Text |Xiao Tian.
In the past year, the "new three" represented by new energy vehicles, lithium batteries and photovoltaic products have become an important growth pole for China's exports.
However, the other side of the coin is that in 2024, the photovoltaic industry will usher in a "big wave of sand".
In the first half of last year, when the entire photovoltaic industry was still immersed in the joy of expanding production and recruiting talents, in less than a year, it suddenly played the "song of ice and fire" - rumors of large-scale layoffs in the photovoltaic industry spread, and the entire industry is facing an increase in overcapacity, and photovoltaic modules have fallen below 1 yuan watt......
Many high-profile cross-border photovoltaic listed companies in the previous year have "changed faces" in the performance forecast, such as Royal Group (002329SZ), Zhengbang Technology (002157SZ), Jiangsu Sunshine (600220sh) and so on.
Under the cold winter of the industry, photovoltaic giant LONGi Green Energy (601012SH) has shown surprising strategic determination.
At a time when domestic counterparts are vigorously launching TOPCON (a technical route for photovoltaic cells) cell production capacity, LONGi has always adhered to the strategy of "not leading, not expanding", showing an unusual "rationality", and only in Ordos has built 30GW of TOPCon production capacity to meet customer needs, and no new production capacity of this technical route has been built. On the contrary, it is vigorously promoting BC cell products, trying to use technological innovation to bring the current deformed photovoltaic industry back on the right track.
Despite looking back on the full year of 2023, LONGi's share price is **4507%, the stock price performance in the secondary market is not satisfactory.
Spread out, according to the statistics of the former weighting calibre, JinkoSolar's stock price is **3910%, JA Solar's share price**5151%, Tongwei's share price**2972%, Trina Solar's share price**5475%。
This shows that LONGi's stock price is not an exception, and the stock price of photovoltaic companies is generally true.
However, aside from the colder market, for value investors, LONGi is still a "penetrating" company based on the three standards of good industry, good company and good company.
On January 10, PowerChina's 2024 photovoltaic module framework was shortlisted for centralized procurement bidding and bid opening, and under the fierce competition of 55 module companies participating in the bidding, P-type products and N-type products have reached the lowest level of 0806 watts and 087 yuan watts.
This is the first large-scale bidding for photovoltaic modules by central state-owned enterprises since 2024, and it is also a record low bid price for centralized procurement of photovoltaic modules.
What is the concept of photovoltaic modules with less than 1 yuan watt? Compared to the beginning of 2023 18 watts to 1The level of 9 yuan watts has been nearly halved.
The product of photovoltaic modules itself is already very low, and falling below 1 yuan watt means completely falling below the cost price. Zhong Baoshen, chairman of LONGi Green Energy, saidIn addition to the cost of production, there are three expenses of sales, management and research, and if it is sold at cost price, it will cause losses, so the current situation of the industry is very grim.
More critically, a panic has formed, which has further led to widespread layoffs.
Since the second half of last year, "JA Solar has laid off 15% of its employees", "JinkoSolar plans to cut 20% of its staff, first optimizing from financial management and other back-office aspects", "LONGi Green Energy will lay off 10,000 employees, of which fresh graduates will be quickly eliminated without compensation", ......The layoffs have not settled in waves.
In the second half of 2023, due to overcapacity and intensified competition, a photovoltaic company began to optimize and adjust its employees, and many fresh graduates who were about to become regular after 5 months of work were dismissed.
And all this points to the "culprit" behind it - overcapacity.
In the first half of 2023, the expansion of the photovoltaic industry, the industry's leading enterprises have invested tens of billions of dollars to increase integrated production capacity, and the local ** has played a pivotal role as the driving force behind the scenes.
According to a source in the photovoltaic industry, the local government has a very good service for the expansion of photovoltaic enterprises.
This is tantamount to "adding fuel to the fire" again on an already overheated track, which will eventually lead to a manufacturing winter in the photovoltaic market.
In Zhong's view, in the past 18 years, we have built 380GW of cell and module capacity, and recently we spent 18 months building 380GW of integrated capacity. There is as much capacity built in 18 months now as it has in the last 18 years. It's even more serious: the industry has built 450GW of integrated capacity in the past 18 months, far more than 380GW. In this way, the supply of the entire market greatly exceeds the increase in demand, in order to compete for living space, enterprises have to find all opportunities, which will inevitably bring fierce competition.
