In the 2017 annual report, 27 listed companies in the photovoltaic industry submitted a “report card” that looks like good. Some people say that the good days of photovoltaics have come; others also said that the photovoltaic industry is a huge profit for the entire industry, and companies have earned A lot of money, and even said to be a 'loss of state fertilizer companies'! After careful analysis and analysis of the annual report of 2017 photovoltaic companies, then the question has come: How much money does China's PV companies actually make? Is the PV industry a real industry-wide windfall?
Question one: Most companies have less than 5% profitability
From 2013 to 2016, the cost of China's photovoltaic industry chain continued to decline, and the economic performance of the photovoltaic industry gradually emerged. At the end of 2016, the National Energy Administration lowered the 2017 benchmark price of photovoltaic benchmarking in the three regions, and in 2017, under the catalytic reduction of subsidies, China’s photovoltaic implementation Larger growth, the new installed capacity of 53GW, of which 19.4GW installed capacity, accounting for nearly 40%, compared to 2016 increased significantly.
Judging from the operating conditions of the 27 companies in the photovoltaic industry chain in 2017, the total revenue of 27 related companies in 2017 reached 180.73 billion, an increase of 29.7% year-on-year, and a net profit of 13.03 billion, an increase of 30.0% year-on-year.
The reporter found that from the perspective of a profit of RMB 13 billion, several companies with the highest profitability, such as Zhonglongji and Sunlight Power, had net profit of RMB 3.565 billion and RMB 1.024 billion respectively in 2017. The cumulative net profit of the two companies was nearly RMB 5 billion. Accounted for a large proportion of the overall profitability of photovoltaic listed companies.
Look first at Longji, which is the global leader in monocrystalline silicon. Due to the strong rise of single crystal lines in recent years, the market share of single crystals has spanned from 5% to 30% in just a few years, becoming the main force of high-efficiency products. Longji has always insisted on the single crystal route. After many years of hard work, it has really developed and traded a correct technology path for the industry. By 2017, its efforts will finally bear fruit, and it will shine. The profit level will also rise as the market for single crystals increases. .
Regarding the reasons for growth in performance, Longji Group stated in its 2017 performance forecast that: During the reporting period, sales of its major products, monocrystalline modules and wafers, grew rapidly, and its main business income increased significantly; at the same time, it benefited from the continuous improvement of technical processes. With the continuous improvement of equipment and the gradual release of self-built production capacity, the cost of main products was further reduced, and the gross profit rate increased year-on-year. By the end of 2017, Longji’s single-crystal silicon wafer production capacity reached 15GW, which was 100% higher than the end of 2016, and the single crystal module production capacity reached 6.5. GW, increased by 30% compared to the end of 2016.
Judging from the improvement in performance, Longji’s net profit increased from 5.2 billion yuan in 2015 to 3,565 million yuan today. However, from the perspective of government subsidies, the amount of subsidy received is not high. In 2017, it did not exceed 100 million yuan. The proportion of profit to net profit was 97.2%, and the profitability was excellent, reflecting the company's efforts to develop photovoltaics in recent years.
Similar to Longji Co., Tongwei Co., Ltd. is a global photovoltaic giant that has risen in recent years. It has global leading competitiveness in the field of polysilicon and solar cells. With regard to growth in performance, Tongwei Co., Ltd. thanks to the rapid development of the industry has driven the upstream manufacturing sector. Demand, and Tongwei’s technology upgrades and lean management in polysilicon and solar cells significantly reduced production costs and improved product quality. Similarly, the percentage of subsidies it received for its revenue was also very low, only 2%. Compared to its annual sales revenue of tens of billions, subsidy income is almost negligible.
Sunlight Power is the global technology leader in photovoltaic inverters. In 2017, Sunlight's power distribution for household photovoltaics achieved great results. The company stated that the growth in performance was mainly due to the rapid growth of distributed power plant system integration business. The expansion in overseas markets is also one of the reasons for the increase in performance.
From the perspective of industry leading companies, the reasons for their success are all due to the company’s hard work, lean management, and strong competitiveness. All of them are under fair market conditions, relying on real skills, and achieving true competence. The community should give thumbs up for their hard work and praise them. It should not be wrongly attributed to 'subsidy' blessings, not to outsider rumors of being 'subsidized' to raise fat. This logic is both a mistake for several industry leaders. Reading, it is the obliteration of their efforts to achieve results.
However, it is worth noting that, in addition to these three leading companies, the profitability of other photovoltaic industry is very general, and even less satisfactory.
Apart from Kailongji, Tongwei, and Sunshine Power, the top net profit companies in 2017 were Central, Dongfang Risheng, Solar Energy, Yishite and Foster. Their net profits exceeded RMB 500 million last year. However, judging from the growth rate of net profit, East Risheng, Foster's net profit all showed a year-on-year decline. The growth rate of Central shares and solar energy net profit did not exceed 40%, and the growth rate of net profit was halved.
In its annual report, Oriental Sunrise stated that the decline in net profit was due to the decrease in the impact of non-recurring gains and losses on the company’s net profit. This also indicates that the company no longer relies on subsidies to 'live', but after the reduction in subsidies, the company’s net profit can be reduced. It remains to be considered whether or not it will continue to grow.
From the perspective of PV listed companies, the overall performance in 2017 was impressive, but after the release of the 531 New Deal, the industry questioned the future profitability of photovoltaics.
