On the evening of March 17, Junda Co., Ltd. (002865) released its 2024 annual report, with the company's annual revenue of 9.952 billion yuan, down 46.7% year-on-year, net profit loss of 591 million yuan, down 172% year-on-year (profit of 820 million yuan in the previous year), and an asset-liability ratio of 76.38%.

Junda's revenue has declined quarter-on-quarter for 6 consecutive quarters (source: Choice data).

From the third quarter of 2023 to the fourth quarter of 2024, the company's operating income has declined quarter-on-quarter for 6 consecutive quarters. For the full year of 2024, the company's net profit will be -591 million yuan, of which the loss in the fourth quarter of 2024 will narrow to -174 million yuan, and the single-quarter performance has improved but failed to reverse the full-year loss trend.

The main financial indicators of Junda shares (source: the company's 2024 annual report, the same below).

Revenues and earnings are under pressure

Almost 100% of Junda's revenue comes from the cell business, and according to the annual report, the company will sell 33.74GW of cells in 2024, of which N-type TOPCon cells account for 91.9%, reaching 30.99GW. However, due to the price war in the PV industry, the gross profit margin plummeted to 0.7%, down 14 percentage points from 14.7% in 2023. According to PV market data, the price of TOPCon cells fell from RMB 0.47/W at the beginning of the year to RMB 0.28/W at the end of the year, a drop of more than 40%. This not only compresses Junda's profit margins, but also reflects the general problem of overcapacity in the industry.

From the perspective of revenue structure, Junda is highly dependent on a single product line and lacks diversified business support. As a third-party battery company, Junda shares have weak bargaining power in the industrial chain.

Cash flow and debt pressures are intensifying

In terms of cash flow, the company's net cash inflow in 2024 will be -34 million yuan, of which the net cash flow from operating activities will be 654 million yuan, a year-on-year decrease of 66.94%. In order to maintain liquidity, the company borrowed heavily in the second half of the year, and its rigid liabilities (short-term borrowings, non-current liabilities due within one year, and long-term borrowings combined) rose from 3.106 billion yuan at the end of the second quarter of 2024 to 4.732 billion yuan at the end of the year, an increase of more than 52%.

Rigid liabilities of Junda shares

Caizhongshe found that the company's asset-liability ratio rose from 74.39% at the end of 2023 to 76.38%, and the equity attributable to parent shareholders shrank by 822 million yuan to 3.89 billion yuan. The high debt ratio is close to the industry warning line (PV companies are generally in the range of 60%-80%), indicating that the company's financial resilience is close to the limit. If the external financing environment tightens, Junda's debt repayment pressure will rise significantly, and the model of relying on bank borrowings to support cash flow may face challenges.

The liquidity of monetary funds is doubtful, and the risk of the capital chain looms

According to the annual report, the company's monetary funds at the end of 2024 will be 3.536 billion yuan, which is only a slight decrease of 72 million yuan from 3.608 billion yuan at the end of 2023. However, as mentioned above, rigid liabilities surged by $1.408 billion to $4.732 billion over the same period, of which short-term borrowings increased by $1.06 billion from $450 million to $1.51 billion, more than tripling in just one year, making investors doubt the authenticity of their funds. After deducting short-term and one-year maturities, net monetary funds are only $946 million, while accounts payable are as high as $3.475 billion, which is 3.67 times of net monetary funds.

According to the analysis of industry insiders, there may be two situations in this combination of "high monetary funds + high debt": one is that some funds are limited (such as margin or advance payment) and cannot be freely used, and the annual report shows that the company's restricted monetary funds are 919 million yuan, which is lower than the increase of 1.408 billion yuan of rigid liabilities; In either case, once the supply chain tightens or banks withdraw loans, Junda's capital chain will face the risk of breakage.

Customer concentration has declined, and market share has been under pressure

"Caizhongshe" noticed that the customer structure of Junda shares is also changing in an unfavorable direction. At the end of 2024, the proportion of the company's top five customers in revenue will drop from 52.45% in 2023 to 41.30%, and the proportion of the first largest customer will drop from 27.73% to 19.01%. This indicates that Junda's bargaining power and customer stickiness in the TOPCon market have weakened.

According to data from the China Photovoltaic Industry Association, the global TOPCon production capacity has exceeded 600GW, while the top five module companies JinkoSolar (688223), Trina Solar (688599), JA Solar (002459), LONGi Green Energy (601012) and Tongwei (600438) have their own cell production capacity of nearly 400GW, which is enough to meet market demand. The market competitiveness of third-party battery companies is being challenged, and their market share is being squeezed by integrated manufacturers.

Industry Background and External Challenges

Junda's predicament is not an isolated case, but a microcosm of the PV industry's downward cycle. In 2024, 200GW of new domestic PV capacity will be installed, but after the "rush to install", demand may slow down in 2025 due to the marketization of electricity prices. The China Electricity Council predicts that new capacity could fall to 150GW in 2025. At the same time, the potential tightening of foreign green energy policies, coupled with the TOPCon patent lawsuit initiated by First Solar against JinkoSolar (involving US09130074 patents), has increased uncertainty in the export market.

Although TOPCon technology is the mainstream, it is under pressure to iterate on technology. HJT (heterojunction) cells are accelerating their rise due to their higher efficiency (mass production efficiency of 26% in 2024), while Junda relies on TOPCon for more than 90% of its revenue, and the transformation window is limited. In contrast, many companies in the industry, such as JA Solar, have deployed HJT and achieved small-scale mass production, showing stronger technical reserves.

Third-party battery manufacturers are under pressure

As a third-party battery company, the core value of Junda Co., Ltd. is to share the pressure or loss of production capacity for integrated manufacturers. However, this role is being weakened in the context of overcapacity and increasing self-sufficiency of module companies. If it is not possible to help the faucet share the cost, Junda's market space will be further compressed.

At the financial level, the asset-liability ratio exceeds 76% and it continues to borrow, indicating that it is difficult to improve cash flow through organic growth in the short term. In the second half of 2024, the model of relying on financing "blood transfusion" will be unsustainable, and in 2025, if bank credit is tightened or suppliers are dunning, a liquidity crisis may be inevitable. Strategically, although Junda has launched a 5GW cell project in Oman in an attempt to go overseas, the cost of building overseas factories is high (the estimated investment is more than US$300 million), and it is difficult to achieve results in the short term.

Junda's 2024 annual report reveals the current situation of revenue halving, continuous losses and fragile capital chain. The industry is overwhelmed, external uncertainty and its own financial pressures are intertwined, and its future trend is full of uncertainties. Whether it can get out of the predicament through technological upgrading or market breakthrough still needs time to test.