Photovoltaic industry encounters "cycle bottom"200freespinspalmsbetTCL Central, as one of the big four silicon wafers, its integration strategy is gradually shrinking. On the evening of May 23, TCL Central adjusted the total amount of convertible bonds issued from no more than 13.8 billion yuan to no more than 4.9 billion yuan, and the funds raised more than a year later shrank by nearly 9 billion yuan.
Coinciding with the bottom of the industry cycle, TCL Central fell into a loss in the first quarter after its net profit halved last year, and at this time it invested 10 billion yuan in financial management, pushing itself to the forefront of the wind and waves.
The photovoltaic industry suffered "the end of the cycle", with convertible bonds shrinking by nearly 9 billion after a year.
On the evening of May 23, TCL Central announced that the company had decided to adjust its plan to issue convertible corporate bonds to unspecified objects, adjusting the total amount of convertible bonds from no more than 13.8 billion yuan to no more than 4.9 billion yuan. It is not difficult to find that the scale of TCL Central convertible bonds has shrunk by 8.9 billion yuan.
At the same time, the amount of fund-raising projects has also shrunk. Among them, the amount of funds to be raised by the annual 35GW High Purity Solar Ultra-thin single Crystal Silicon Wafer Smart Factory Project will be changed to 3 billion yuan, with a total investment of 36.200freespinspalmsbet.50 million yuan200freespinspalmsbetN-type TOPCon high efficiency solar cell industry 4200freespinspalmsbetThe capacity of the "Smart Factory Project" has been reduced from 25GW to 12.5GW, and the proposed investment has been changed to 1.9 billion yuan, with a total investment of 4.624 billion yuan.
On April 7, 2023, TCL Central disclosed its plan to issue convertible bonds of no more than 13.8 billion yuan, of which the "N-type TOPCon High efficiency Solar Cell Industry 4.0 Smart Factory Project" plans to raise 10.3 billion yuan, with a total investment of 10.665 billion yuan, accounting for more than 70% of the total convertible bonds.
At that time, TCL Central said that this fundraising project would further increase the output of G12 large-size ultra-thin single crystal silicon wafers and N-type TOPCon solar cells, and enhance the overall industrial level of 4.0. On May 24 of the same year, TCL Central also discussed with Vision Industries Company the proposal to jointly set up a joint venture company and invest in the construction of a photovoltaic wafer factory in Saudi Arabia.
It is worth mentioning that for the issuance of 13.8 billion yuan of convertible bonds, the Shenzhen Stock Exchange has issued an inquiry letter to TCL Central, requiring it to explain the necessity of this issue and large financing combined with the company's working capital needs, monetary funds, trading financial assets, and so on. For the reason why the total amount of convertible bonds was adjusted on such a large scale after a year, Blue Whale Finance called TCL Central, which was not answered.
The substantial adjustment of the total amount of convertible bonds in TCL Central may be related to the changes in the industrial environment and the industry cycle. At present, the efficiency of P-type PERC battery is approaching the theoretical limit and the cost reduction space is limited, so the industry aims at the next generation of N-type battery technology to upgrade and iterate. According to InfoLink, the market share of TOPCon batteries will reach about 70% in 2024. However, with many players in the industry flocking to the track, the domestic TOPCon route dividend is also gradually disappearing. Affected by the continuous expansion of the imbalance between supply and demand, the price of products in each link of the photovoltaic industry chain goes down to the cash cost range.
In the TCL Central 2023 Annual report, Chairman Li Dongsheng also said that looking forward to 2024, the photovoltaic industry will still be at the bottom of the market cycle in the short and medium term, with a serious imbalance between supply and demand, accelerated technological transformation of products, and the elimination of backward production capacity driven by the survival of the fittest.
On the one hand, it asked the market for money to expand production cautiously, while on the other hand, TCL Central put forward a $10 billion financial plan in early May.
On May 7, the TCL Central Board of Directors deliberated and passed a motion approving that the company should use its own funds of no more than 10 billion yuan to purchase wealth management products, within which the funds can be used on a rolling basis, and the financial management quota will be valid for 12 months from the date of approval by the board of directors.
The move by TCL Central sparked "dissatisfaction" among investors. In fact, since 2020, TCL Central has frequently carried out annual large amounts of idle funds for financial management, with a cumulative financial quota of 22 billion yuan. In response, TCL Central explained that the main purpose of using its own funds to buy wealth management products is to improve the efficiency of the use of its own funds and the level of income.
As of the first quarter of this year, TCL Central has 7.855 billion yuan in money on its books and only 250 million yuan in short-term loans. From the debt structure of TCL Central, it is not difficult to see that TCL Central is mainly long-term debt, as of the end of the first quarter, the balance of long-term debt is 36.34 billion yuan. For the whole year of 2023, the interest expense of TCL Central is 1.388 billion yuan. In the past five years, its interest expense has been kept at around 1 billion yuan. Roughly calculated, its capital cost does not exceed the annualized 3%.
There is a discount on their own hematopoietic ability, and the "color TV king" is ready for the winter.
