Recently, a portion of photovoltaic (PV) enterprises disclosed their performance forecasts for the first half of 2024, shedding light on the challenges faced within the industry.

As per data provided by iFinD, by July 16, among 64 listed companies categorized under the photovoltaic equipment sector by Shenwan Hongyuan, 22 had announced their performance expectations for the first half of 2024. Notably, only nine enterprises are expected to achieve profitability, making it less than half of those disclosing their resultsFurthermore, over 80% of enterprises are experiencing a decline in net profit attributable to shareholders compared to the previous yearAlarmingly, the top contenders in the list of the ten largest losses primarily consist of leading enterprises like Tongwei Co., Longi Green Energy, and TCL Zhonghuan.

Amidst plummeting industry chain prices, dwindling corporate performance, and declining stock prices, the question arises: when will a turning point be reached in the photovoltaic industry? How can these companies gather strength to persevere through this downward cycle? Is there still growth potential in the increasingly risky overseas markets?

Leading Companies Bear the Brunt of Losses

From the performance forecasts disclosed, only nine companies are projected to turn a profit in the first half of the year, with only two - Deye Co

and JinkoSolar - anticipating net profits exceeding 1 billion yuanThey expect net profits attributable to shareholders between 1.183 and 1.283 billion yuan, and 1.165 to 1.353 billion yuan, respectively.

Among the 13 photovoltaic enterprises forecasting losses for this half-year, several previously high-performing firms find themselves at the forefront as significant contributors to the downturn: Longi Green Energy, Tongwei Co., TCL Zhonghuan, Aiko Solar Energy, Shuangliang Eco-Energy, and JA Solar Technology top the list of losses.

Specifically, Longi Green Energy is projecting a net loss attributable to shareholders of between 4.8 billion and 5.5 billion yuan, a stark contrast to last year's profit of 9.178 billion yuan

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Tongwei is forecasting losses between 3 billion and 3.3 billion yuan, down from profits of 13.27 billion yuan last yearTCL Zhonghuan expects losses of 2.9 to 3.2 billion yuan, compared to 4.536 billion yuan in profits during the same period last yearSimilarly, other companies like Aiko and JA Solar are also predicting significant losses compared to their previous year profits.

Out of the companies forecasting a decline of over 100% in their net profit estimates, 13 companies stood out, with Mu Bang Gao Ke experiencing a staggering drop between 1423.78% and 1728.59%. Others like Yijing Photovoltaic (Decrease of 240.35 per cent to 310.53 per cent) and Shuangliang Eco-Energy also ranked prominently on this listNotably, Mu Bang Gao Ke has shifted industries, and compared to its profits last year, it now faces losses multiplied many times over.

Correspondingly, the photovoltaic sector's performance has shown a sustained weakening trend, manifested in plunging stock prices for listed companies

As of July 16, the total market capitalization of the 64 photovoltaic listed companies reached approximately 1,167.79 billion yuan, down over 40 billion yuan from the 1,600.93 billion yuan at the beginning of the year—a significant overall decline of 27.06%. The few unicorns left in the market include Sunshine Power (valued at 145.8 billion yuan) and Longi Green Energy (valued at 106.6 billion yuan).

Continuous Decline in Industry Chain Prices

The significant losses incurred in the first half of the year are attributable to the widespread and persistent decline in photovoltaic industry chain prices, leaving industry players cringing.

Large-capacity enterprises have borne the brunt of this situation, swiftly transitioning from profit to loss

Tongwei has noted in its performance forecasts that the drastic and sustained decline in market prices across all segments of the industry chain has resulted in significant losses from its photovoltaic business operationsTCL Zhonghuan pointed out that by the second quarter of 2024, major products across the photovoltaic industry chain are facing pricing and cost mismatches, leading to widespread losses and even cash cost losses.

According to a recent report from Guoxin Securities, the current main segments of the photovoltaic industry chain have entered a stage of net losses that even dip below cash costsCompanies face severe losses due to irrational competition.

In this context, the risk of elimination looms larger for cross-industry players and smaller enterprises, putting them in a precarious position

Mu Bang Gao Ke, as one of the most severely affected companies, has publicly acknowledged that the continual decline in industry chain prices exacerbates the already fierce competition.

