(Yicai) Oct. 26 -- Shares of Tongwei and TCL Zhonghuan Renewable Energy Technology fell after the two global photovoltaic material titans announced double-digit slumps in revenue for the third quarter due to lower product prices.

Tongwei [SHA: 600438] finished the today 5.8 percent lower at CNY27.28 (USD3.70) a share, the lowest since October 2020 and about 60 percent below an all-time high reached last year. TCL Zhonghuan [SHE: 002129] came off 4.1 percent to CNY18.24, the lowest since June 2020. Its stock has retreated about 70 percent from a record high also set last year.

In the three months ended Sept. 30, revenue at Chengdu-based Tongwei was CNY37.4 billion (USD5.1 billion), down 11 percent from a year earlier and 8 percent from the second quarter, according to the earnings report the world's largest polysilicon supplier released yesterday. Net profit shrank 68 percent from a year ago to CNY3 billion (USD409.9 million).

TCL Zhonghuan’s revenue stood at CNY13.8 billion in the period, a 24 percent annual decline and a 20 percent quarterly drop, the world's second-largest solar wafer supplier said the same day. The Tianjin-based firm’s profit slid 21 percent to CNY1.7 billion from a year ago.

Last year, Tongwei benefited from a sharp increase in silicon prices, but as more new capacity came on stream product prices began to fall from December and excess capacity is expected to continue to weigh on prices.

Silicon material prices in first-tier producers are forecast to range between CNY70,000 and CNY800,000 a ton (USD9,564 to USD109,303) next month, significantly less than the peak of CNY330,000 yuan a ton in the second half of last year, according to the latest weekly report of the silicon branch of China Nonferrous Metals Industry Association.

Most manufacturers have dropped their silicon wafer prices to the break-even point and some have already become unprofitable, the branch added, as the problem slowly moves downstream. 

Early this year, photovoltaic cell and component suppliers in the middle reaches of the industry chain still benefitted from falling silicon wafer prices, but that changed when lower finished product prices failed to spur enough demand, resulting in greater pressure on firms downstream to trim prices further.

An insider at a solar panel supplier told Yicai that since the third quarter, the company had experienced a squeeze on profit. 

This year's earnings results have been mixed so far, as Tongwei’s nine-month revenue rose 9 percent to CNY111.4 billion (USD15.2 billion) year on year, but net profit sank 25 percent to CNY16.3 billion. TCL Zhonghuan logged a 2 percent dip in revenue to CNY48.7 billion, while its profit jumped 24 percent to CNY6.2 billion.

Lower prices along the industry chain bring opportunities to investors in solar power projects. In the first nine months, major Chinese solar power producers completed CNY222.9 billion of investments, a 68 percent jump from a year ago. They newly installed 128.9 gigawatts of capacity, or 76.3 GW more than was added in the same period last year, according to the data released by the National Energy Administration.

Editors: Tang Shihua, Emmi Laine