The photovoltaic industry faced significant challenges last year, experiencing the most severe capacity reduction in its history. Prices for products across the industry chain plummeted, leading to widespread financial losses among publicly listed solar companies. As annual reports begin to emerge, the financial data from the fourth quarter of last year will shed light on the impact of the industry’s efforts to reduce production and stabilize prices.
On March 17, JunDa Co., Ltd. (002865.SZ) released its annual report, disclosing a staggering net loss of 11.18 billion yuan after deducting non-recurring expenses. This figure marks the highest loss since the company ventured into the photovoltaic sector and wipes out all profits earned since its transition to solar energy in 2021. In the fourth quarter of last year, JunDa’s revenue continued to decline year-on-year and quarter-on-quarter, although its gross profit margin returned to positive territory after two consecutive quarters of negative margins.
As of March, the domestic photovoltaic market has entered a phase of policy-driven demand surge, with an increase in terminal demand that has been felt across all segments of the solar product chain. This has resulted in a slight uptick in product prices, with industry experts anticipating that this round of price increases could last several weeks, positively impacting the industry’s performance in the first half of the year.
JunDa Co., originally focused on automotive interior and exterior components such as dashboards and bumpers, diversified into photovoltaic products through acquisitions in 2021. Over the past four years, the solar industry has experienced both peaks and troughs, with new installation demands maintaining growth amidst rapid capacity expansion, leading to volatile product pricing. By 2024, the entire sector is expected to enter a capacity reduction cycle, resulting in substantial financial losses for major companies.
According to the annual report, JunDa’s revenue for 2024 was 9.952 billion yuan, a decrease of 46.66% year-on-year. The losses included 5.91 billion yuan in net profit attributable to shareholders and 11.18 billion yuan in net profit after excluding non-recurring items, compared to profits of 816 million yuan and 559 million yuan in the same period of the previous year. Notably, JunDa’s losses since transitioning into the photovoltaic sector have completely offset its prior profits, with a total non-recurring net profit loss of 10.52 billion yuan from 2022 to 2023, following a loss of 1.81 billion yuan in 2021.
The main reasons for JunDa’s financial losses include a significant decline in gross profit margins and asset impairment provisions. During the reporting period, the gross profit margin for its solar cells was just 0.48%, a decrease of 14.21 percentage points year-over-year. Additionally, the company recorded an asset impairment of 1.32 billion yuan, primarily due to inventory impairment provisions.
In the last quarter of the previous year, the domestic photovoltaic industry entered a phase of production reduction aimed at stabilizing prices. The effectiveness of these reductions is crucial for the sector’s recovery this year. Despite JunDa’s gross profit margin turning positive in the fourth quarter, the downward trend in revenue remained unaltered, with the company reporting 1.75 billion yuan in revenue, a year-on-year decline of 59.08% and a quarter-on-quarter decline of 4.26%. The demand for solar cells appeared weak, leading to a net loss of 1.74 billion yuan, although this was an improvement of over 70 million yuan from the previous quarter. The adjusted net profit loss was 3.83 billion yuan, an increase of approximately 38 million yuan compared to the third quarter.
Regionally, JunDa’s overseas market share has significantly increased, with overseas sales rising from 4.69% in 2023 to 23.85%, primarily driven by demand from markets in India, Turkey, and Europe, where the gross profit margin stood at 6.37%, substantially higher than in domestic markets.
Solar cells represent a critical element in the evolution of industry technologies. Over the past few years, photovoltaic silicon cells have transitioned from multicrystalline BSF to monocrystalline PERC and then from P-type PERC to N-type TOPCon technology. This technological shift has occurred within approximately two years. The year 2024 marks a pivotal point for the accelerated exit of P-type cells and the rapid penetration of N-type technologies, with TOPCon batteries emerging as the dominant technology.
As a newcomer to the photovoltaic sector, JunDa’s battery business primarily focuses on the N-type technology path. In the reporting period, the company shipped 33.74 GW of battery products, a year-on-year increase of 12.62%; among these, N-type battery shipments amounted to 30.99 GW, accounting for over 90% of total shipments, reflecting a growth of 50.58%.
By the end of 2024, JunDa’s total battery production capacity is projected to reach 44 GW. In terms of institutional activity, the Northbound Stock Connect slightly reduced its holdings in JunDa by 701,400 shares in the fourth quarter, ending with 3.6172 million shares, making it the eighth-largest shareholder. Three products from WanKea Fund have entered the top ten shareholders of the company, holding 4.5361 million shares, 4.3748 million shares, and 2.5712 million shares, respectively, all managed by Mo Haibo. Additionally, Guangfa High-end Manufacturing has now become JunDa’s ninth-largest shareholder with 3.5814 million shares.
The surge in installation demand is driving price increases, which may lead to profit recovery in the first half of the year. This year, the photovoltaic sector has begun to show signs of production cuts and price stabilization, with prices for batteries, silicon wafers, and silicon materials rebounding slightly. Since the second week of March, propelled by the “430 new policy” and “530 new policy,” the industry has witnessed a surge in installations, stimulating price increases throughout the supply chain. According to the China Nonferrous Metals Industry Association’s Silicon Industry Branch, prices for silicon wafers, batteries, and modules saw slight increases last week. Data from Infolink Consulting indicates that the average price of domestic distributed project modules is 0.73 yuan/watt, rising by 0.01 yuan/watt week-on-week, with a cumulative increase of 0.04 yuan/watt since the Lunar New Year. In the battery segment, the demand for 210RN has surged, with market transaction prices ranging between 0.31 yuan and 0.35 yuan/watt, while N-type silicon wafers of various sizes have also seen price increases.
The Silicon Industry Association stated that the primary reasons for the price increases are the rapid growth in terminal installation scales and the swift recovery of downstream demand, which has significantly increased demand for modules and batteries, leading to quicker inventory depletion and heightened silicon wafer demand, resulting in a supply-demand imbalance in the market.
Considering the ongoing demand growth in March and the current inventory reduction phase for silicon wafers, overall prices are expected to continue their upward trend. How the price increases driven by the installation surge will impact the operational performance of listed companies remains to be seen. Analysts in the photovoltaic sector believe that the initial wave of installation demand this year is likely to stimulate previously unmet demand due to inventory and pricing issues from last year, with production schedules across various segments expected to remain robust for several weeks, benefiting the entire industry in further reducing capacity.
“The signals for price increases are clear. Domestically, there should be no short-term issues with demand, though the main question is how much growth can be achieved. By mid-April, we expect the industry’s production rhythm to maintain a fast pace. Internationally, the European market is anticipated to experience seasonal recovery, and emerging markets that saw high demand last year will continue to contribute to new demand this year. The extent to which the end-users will accept price increases will need careful monitoring of module production scales in April. Overall, this wave of installation demand is set to effectively enhance the performance of the photovoltaic industry chain in the first half of the year,” stated a Shanghai-based private equity fund manager.