Under immense pressure from losses, Mu Bang Gao Ke oscillated regarding its production expansion plansThe company canceled a previously planned 10GW TOPCon photovoltaic cell manufacturing facility, which involved an investment of approximately 4.8 billion yuanYet, mere months later, it announced a new 16GW N-type high-efficiency monocrystalline silicon rod project with an estimated investment of 4 billion yuan in Shanxi XinzhouHowever, the company revealed it currently faces significant financial shortfalls and has yet to specify its financing plans.

Regarding the PV industry chain price trends for the second half of the year, analyst Fang Wenzheng stated that polysilicon prices have now reached a bottom range

In the latter half of the year, delays are anticipated for some ongoing or planned polysilicon projectsA rebound in polysilicon prices is only expected once some existing production capacities have been eradicatedWhile silicon wafer prices appear to have bottomed, substantial inventory overhang and a shifting supply-demand ratio imply no significant price recovery will occurThe battery cell market remains chaotic, pushing some manufacturers to rely on low-price competition to secure orders, keeping prices under pressure.

When Will the Turning Point Arrive?

In the face of declining prices across the photovoltaic industry chain and dismal company performances, responses to the question "When will the turning point arrive?" vary significantly within industry circles.

During a research activity on July 4, Longi Green Energy Chairman Zhong Baoshen noted that 2024 would be a particularly challenging year for both the company and the industry

He anticipates that Longi will return to a growth trajectory by 2025, likely before the wider photovoltaic industry experiences recovery.

SEMI representative Lü Jinbiao anticipates that the photovoltaic sector will see adjustments this year, with indications of an impending shift likely to surface in the third quarterHe pointed out that the industry chain adjustments will first become apparent in the polysilicon segment, with companies opting for production line shutdowns to alleviate inventory pressuresHe stressed, "If no adjustments are made by the third quarter, and they continue to engage in low-price competitive bidding for orders, they won't survive until 2025."

Shen Wenzhong, head of the Solar Energy Research Institute at Shanghai Jiao Tong University, stated that this year will represent the nadir of the industry cycle

Although demand remains on the rise, persistent low utilization rates mean the industry is presently in a stage of inventory clearance.

Pang Peng, secretary-general of the China New Energy Power Investment and Financing Alliance, echoed similar sentiments, indicating that the turning point is expected in early next year, as numerous cross-industry players and laggards are anticipated to withdraw during the latter half of this year.

When discussing how photovoltaic enterprises can weather this current winter, Shen highlights that the focus should not be on technology but rather on financial capabilitySimilarly, Pang emphasizes the importance of securing stable cash flow before cautiously expanding production in a bid to maintain industry supply and demand equilibrium.

Fang Wenzheng opines that the photovoltaic sector will undergo a process of price stabilization at low levels and accelerated clearance of production capacities in the short term, with competition shifting focus to cost efficiency

Photovoltaic companies need to stay attuned to market changes, align with policy direction, and boost technological innovation to adapt to industry transformation, particularly given the rapid pace of technological iteration.

The Middle East: A Potential New Frontier

In light of ongoing trade policies from Western countries targeting China’s photovoltaic sector, Chinese companies are pivoting towards the Middle East to seek new growth opportunities.

On July 16, following Sunshine Power's announcement of a partnership with Saudi Arabia's AlGihaz for the world's largest energy storage project, JinkoSolar and TCL Zhonghuan also revealed their Middle Eastern investment plans

JinkoSolar plans to establish a 10GW high-efficiency battery and module project in Saudi Arabia with a total investment of approximately 36.93 billion Saudi Riyals (around 7.157 billion yuan); TCL Zhonghuan plans a 20GW annual production capacity photovoltaic wafer project in Saudi Arabia, estimating an investment of roughly $2.08 billion (around 15.119 billion yuan). Other firms like GCL-Poly Energy, Trina Solar, and Junda have also unveiled investment endeavors in the Middle East, which encompasses polysilicon, silicon wafers, battery modules, and auxiliary materials.

As a burgeoning hotspot for Chinese photovoltaic firms venturing overseas, the Middle East remains an untapped reservoir for expansionAccording to Infolink Consulting, the photovoltaic demand in the Middle East is projected to reach around 20.5 to 23.6GW in 2023, with Turkey, Saudi Arabia, and the UAE leading the surge in market demand.

Industry insiders emphasize the importance for PV companies to diversify and differentiate their export channels in the face of uncertainties in foreign markets