimates, the production of N-type cells in 2023 will be about 13150GW, the market share has increased significantly compared with 2022, but there is still a lot of room for improvement.
According to the prospectus, as of the end of June 2023, Hongxi Energy's solar cells are all large-scale monocrystalline P-type cells. In terms of N-type batteries, Hongxi Energy said that the current 2GW TOPCON (battery) production line in Jiaxing, Zhejiang Province has achieved mass production and sales, and the production capacity of N-type cells under construction and expansion has reached 9GW (7GW TOPCON and 2GW heterojunction).
In addition, some of the company's P-type battery production lines have the basis for converting to N-type TOPCON production lines, and Hongxi Energy has started relevant technical transformation actions, and plans to put them into operation in 2024.
Judging from Hongxi Energy's layout in n-type batteries, the company has lagged behind other peer competitors. In the reply to the audit inquiry letter, Hongxi Energy disclosed the production capacity of its peer competitor n-type cells. At present, N-type TOPCON cells from Tongwei Co., Ltd., Junda Co., Ltd. and other enterprises have been mass-produced, and the production capacity scale is much larger than that of Hongxi Energy.
Figure Hongxi Energy Prospectus).
At present, major photovoltaic cell companies are gradually withdrawing from the production of p-type cells and accelerating the layout of n-type cell production capacity. In this regard, the regulator asked Hongxi Energy to explain the production time of the company's n-type batteries and explain whether the company is in a disadvantageous position in the field of n-type batteries.
In this regard, Hongxi Energy only said that although the market share of n-type batteries has increased, there is still a lot of room for improvement in the future, and due to the company's fixed customers, there will be no sales channel problems for the company's n-type batteries in the future.
In fact, n-type cell capacity is expanding much faster than the market expects. In 2023, TrendForce will have a total cell production capacity of 1,173GW and Topcon N-type cells of 676GW.
However, according to PV Infolink**, global PV cell demand will only be 601GW by 2025. LONGi Green Energy also said at the investor conference that N-type cells and modules will enter the stage of overcapacity in 2024.
Even so, Hongxi Energy has not given up on the idea of expanding the production of TOPCON batteries. In the prospectus, Hongxi Energy plans to invest 281.5 billion yuan to build a new generation of n-type battery project.
Figure Hongxi Energy Prospectus).
From the perspective of progress, Hongxi Energy's n-type battery layout is obviously later than that of its competitors. At present, the overcapacity of the photovoltaic industry chain is intensifying. In the fourth quarter of 2023, the net profit of TCL Zhonghuan, a leading photovoltaic wafer company, and many photovoltaic companies declined quarter-on-quarter.
At present, solar cells** continue to decline. For Hongxi Energy, in the new round of battery technology revolution, it is already lagging behind its competitors, and in the future, it is still unknown whether it can maintain profitability in the increasingly fierce photovoltaic overcapacity.
At present, the homogenization of photovoltaic enterprises' products is extremely serious, and the industry entry threshold is low, and there are many market participants. For photovoltaic cell companies, the only way to survive in the brutal overcapacity is to increase technology research and development and improve the photoelectric conversion efficiency of batteries.
For Hongxi Energy, the weak R&D capability is the company's shortcoming. According to the data, from 2020 to the first half of 2023 (hereinafter referred to as the "reporting period"), Hongxi Energy's R&D expenses were 1802930,000 yuan, 1776270,000 yuan, 2931020,000 yuan, 1531770,000 yuan.
Figure Hongxi Energy Prospectus).
During the reporting period, the company's R&D expense ratios were: 06%。By way of comparison, the average R&D expense ratios of comparable companies over the same period were: 35%。
Figure Hongxi Energy Prospectus).
Due to the decrease in R&D investment, the number of R&D personnel of Hongxi Energy is also decreasing year by year. During the reporting period, the company's R&D personnel were 119, 102, 101 and 98 respectively. During the same period, the average salary of the company's R&D personnel also declined.
Figure Hongxi Energy Prospectus).
R&D investment is too low, which is also the core reason why the company's n-type battery progress is slower than that of competitors. In addition, even in the field of p-type batteries, which the company is proud of, Hongxi Energy's battery photoelectric conversion efficiency is only equivalent to the average of comparable companies in the same industry, and it is still lower than that of leading companies in the industry such as Tongwei Co., Ltd. and Yicheng New Energy.
Figure Hongxi Energy Prospectus).
For solar cell companies, maintaining the necessary R&D investment is an important guarantee to promote product technology iteration. Today, the company's large-scale deployment of TOPCon batteries is not the only technical route.
For example, the BC battery currently vigorously deployed by Aiko Co., Ltd. and LONGi Green Energy can theoretically reach 291%, slightly higher than the theoretical conversion efficiency of TOPCON cells.
In addition, large photovoltaic companies such as LONGi Green Energy are also actively deploying third-generation solar cells. In 2023, the conversion efficiency of LONGi Green Energy's perovskite cells will be as high as 339%。In terms of new technologies such as BC batteries and perovskite batteries, Hongxi Energy does not have much accumulation.
If the research and development of new products is not considered, when the new installed capacity of photovoltaic continues to rise, Hongxi Energy's performance is acceptable.
According to the data, in 2023, the new domestic photovoltaic installed capacity will be 220GW, a year-on-year increase of 151687%。On the basis of continued strong downstream demand, Hongxi Energy achieved revenue of 20 in the first three quarters of 20231.6 billion yuan, a year-on-year increase of 1854%, and the net profit attributable to the parent company was 30.3 billion yuan, a year-on-year increase of 15134%。
However, in the next few years, the growth rate of new domestic photovoltaic installations will decline sharply. Many research institutions**, the growth rate of new photovoltaic installed capacity in 2024 will enter an era of steady growth of 15%-25%. With the slowdown in downstream growth and the uncontrolled expansion of production capacity in the whole industry chain, related battery products have fallen again and again.
Figure Hongxi Energy Prospectus).
Li Zhenguo, founder and president of LONGi Green Energy, said that the PV industry has already experienced serious overcapacity, and in the next two to three years, more than half of China's PV manufacturers may be forced to withdraw from the market. Only by insisting on technology research and development and leading the market can it be possible to survive in this cruel knockout round.
Compared with other large-scale photovoltaic enterprises, Hongxi Energy's R&D capabilities lag significantly behind. When the industry as a whole is up, Hongxi Energy can still get a piece of the pie.
As the industry continues to decline, the company's weak R&D capabilities and weak product competitiveness will gradually be exposed. Under the continuous influence of products, in the next few years, Hongxi Energy may suffer losses, and the road to listing will also be full of variables.
The title picture in the article comes from: Camera.com, based on the VRF protocol.