According to Cao Renxian, Chairman of Sungrow Power Supply Co., Ltd., the annual output value of the PV industry is about 5000-1 trillion yuan, but the total profit of the industry is very low. Except for several listed companies with relatively good operating conditions, the profit rate of most companies is less than 5 %, some of the leading companies have just turned losses into profits, and a large part of the companies are not profitable. The profits obtained by the entire industry are restrained and modest. Renewable energy subsidy funds are replenished to terminal power station investors. Manufacturing companies do not have much advantage. Most of these subsidies are converted into ecological civilization benefits.
According to the information from the China Securities Regulatory Commission, as of the end of April 2018, 3,522 listed companies in Shanghai and Shenzhen have disclosed their 2017 annual reports, and their net profits have continued to grow. Statistics show that in 2017, Shanghai and Shenzhen listed companies realized operating income of 39.25 trillion yuan. , Achieve a net profit of 3.36 trillion yuan, net interest rate of 8.56%. Therefore, compared to all walks of life, China's photovoltaic industry's net profit rate is actually more 'meager'.
Problem 2: Many companies still suffer serious losses
In fact, the current trend of boosting the entire photovoltaic industry shows that the trends of the strong and permanent have emerged, but for most photovoltaic companies, the days are still not good or even worse.
Last year, *ST Hairun continued to fall into losses, and the company suffered a loss of 2.436 billion yuan for the year. It said that due to the decline in market prices of photovoltaics in 2017, the company’s production and sales volume of main products, market prices and gross profit margin for sales decreased, and due to domestic power stations Due to the restriction of power supply, overseas PV power plants are affected by the decrease in transaction volume in the green card market, resulting in an increase in the amount of impairment of the company's assets.
After this loss, *ST Hairun was once again faced with delisting pressure. After consecutive losses in 2013 and 2014, the company relied on 2015 earnings to avoid delisting. Another example is Aerospace, which achieved revenue of 6.657 billion yuan in 2017 , year-on-year increase of 22.18%; but net profit loss of 308 million yuan, a year-on-year drop of 252.25%.
The reporter learned that aerospace has suffered such a large loss, and the loss in the photovoltaic industry has become one of the main reasons for dragging down performance. Aerospace Electric stated that in 2017, the price of polysilicon at the front end of the company's silicon wafers rose rather than decreased, and it was at a historically high level throughout the year. The price of products is still in a downward avenue, and in particular, the market price of traditional polysilicon modules declines faster than the rate of cost decline. In addition, the output of the battery cell line due to technological transformation of black silicon is lower than expected; terminal and EPC links are lowered and subsidized due to state subsidies. Due to the long time in place, the company's investment construction volume has dropped drastically and gross margins have been severely squeezed. The 'first-come-first-served' preliminary development cost has been disposed of. Under the influence of the above factors, despite the company's transfer of 260MW of power station in 2017, the profit was 1.38. Billion, but the PV industry still has a loss of 550 million yuan.
Similarly, the relevant industry chain companies listed on the 3rd board, from the perspective of their financial statements, the days are not too good. Take Baobao as an example, its 2017 operating income was 184 million yuan, an increase of 35.03% year-on-year; but its net profit was Loss of 2.647 million yuan, compared with last year, from profit to loss.
It is worth noting that in 2017, there was also Silver Star Energy. Yi Cheng Xineng and other enterprises also suffered significant losses. However, they enjoyed very few subsidies. No company received subsidy of more than 30 million yuan, and received subsidies far. It is lower than previous years. Their losses also reflect that the photovoltaic industry has not reached the high economic cycle, and many companies still face various problems such as losses.
Question 3: Weak growth, low gross margins in the industry
Finally, from the gross profit of listed companies in the photovoltaic industry chain last year, there are concerns.
Through analysis, it is not difficult to notice that the areas with the highest profits in the PV industry are now concentrated on silicon wafers, but their gross profit margin is not high. For example, the gross profit margin of Longji’s main products is stable at over 30%, which is slightly higher than that of 2016. GCL's integrated gross profit is about 30%, Central shares are slightly lower, about 20%, Tongwei's gross profit is only about 18%. Although the gross profit of the above-mentioned companies are slightly higher than before, but the increase is not significant.
In the field of photovoltaic equipment, the gross profit margin of major companies is stable at around 35%, such as sunlight power supply, KSTAR, etc. However, in the field of battery components, etc., the gross profit margin is much lower, and the world’s largest PV module manufacturer Jinko Energy In 2017, the total turnover was approximately 26.4 billion yuan, gross profit margin was 11.3%, net profit was only 114.7 million yuan, and net profit margin was less than 1%. The fourth largest component manufacturer, Jingao, achieved revenue of 19.7 billion yuan, gross margin of 12.3%, net profit. 300 million, 1.5% net margin. Therefore, how to effectively increase profit margins will be a major guarantee for the company's continued profitability in the future.
According to the China Energy News, citing Wang Bohua, the secretary general of the China Photovoltaic Industry Association, in the Chinese PV industry, the net profit rate of component companies in 2017 is very low, and the top corporate net profit rate is only 1% on average.
Therefore, it is not difficult to see that the gross profit margin and net profit level of the entire photovoltaic industry are actually not high. It is not the so-called photovoltaic profits that the outside world has mentioned. This is typical of rumor.