TCL Group was founded in 1981, under the leadership of the capital boss Li Dongsheng, successfully landed on the Shenzhen Stock Exchange in 2004, and gradually grew into a diversified industrial group integrating color TV, white TV, mobile phone, panel and many other businesses. In April 2019, TCL Group completed a major asset restructuring and delivery, divested the smart terminal and related supporting businesses, changed its diversification to focus on the semiconductor display industry, and used the industry as a traction to develop industrial finance and investment business.
After that, Li Dongsheng's capital map was officially opened. At present, it has controlled five listed companies: Omar Electric Appliance, TCL Technology, TCL Electronics, Huaxian Optoelectronics and TCL Central. In November 2023, Kone shares IPO submitted for registration, but at the end of March this year, due to the expiration of the financial information, it is currently suspended. If the impact on A-shares is successful, Li Dongsheng's capital map will be expanded.
Since 2020, TCL Group has continued to increase the semiconductor display business on the one hand, and actively looking for new growth momentum in the field of semiconductor photovoltaic and semiconductor materials on the other. At present, the company focuses on the development of semiconductor display, new energy photovoltaic and semiconductor materials business.
In 2020, the Central Group completed the mixed reform and delisting of state-owned enterprises and introduced strategic investor TCL Technology, which became a wholly-owned shareholder of the Central Group. In April 2022, Central changed its name to "TCL Central". At present, TCL Central is mainly engaged in the R & D, production and sales of semiconductor silicon wafers, semiconductor power and rectifier devices, conductor photovoltaic single crystal silicon wafers, photovoltaic cells and modules. The company's main products are new energy photovoltaic single crystal silicon rods, silicon wafers, voltaic cells, high-efficiency stacked tile modules.
After the mixed reform of the Central Group in 2020, the performance of TCL Central has also changed. The operating income of TCL Central increased from 19.057 billion yuan in 2020 to 67.01 billion yuan in 2022, and the net profit of returning home also increased from 1.089 billion yuan to 6.819 billion yuan. However, behind the soaring performance is the reality that TCL Central relies on successive financing to "replenish blood" to expand production capacity.
In August 2020, TCL Zhonghuan issued an additional 248 million shares to raise approximately 5 billion yuan; in November 2021, the company issued an additional 199 million shares to raise approximately 9 billion yuan; in addition, in May this year, TCL Zhonghuan issued a 4.9 billion yuan convertible bond, the total three financings are approximately 18.9 billion yuan.
In the process of converting P-type production capacity to N-type production capacity, TCL Zhonghuan, one of the four silicon wafer giants, suffered a loss in the first quarter of this year after suffering a "halving" in net profit last year, and its own blood-making capacity was discounted.
In 2023, the photovoltaic industry has experienced cyclical adjustments, and prices have declined severely amid overcapacity and intensified competition. Under this circumstance, TCL Zhonghuan's revenue scale and net profit decreased year-on-year. Current operating income decreased by 11.74% year-on-year to 59.146 billion yuan; parent net profit decreased by 49.9% year-on-year to 3.416 billion yuan. In addition, the shareholding company Maxeon also brought a negative impact of 1.69 billion yuan.
Data shows that Maxeon has been listed in the United States, and its main shareholder is international energy giant Total Solar International. In 2019, TCL Zhonghuan reached a cooperation with Total, which spun off its controlling SunPower's solar cell and module business outside the United States and Canada into Maxeon, which was incorporated in Singapore. TCL Zhonghuan became its second largest shareholder with a shareholding ratio of 28.85%. Since then, TCL Zhonghuan has increased capital to Maxeon several times, and in August 2022, it plans to subscribe for the 5-year convertible bonds issued by Maxeon Company with its own funds of US$200.79 million.
In 2023, due to the rapid decline in photovoltaic product prices in Europe and the United States, where Maxeon's main markets are located, the adjustment of photovoltaic subsidy policies and the high interest rate environment, as well as the slow transformation of its own operations, its performance and share price have dropped significantly. As a result, TCL Zhonghuan recognized an asset impairment loss of 1.01 billion yuan and a loss of 440 million yuan from changes in fair value to Maxeon. It also recognized a loss of 340 million yuan from Maxeon's investment and received an interest income of 108 million yuan from convertible bonds, which has a total impact on TCL Zhonghuan's performance. A negative impact of 1.69 billion yuan.
In 2024, as the overall photovoltaic industry continues to decline and gradually shifts from cost competition to cash costs, TCL Zhonghuan's performance fell into a loss in the first quarter of this year. In the first quarter of 2024, TCL Zhonghuan's revenue was 9.933 billion yuan, a year-on-year decrease of 43.62%, and its parent's net profit lost 880 million yuan, compared with a profit of 2.253 billion yuan in the same period last year.
At a time when the photovoltaic industry's supply chain is undergoing structural adjustment, shrinking and expanding production capacity to control cost outflows, and at the same time, restoring its own blood-making capacity are top priorities for TCL Central.
(Article source: Blue Whale Finance)
