The PV hype fades away; what once attracted thousands of attendees now only has 800 people online. LONGi Green Energy aims to return to the break-even point in Q3.

After experiencing significant fluctuations in performance, shifting from profit to loss, LONGi Green Energy Technology Co., Ltd. (601012.SH) stated that it is making adjustments through multiple measures. At the 2024 Annual and 2025 Q1 Performance Briefing held today, Zhong Baoshen, the company's chairman, indicated that the ability to turn losses into profits is highly correlated with industry conditions. The company aims to achieve break-even as early as possible, with a target to return to the break-even line by Q3 this year.

A reporter from Cailian Press noted that in 2022, amidst high enthusiasm for PV investment, the online attendance at LONGi's performance briefing exceeded 16,000 people at its peak, causing server lag on the online platform. However, as the PV sector's popularity in the capital market waned, the online attendance at today's 2024 Annual Performance Briefing only slightly exceeded 800 people.

The exit speed of PV capacity cannot keep up with the "exit" speed of investors. Judging from the operating situation in Q1 this year, the deep adjustment of the PV industry has not yet seen a clear turning point. LONGi's management introduced that in the future, it will deepen cost reduction and efficiency enhancement, driving a year-on-year reduction in operating losses. Starting from Q4 last year, the company's main business has significantly improved, with the net operating cash flow turning positive and overall operational efficiency further enhanced.

Regarding the volume ramp-up of BC2.0 products, which investors are most concerned about, the management responded in terms of cost reduction paths and gross margin improvement. Zhong Baoshen further stated that the future PV industry will enter a medium-to-low-speed growth phase. LONGi will launch differentiated products for ground-mounted power stations and distributed scenarios to meet the diverse needs of customers.

BC module shipments exceeded 4GW in Q1.

Regarding the reasons for the operating losses, according to the management's introduction at the performance briefing, in 2024, during the industry shakeout phase, the prices of the company's main products, wafers and modules, decreased by 61% and 39% YoY, respectively. The decline in product prices and the iteration of PV technology led to an asset impairment loss of 8.7 billion yuan, and investment losses of 486 million yuan occurred in equity-participated polysilicon enterprises. These factors collectively resulted in operating losses for the company in 2024.

Facing increasingly fierce competition in the industry, the company has actively adjusted its business strategies, strengthened internal management, comprehensively implemented lean cost management, and driven significant improvements in operating cash flow in Q4.

In terms of sales data, the company achieved wafer shipments of 108.46GW last year (46.55GW of which were external sales), and cell and module shipments of 82.32GW. According to financial reports disclosed by peer companies, LONGi ranked second in annual module shipments, second only to Jinko Solar (92.87GW), moving up two positions from the 2023 ranking.

Since May 2024, LONGi has launched full-scenario module products based on its high-efficiency HPBC2.0 cell technology, equipped with the company's self-developed TRINUM wafers, achieving breakthroughs in module power, efficiency, and bifaciality.

In Q1 this year, the company achieved wafer shipments of 23.46GW (11.26GW of which were external sales); cell and module shipments reached 16.93GW, with BC module sales accounting for 4.32GW.

In terms of capacity, according to Zhong Baoshen, the company currently has 15GW of BC Gen 2 capacity, which is in a state of rapid growth. It is expected to increase to 35GW by the end of June and reach 50GW by the end of the year. Starting from July, the proportion of BC output in the company's overall capacity will rapidly increase, reaching approximately 50% in H2.

Regarding cost reduction, Zhong Baoshen stated that by the end of this year, it is expected to be close to the mainstream TOPCon products on the market. He further indicated that under current market conditions, the gross margin of Gen 2 can be approximately 10% higher than that of mainstream products on the market. "In other words, if the gross margin of existing products can reach 3% to 5%, BC Gen 2 should be able to achieve 13% to 15%," Zhong Baoshen said in response to an investor's question.

Recently, the "White Paper on the Development of Back Contact (BC) Cell Technology," jointly released by LONGi and another top-tier BC enterprise, Aiko Solar (600732.SH), along with multiple parties, shows that due to the rapid promotion of BC mass production, economies of scale have begun to emerge, and the cost investment in equipment and materials has rapidly narrowed the gap with TOPCon. As the manufacturing yield of mainstream enterprises has increased to over 98%, efficiency has exceeded 27%.

The report indicates that the current manufacturing cost difference between BC and TOPCon has been controlled within 5 cents/W. In the future, BC technology can still achieve rapid cost reductions through three aspects: improving cell conversion efficiency, economies of scale, and technological process advancements. It is expected that the mass production cost of BC will be on par with, or even lower than, TOPCon in the next year.

The company's planning shows that it expects to achieve wafer shipments of 120GW and module shipments of 80-90GW in 2025, with BC module shipments accounting for more than a quarter.

Continuously advancing business in the US and emerging overseas markets.

In the "Letter to Shareholders" released yesterday along with the financial report, Chairman Zhong Baoshen mentioned the impact of the US market when summarizing decision-making setbacks. In the high-margin US market with trade barriers, affected by customs clearance disruptions in the previous two years, LONGi incurred significant costs for cargo detention and return shipments, and was also burdened with customer claims due to delivery failures. It was not until H2 2024 that the company's US business operations returned to normal.

At today's performance briefing, multiple investors further mentioned the impact of the US "reciprocal tariff" policy on module exports.

In response, Zhong Baoshen stated that currently, the company produces cells in Malaysia and exports them to the US, where modules are then manufactured through a US joint venture factory. Currently, Malaysia is also affected by the new US tariff policy, but its tax rate remains relatively low compared to other Southeast Asian countries, giving it certain advantages.

However, Zhong Baoshen also emphasized that there is still uncertainty regarding how the scale of the US market will change in the future with policy changes. For now, the company will steadily advance its US business along the established supply chain path while continuing to observe future variables in import and export policies.

According to information provided by LONGi, last year, in terms of module business, the company ranked first in market share in the centralized markets of China and Europe. The US joint venture factory operated at full capacity and full sales, driving strong growth in shipments to the high-value US market. The company also effectively built brand and channel advantages in emerging markets, with module sales in the Middle East and Africa region increasing significantly by 76%, and sales in Pakistan, a key emerging market in the Asia-Pacific region, surging by 136% YoY.

Regarding the outlook for new PV installations, Zhong Baoshen adopted a more cautious attitude. He believes that the entire market has entered a medium-to-low-speed growth phase. Specifically, there are many uncertainties in 2025, and it may be a year without incremental new installations, with global PV demand expected to remain flat or increase slightly compared to 2024.

However, by 2026, with the adaptation and adjustment of the power system to the integration of new energy, it is expected to return to a growth state. However, it will not return to the previous growth rates of 40% to 50% seen in recent years; instead, it may see an increase of around 10%.