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2023 Annual Report: LONGi maintains Robust Financial Condition and Strong Risk Resistance Capabilities

2023 Annual Report: LONGi maintains Robust Financial Condition and Strong Risk Resistance Capabilities

On April 30, 2024, LONGi Green Energy Technology Co., Ltd. (hereinafter referred to as “LONGi “), a global leader in solar technology, officially released its performance report for the year 2023. The company achieved a revenue of 129.498 billion yuan, continuing to maintain a scale of a hundred billion in revenue. Affected by the rapid decline in the industry chain prices and impairment provisions, the net profit attributable to shareholders of the listed company, excluding non-recurring gains and losses, was 10.834 billion yuan, with a comprehensive gross margin of 18.26%. By the end of 2023, the company’s asset-liability ratio was 56.87%, and it had sufficient cash reserves. During the period of industry operation volatility with declining prices, the company maintained a robust financial condition and strong risk resistance capabilities.

Industry supply and demand imbalance intensifies, and the pace of new capacity transformation and upgrading accelerates
Under the pressure of severe supply and demand imbalance, photovoltaic product prices plummeted in 2023, especially since the fourth quarter, where the bidding prices for modules continued to hit new lows, with module prices falling below 1 yuan per watt. According to PV InfoLink data, in 2023, the price of multicrystalline silicon materials dropped by about 70%, the price of silicon wafers and cells (PERC 182) decreased by about 60%, and the price of modules (PERC 182) declined by about 50%. The disorderly low-price competition has significantly undermined the profitability of companies.

Affected by this, in 2023, LONGi conducted impairment tests on assets showing signs of impairment and planned to set aside an impairment provision of 7 billion yuan, which mainly includes an inventory write-down provision of 5.2 billion yuan and an impairment provision for fixed assets of 1.6 billion yuan, among others. The company achieved a revenue of 17.674 billion yuan in the first quarter of 2024.

During the reporting period, LONGi actively accelerated the upgrading and mass production of HPBC and TOPCon capacities. The annual production capacity of 29GW for high-efficiency HPBC cell in Xi’xian and 4GW in Taizhou has been fully put into operation. The 46GW silicon ingot and wafer project in Ordos and the 30GW cell project, as well as the 10GW module project in Wuhu, have been successively launched. With the acceleration of capacity transformation towards future technologies, the company expects to achieve a silicon wafer shipment target of 135 GW and a cell plus module shipment target of 90-100 GW in 2024.

In addition to the imbalance in the industry chain value, the short-term fluctuations in LONGi’s performance are closely related to the transformation and iteration of old and new production capacities. This year, the Lighthouse Factory in LONGi’s Jiaxing Production Base, which represents the highest level of intelligent manufacturing and digitalization in the global photovoltaic industry, was completed. The Lighthouse Factory has developed and implemented more than 30 digital technologies to promote intelligent manufacturing, which has resulted in a 28% reduction in unit manufacturing costs, a 43% reduction in yield loss, an 84% reduction in production and delivery cycles, and a 20% reduction in unit energy consumption within one year. In the future, other production bases of LONGi around the world will take the Lighthouse Factory as an excellent example, continuously optimizing production cost reduction measures, and promoting greater cost reduction and efficiency improvement on a larger scale.

New TaiRay silicon wafers will be mass-produced in Q2 2024, and HPBC 2.0 will be launched to the market in H1 2024

In 2023, LONGi achieved shipments of 125.42 GW of monocrystalline silicon wafers (of which 53.79 GW were sold externally); it achieved external sales of 5.90 GW of monocrystalline cells; and it achieved shipments of 67.52 GW of monocrystalline modules (of which 66.44 GW were sold externally). In the first quarter of 2024, the company achieved shipments of 26.74 GW of monocrystalline silicon wafers (12.43 GW sold externally), a year-on-year increase of 12.26%; it achieved external sales of 1.51 GW of monocrystalline cells; and it achieved shipments of 12.89 GW of monocrystalline modules (12.84 GW sold externally), a year-on-year increase of 16.55%.

