Author: Tian Si

Edited by Jiang Bo

With the gradual disclosure of the 2024 performance forecast, the "loss king" of the photovoltaic industry has also surfaced.

Huaxia Energy Network (public number hxny3060) learned that on January 24, TCL Zhonghuan (SZ: 002129) announced its performance forecast, saying that it is expected to lose 8.2-8.9 billion yuan in 2024, deducting a non-net profit loss of 9.2 billion yuan to 9.9 billion yuan.

Compared with the photovoltaic companies that have released performance forecasts, TCL Zhongbi LONGi Green Energy (SH: 601012) is expected to have a maximum loss of 8.8 billion yuan, which is much more, which can be called the "loss king" of photovoltaic listed companies in 2024.

In the first three quarters of 2024, TCL Zhonghuan's loss has reached 6.061 billion yuan. According to this calculation, TCL Zhonghuan is expected to lose 1.939-2.639 billion yuan in the fourth quarter. Compared with the losses of 880 million yuan in the first quarter, 2.184 billion yuan in the second quarter, and 2.998 billion yuan in the third quarter, TCL Zhonghuan's loss in the fourth quarter was basically to the end, and there was no further expansion trend.

In contrast, JA Solar (SZ:002459), Tongwei (SH:600438), Trina Solar (SH:688599) and even Aiko (SH:600732) all saw widening losses in the fourth quarter. This shows that the winter of the entire photovoltaic industry is still cold, and it will take time for the industry to reverse.

However, TCL Zhonghuan is still the company with the most losses in this round of photovoltaic adjustment cycle.

Since the second half of 2023, when the photovoltaic industry entered the adjustment stage, TCL Zhonghuan has lost money for 5 consecutive quarters. In the fourth quarter of 2023, TCL Zhonghuan began to turn from profit to loss, with a loss of 2.772 billion yuan in the quarter. In this way, the company's cumulative loss in five quarters has exceeded 11.6 billion, and the profit in the three years of 21-23 years has been almost lost.

In terms of the company's asset scale, TCL Zhonghuan is not the highest (as of the end of the third quarter of 2024, TCL Zhonghuan's total assets are 129.884 billion yuan, and the total assets of LONGi Green Energy in the same period are 155.192 billion yuan), but it is the largest loss, which shows that there are some problems in the company's business capabilities and corporate strategy.

TCL Zhonghuan is the only old factory in China's photovoltaic industry with a history of more than 60 years that claims to have "gone through five cycles" (in addition to the three rounds of PV cycles, including the deepening of the state-owned enterprise reform in 1985 and the state-owned enterprise contracting reform in the early 1990s). Even in 2012, the company turned around after only two quarters of losses, and then maintained a decade of consecutive quarterly profits.

So, what is the reason why such a high-quality company has now become the "loss king" of the industry?

TCL Zhonghuan explained in the 2024 performance forecast that it is mainly due to: the imbalance between market supply and demand, the continuous decline in product sales prices, and the impact of falling product prices and inventory disposal, the company's new energy materials business has suffered a gross profit loss since the beginning of the second quarter, and has accelerated into the stage of cash cost loss; The relative competitiveness of the battery module business was insufficient, and the company's overseas subsidiary, Maxeon, was in a period of operational transformation, which had a certain impact on the performance during the reporting period.

In fact, in the eyes of the industry, TCL Zhonghuan's fiasco stemmed more from strategic mistakes. In the first half of 2024, the surplus situation in the industry has been very obvious, and the prices of the whole industry chain have fallen below the cost line, but TCL Zhonghuan is still insisting on relying on low-price competition to seize market share, and the operating rate in the first half of the year has reached more than 90%. The consequence is that the more you sell, the more you lose. In the first half of the year, TCL Zhonghuan used a loss of more than 3 billion yuan in exchange for a 1% increase in the market share of silicon wafers.

In August 2024, TCL Zhonghuan urgently replaced the "veteran" Shen Haoping, and Chairman Li Dongsheng personally stepped down as CEO. After a short transition, on September 30, Li Dongsheng promoted the young Wang Yanjun to the position of CEO. Wang Yanjun was born in 1983 and is a Ph.D. candidate at the School of Nanotechnology and Nano Bionics at the University of Science and Technology of China.

By the end of the third quarter, the backlog of polysilicon and wafer inventories caused the company an inventory impairment loss of 2.397 billion yuan. Therefore, in the second half of the year, TCL Zhonghuan's losses continued to expand, resulting in a bleak situation throughout the year.

In addition, the lack of competitiveness of the battery module business mentioned by TCL Zhonghuan and the transformation period of its overseas subsidiary Maxeon are also important reasons for dragging down the performance.

According to the 2024 semi-annual report, TCL Zhonghuan's photovoltaic module revenue accounted for 17.04%, but the gross profit margin was only 0.94%.

As for Maxeon, it has been facing continuous losses in performance and falling stock prices since its listing in 2020. According to the information released by TCL Zhonghuan, in the first three quarters of 2024, the company's long-term equity investment assets related to Maxeon suffered an impairment loss of 1.01 billion yuan.

Despite this, TCL Zhonghuan is still increasing its stake in Maxeon. Following the announcement in May 2024 that TCL Zhonghuan intends to control Maxeon for no more than US$198 million and a shareholding ratio of at least 50.1%, it announced in November that it intends to purchase 100% of Maxeon's wholly-owned subsidiary SPML, 100% of Maxeon's non-US sales subsidiary and related tangible and intangible assets, including the Sunpower trademark.

Industry analysts believe that TCL Zhonghuan insists on holding shares in Maxeon because of the 1,650 patents in Maxeon's hands, covering IBC, Hypercell technology and TOPCon technology, and the fundamental reason is to strengthen its cell and module business and create an integrated industrial layout.

It's just that in the current situation that all links of the industrial chain have been excessive, the more integrated the enterprise, the more serious the loss, adhere to the integration, can really pull TCL Central out of the quagmire of loss? It may be time for TCL Zhonghuan to reassess the correctness of this strategy.

In September 2024, when the heads of leading photovoltaic companies such as Tongwei, Trina Solar, LONGi Green Energy, and GCL Group gathered on CCTV's "Dialogue" program, Li Dongsheng revealed his thoughts and said: "We have to see clearly what we did right and what we didn't do right in our past business decisions. ”

"After the storm, you will see a rainbow." In a handwritten letter to China's photovoltaic industry, Li Dongsheng also wrote.