In other words, the outcome of this round of PV winter is predictableAll photovoltaic companies will face the ultimate profit test, large-scale losses and death will be the norm, and advanced production capacity will mercilessly eliminate backward production capacity.
This is the worst era for PV, but it is also the best of times.
According to PV-Infolink and other institutions**, from 2023 to 2025, the new global PV installed capacity is expected to be 350GW, 450GW, and 550GW respectively. Another data from the agency shows that by 2024, the production capacity of polysilicon, silicon wafers, cells and modules in China's main photovoltaic industry chain will exceed 1TW.
Half of it is seawater, half of it is flames", in this energetic track, the harder it falls now, the more it will rise in the future, and sometimes it is more powerful to retreat in order to move forward better, and it is more powerful to retract the fist and hit it again.
The cold winter of 2024 has arrived, compared to the competition between scale and costThe most exciting, crucial, and cruel part of this desperate contest lies in the "choice", and the choice difference will also directly lead to the division of fate.
At present, at the time of overcapacity in the industry, many photovoltaic leaders firmly believe that "advanced capacity is not overcapacity", and the current overcapacity is a structural overcapacity.
There is some truth to this view, but it is not comprehensive.
Looking back at the development history of photovoltaic cell technology, before 2015, P-type BSF cells occupied the mainstream market position; After 2016, P-type PERC cells took over the baton, accounting for 86% of the PV market by 20204%。
In the past three years, as the efficiency of P-type PERC monocrystalline cells has approached the upper limit, PV companies have begun to vigorously promote the industrialization of N-type cell technology represented by TopCon, HJT and BC.
In particular, TOPCon has taken the lead in entering the stage of large-scale mass production since 2022 and is favored by many photovoltaic giants.
From the data level, TOPCon's production capacity for PERC is gradually being replaced. According to the research report of China Post**, in terms of product structure, the proportion of N-type module bidding has increased rapidly, and it will become the mainstream product of domestic centralized installation in 2024. Since the beginning of 2023, the proportion of n-type module bidding has increased rapidly, from about 20% at the beginning of the year to 60% in November, and since the fourth quarter of last year, the proportion of n-type module procurement has generally reached more than 70%.
But as Zhong Baoshen said,When an opportunity for technological change arises, many people see it as their own opportunity.
In the past two years, there are many enterprises outside the industry that have invested a lot in the photovoltaic industry, on the one hand, they see the future demand opportunities of the photovoltaic industry, on the other hand, they also see the opportunities for technological change, and they think that the new technology that is invested in now has bright prospects in the future.
If all investors have this mentality, it means that there are many people who think the same way as you at the moment of investment. The so-called "advanced" production capacity, although it has improved compared with the previous generation of technology in the past, is not actually advanced production capacity, and this generation of technology has become a "big road goods" or even a surplus in a short period of time.
LONGi's judgment has obviously been verified.
According to statistics, the top companies in the world's photovoltaic module shipments are all focusing on the TOPCon field, and the production capacity of N-type TOPCon planned or expanded is at the level of tens of gigawatts.
JinkoSolar, for example, expects to have 85GW of wafer, 90GW of cells and 110GW of modules by the end of 2023, of which N-type capacity accounts for 75%. In addition, according to JA Solar's 2023 production capacity target, the module production capacity will reach 95GW, and the wafer and cell production capacity will reach more than 90% of the module production capacity respectively.
Looking at many enterprises that have crossed over into the photovoltaic field, they have also invested in "advanced production capacity".
For example, in August 2022, Royal Group disclosed that it signed a battery project with an annual output of 20GWTOPCon and set up Anhui Green Energy as the main investor, with a planned investment of about 10 billion yuan.
JinkoSolar, which has been in the limelight for a while due to the rapid volume increase of TOPCON, has recently been counterattacked.
In the first three quarters of 2023, the company's net profit attributable to the parent company was 635.4 billion yuan, the annual estimate is 725-79.500 million yuan, which shows that the net profit attributable to the parent company in Q4 is only about 896-15.9.6 billion, down 36%-64% quarter-on-quarter. In addition, according to Caixin**, TOPCON will build 300-400GW of new production capacity in 2023, and it is expected that the new production capacity will exceed 200GW in 2024, from the blue ocean to the red ocean in just a moment.
In contrast, LONGi has adopted a "rational and positive" strategy.
From the perspective of dismantling, LONGi's "rationality" is reflected in the fact that when Jinko, Trina Faucet and others fell to TOPCON, they chose to hand over their future to the immature BC.