In the first quarter of 2024, the company launched bifacial double-glass modules based on the advantages of HPBC technology, which effectively meet the high-temperature resistance and humidity tolerance reliability requirements of most domestic distributed scenarios for photovoltaic modules, enhancing the differentiated competitive advantage of the company’s full-scenario module product matrix. The newly released “TaiRay” silicon wafer product has made breakthroughs in aspects such as resistivity concentration and impurity absorption effects, which can effectively improve the efficiency at the cell end for mainstream technology routes across the entire platform. It is planned to be put into mass production in the second quarter of 2024.

LONGi adheres to the philosophy of pursuing development through innovation. In 2023, the company’s R&D investment for the entire year was 7.721 billion yuan, accounting for 5.96% of the total revenue. Focusing on cost reduction and efficiency improvement, the company has carried out upgrades to its BC (Back Contact) technology products and the development of next-generation technologies. It has continuously invested in technological routes such as TOPCon, HJT and tandem cells. The company has set world records for both the back-contacted crystalline silicon heterojunction solar cell with an efficiency of 27.09% and the crystalline-silicon-perovskite tandem cell with an efficiency of 33.9%, further consolidating the company’s R&D strength and cutting-edge technical reserves.

The industrial competitive landscape is being reshaped, and the company is navigating through the business cycle with prudent management

In 2024, the industry will enter a phase of accelerated elimination, where a company’s global operational capabilities, including marketing, technological research and development, financing capabilities, operational management, and business model innovation, will become the focal points of competition. The competitive landscape among enterprises will see accelerated differentiation, and the short-term pains of the industry will not affect the long-term value of leading companies.

Affected by the rapid decline in industry chain prices and the tightening of market financing policies, enterprises with high debt and product homogenization have begun to exit the market. Li Zhenguo, founder and president of LONGi, stated on the CCTV program “Dialogue: Start of the Year Talk” that being too aggressive could lead to problems, while being too conservative could result in being eliminated. From 2021 to 2023, the asset-liability ratios of LONGi were 51.31%, 55.39%, and 56.87%, respectively. With its strong manufacturing capabilities and financial health, the company has received the highest bankability rating recognized by the authoritative PV ModuleTech for several consecutive years. The financial health index has continued to lead the industry, demonstrating a strong ability to respond to industry risks.

During the reporting period, the company optimized and enhanced its overseas production capacity layout, further improving its overseas supply capabilities. Projects such as the 2.8GW module facility in Malaysia and the 3.35GW cell facility in Vietnam have been gradually put into operation as scheduled, and the construction of the 6.6GW silicon ingot project in Malaysia is progressing in an orderly manner. With the official commencement of production at the company’s 5GW module joint venture factory in Ohio, USA, in the first quarter of 2024, the company’s shipment capabilities in the US market are expected to be enhanced.

As the market clears out outdated capacities, the performance of companies with leading products will gradually recover. Zhong Baoshen, Chairman of LONGi, stated that the company’s overall business for the year will show a trend of being lower in the beginning and higher towards the end, with a sequential increase each quarter. The overall shipment growth rate of LONGi this year will not be lower than the average growth rate of the industry, and the product shipment volume will continue to grow. In the next three years, the company expects to achieve an annual production capacity of 200 GW for monocrystalline silicon wafers, with the “TaiRay” silicon wafer capacity accounting for over 80%; the annual production capacity for BC (Back Contact) cells will reach 100 GW; and the annual production capacity for monocrystalline modules will reach 150 GW.

About LONGi

Founded in 2000, LONGi is committed to being the world’s leading solar technology company, focusing on customer-driven value creation for full scenario energy transformation.

Under its mission of ‘making the best of solar energy to build a green world’, LONGi has dedicated itself to technology innovation and established five business sectors, covering mono silicon wafers cells and modules, commercial & industrial distributed solar solutions, green energy solutions and hydrogen equipment. The company has honed its capabilities to provide green energy and has more recently, also embraced green hydrogen products and solutions to support global zero carbon development. www.longi.com