(Yicai Global) Feb. 3 -- Chinese suppliers of raw materials for solar panels were benefitting the most from last year's photovoltaic energy boom and rising prices.

Some 31 PV firms out of the 56 mainland-listed ones that have already released their annual earnings reports predict net profit growth for 2022, Yicai Global learned. Eight of them expect to turn profitable. However, five predict that net profits fell and nine were making a loss, four of which did so for the first time.

The generally strong performance was driven by large-scale installation demand and the trend is likely to continue. This year, China's new PV installation capacity will top 110 gigawatts if the National Energy Administration's plan remains unchanged.

Upstream Power

Among upstream companies, Chengdu-based Tongwei and Shihezi-headquartered Daqo New Energy ranked best in profitability last year. Silicon material giant Tongwei expects its net profit to have increased by more than three times to a point between CNY25.2 billion and CNY27.2 billion (USD3.7 billion and USD4 billion) as product prices soared. Daqo also anticipates a more than threefold profit boost year-over-year to CNY19 billion or even as high as CNY19.2 billion.

However, the trend of rising raw material prices showed signs of easing in the fourth quarter, taming firms' performance. Tongwei said that in the last quarter of 2022, its net profit fell as much as 64 percent from the third quarter. Silicon wafer giant Longi Green Energy Technology said its profit decline may have been as high as 22 percent over the same time period.

But for the whole year, midstream companies were not doing too badly. Longi expects its net profit to have increased between 60 and 71 percent to a sum between CNY14.5 billion and CNY15.5 billion. TCL Zhonghuan Renewable Energy Technology predicts a number as high as CNY7.1 billion (USD1.1 billion), a gain of 64 to 76 percent YoY.

Large mid and downstream players were still recording impressive profit increases due to rising downstream demand despite the surging commodity prices. Three leading wafer and module suppliers, Jinko Solar, JA Solar Technology, and Trina Solar, each expect their net profits to have more than doubled from 2021.

Beijing-based JA Solar is the biggest gainer among solar panel manufacturers with a net profit boost of up to 175 percent to as high as CNY5.6 billion. Shipments may have risen by over 50 percent to 40 GW last year, according to a third-party body.

Growing Market

Despite the volatile prices, firms across the industry chain are expanding production. Longi said on Jan. 17 that it will invest CNY45.2 billion (USD6.7 billion) to add 100 GW of annual capacity of silicon wafers and 50 GW of monocrystalline cells. Tongwei has also revealed several midstream and downstream investment plans.

"Industrial leaders with abundant funds, big scale, and first-mover advantage are continuously expanding capacity, posing operating pressures to new and small industrial players," a PV industry professional told Yicai Global.

Going forward, a bigger share of profits may go to large firms with comprehensive upstream and downstream projects, the source said, adding that consequently, small firms could be gradually knocked out.

Editors: Tang Shihua, Emmi Laine, Xiao Yi