PVTIME – On October 23, Tongwei Co., Ltd. (hereafter referred to as “the company”) released its third quarterly report for 2020. In the first three quarters, the company’s revenue was 31.678 billion yuan, a year-on-year increase of 13.04%, and net profit attributable to the parent was 3.333 billion yuan, a year-on-year increase of 48.57%. The company’s revenue in the third-quarter was 12.94 billion yuan, an increase of 8.73% year-on-year, and its net profit attributable to the parent was 2.322 billion yuan, an increase of 193.07% year-on-year.
Affected by the July incident of silicon materials enterprises in Xinjiang, and the production halt caused by flooding at Yongxiang Leshan’s 20,000ton production facility in August, the supply shortage of silicon materials has catalyzed the continuous increase in prices across the industrial chain. According to PVInfoLink’s latest quotation, the average price for polysilicon-prime for mono is 90 yuan/kg and polysilicon-prime for multi about 61 yuan/kg, up 53% and 110% from the low points of the year. Considering that there will be almost no new production capacity in the coming year, and the current supply and demand imbalance holds, the price of silicon materials is expected to remain high.
The company’s silicon material production capacity is currently 80,000 tons, of which monocrystalline materials account for more than 95%. The average production cost is 39,500 yuan/ton. The average production cost of new capacity is 36,500 yuan/ton, which is at an industry leading level. With Baoshan Phase I’s 80,000 tons of total capacity expected to be completed and put into operation in 2021, it is expected that the company’s silicon material business will maintain strong growth with greater performance and flexibility next year. Additionally, the company signed a strategic cooperation agreement with LONGi on September 25 to guarantee the trading volume of 101,800 tons of polycrystalline silicon materials and carry out investment cooperation every year.
Installed capacity in Q3 continued to improve month-on-month. At the same time, due to the impact of silicon and silver paste price increases, cell price rose rapidly as well. Particularly, demand for M6 was strong but supply was limited, leading to the price remaining firm and improving cell profitability significantly.
With the production ramp of Meishan Phase I’s 7.5GW (compatible with sizes 21Xmm and under), Meishan Phase II’s 7.5GW and Jintang Phase I’s 7.5GW scheduled to be completed in 2021, the company’s large-scale production capacity structure will continue to be optimized and profitability will be significantly enhanced. In addition, the company is actively promoting the planning of heterojunction production capacity. As heterojunction technology continues to mature, the company is expected to lead and reshape the cell industry.
Q4 of 2020 will be the most prosperous photovoltaic installation season, and high growth in 2021 is expected. From the perspective of industrial chain production and order transactions, Q4 installed capacity will continue to be strong. The company expects installed capacity in Q4 to reach nearly 40GW globally, the most in recent years. The path for photovoltaic cost reduction is clear, and the world is accelerating into the era of grid parity. Affected by low interest rates combined with policy stimulus, domestic and international demand are expected to increase next year. The company expects global photovoltaic installed capacity to reach 160-170GW next year.
Cost control during the reporting period was stable, and the substantial increase in inventory led to a slight decline in cash flow. The company’s expense ratio during the first three quarters was 9.03%, a year-on-year decrease of 1.21%. The sales/management/R&D/financial expense ratios were 1.85/3.36/2.32/1.50%, which is -0.90/0.04/-0.01/-0.34% year-on-year, respectively. The company’s inventory at the end of the third quarter was 3.344 billion yuan, an increase of 38.42% from the beginning of the year due to preparing for the fourth quarter. Operating cash flow fell slightly by 5.86% year-on-year to 2.038 billion yuan. It is also worth noting that the overseas epidemic lasted longer than expected while industry installed capacity growth was lower than expected, and competition within the industry exceeded expectations.