The theoretical conversion efficiency limit of BC is 291%, up from 28 for TOPCON and HJT7% and 285%。According to Zhong Baoshen, the efficiency improvement of TOPCON technology and traditional PERC cells is relatively small, and the technology is highly homogeneous, which is very easy to have investment returns that do not meet expectations, and may even face the embarrassment of surplus before making money.
At present, the yield rate of LONGi's HPBC production line has reached 95%, which is still far from the more than 99% of PERC, but theoretically reaching more than 93% has the conditions for large-scale continuous production. In a recent survey, LONGi said that the company's existing HPBC battery production capacity is about 35GW.
Another key word is "positive". LONGi is making up for its shortcomings, especially in the study of customer needs.
Zhong Baoshen admitted that LONGi used to be positioned as "higher efficiency, lower cost, and higher reliability", but with the diversification of customer needs, these three needs have become the most basic needs. Customers are not essentially buying the same, but buying different. To this end, LONGi is actively promoting the implementation of BC battery products.
The trillion-dollar photovoltaic market is in the strongest "involution in progress" in history, aiming at poetry and the distant LONGi, and the possibility of breaking through is increasing.
The new cycle of photovoltaic is coming, and no one can be immune.
Since 2022, the photovoltaic sector has been ** for two consecutive years. Wind data shows that so far in 2024, in just over a month, the overall photovoltaic index has fallen by more than 27%.
On the disk, LONGi and Jinko's dynamic PE is less than 10 times, Trina Solar is less than 8 times, TCL Zhonghuan is only 6 times, and Tongwei is only 5 times. may be due to the Hong Kong stocks, GCL is less than 3 times. Even if you look at the past few decades, it is difficult to see such a low level of valuation.
Industry insiders call the photovoltaic "endless" industry "Davis double kill".
This round of killing and falling in the photovoltaic industry began in mid-2022, and the second half of 2022 to the first half of 2023 belongs to the first stage of Davis's double kill, that is, the valuation stage; In the second half of 2023, it will begin to enter the second stage, and judging from the annual report data disclosed by the current photovoltaic manufacturers, it will also usher in the stage of killing performance.
However, whether it is to kill valuation or performance, the share price of LONGi Green Energy, which is in the "cycle", has reached the bottom or is close to the bottom.
And this is precisely the best opportunity for long-term investors.
Howard Marx, the founder of Oaktree Capital, mentioned more than once in his classic book "The Most Important Things to Invest", "Buying at a price below the value is, in my opinion, the true meaning of investment - the most reliable way to make money." ”
It's easy to spot good industries and good companies, but it's not easy to buy at a price below value. Because the amplitude of ** is very large, the chance of "good" appearing is elusive.
In this regard, Warren Buffett gave a more accurate answer - "I will not buy and sell because of the market situation or economic situation", because he is "not good at accurately grasping the investment timing, but only when he thinks the investment object is **cheap**".
In his view, the good ** is often the cycle "given", the cycle is not based on the subjective will of the enterprise for the transfer, when you hold a long-term excellent enterprise, experiencing a long downward cycle, adhere to the long-term hold can obtain stable income.
In fact, looking at Berkshire Hathaway's investment history, for example, in 1989, in the banking, industrial and real estate sectors, Wells Fargo did not survive in a chaotic market, and in 1990 Warren Buffett won 2$900 million** invested in Wells Fargo and earned 10 times the income in 10 years.
For another example, Warren Buffett was at an inflection point in Apple's performance in 2016, was not favored by the market, and the stock price was **. In 2021, he received more than 5 billion yuan in dividends from Apple alone.
In this round of adjustment, LONGi Green Energy survived by "shrinking" its business to maintain cash flow; At the same time, the grain was accumulated on the high wall, and the enterprise moat was established to resist the storm; On the other hand, companies that do not care about the gains and losses of one city and one pool, and continue to bet on new technologies and new products to enter a new boom cycle, are undoubtedly underestimated by the market.
In October 2012, when the Internet was flourishing, an article in China Entrepreneur magazine boldly predicted: if there is an industry that is shrouded in an aura comparable to the Internet, the ability to create wealth is comparable to the Internet, and the industry's ability to attract capital is comparable to the Internet, then it must be photovoltaic.
Ten years later, PV not only surpasses the Internet, but also the scenery is still unlimited. From an investment point of view, it is especially important to find a company that must win in a must-win track.
Kunpeng Project