On April 5, the leading photovoltaic enterprise Longi Green Energy Technology Co.Ltd(601012) announced that the company received a letter from the Yunnan Provincial Development and Reform Commission on April 1, canceling the preferential tariff policies and measures enjoyed by the company in Yunnan Province. Since September 1, 2021, all the electricity prices of the company have been formed through electricity market-oriented transactions and settled directly with power grid enterprises.
By the end of 2021, Longi Green Energy Technology Co.Ltd(601012) the chip production capacity put into operation in Yunnan accounted for about 54% of the company’s total production capacity. The above matters will increase the production cost of invested enterprises in Yunnan Province to a certain extent, and the electricity charge will account for about 15% of the whole process processing cost of silicon chips, which will have a certain adverse impact on the company’s profits.
Yunnan’s production capacity accounts for about 54%
Longi Green Energy Technology Co.Ltd(601012) previously disclosed that according to the company’s strategic development needs, the company signed a strategic cooperation framework agreement with the people’s Government of Yunnan Province on March 10, 2016, and reached a strategic cooperation intention on the company’s investment in the construction of monocrystalline silicon rod silicon wafer, high-efficiency battery module and characteristic agricultural photovoltaic power station industrial chain in Yunnan Province, driving 100 billion level monocrystalline photovoltaic industrial cluster and relevant preferential policy support from Yunnan Province.
Since 2016, the company has successively signed project investment agreements with Yunnan Provincial Development and Reform Commission, Energy Bureau, Baoshan Municipal People’s government, Lijiang Municipal People’s government, Chuxiong Yi Autonomous Prefecture People’s government, Tengchong Municipal People’s government, Qujing Municipal People’s government and other places in Yunnan Province to promote the effective implementation of the above strategic agreements. By the end of 2021, the company has formed about 67gw of crystal drawing capacity and 57gw of slicing capacity in Yunnan Province. The Lijiang phase III construction project with an annual output of 10GW monocrystalline silicon rod, Qujing phase II project with an annual output of 20GW monocrystalline silicon rod and 30GW monocrystalline silicon wafer, and Qujing project with an annual output of 30GW monocrystalline battery have not been started or put into operation.
On April 1, 2022, Longi Green Energy Technology Co.Ltd(601012) received the letter from the development and Reform Commission of Yunnan Province on clarifying Longi Green Energy Technology Co.Ltd(601012) relevant electricity prices, informing that according to the requirements of relevant national departments to clean up the preferential electricity price policies, the preferential electricity price policies and measures enjoyed by the company in Yunnan Province will be cancelled. From September 1, 2021, all electricity prices of the company will be formed through electricity market-oriented transactions and settled directly with power grid enterprises.
By the end of 2021, the company’s slicing capacity in Yunnan accounted for about 54% of the company’s total capacity. Since the company’s investment projects in Yunnan Province can no longer implement the electricity price agreed by both parties in the original cooperation agreement, the production cost of investment enterprises in Yunnan Province will be increased to a certain extent. The electricity charge accounts for about 15% of the whole process processing cost of silicon wafer, which will have a certain adverse impact on the company’s profits.
upstream price increase company raises silicon wafer quotation for many times
According to the report of the third quarter of 2021 disclosed by Longi Green Energy Technology Co.Ltd(601012) disclosure, the company achieved an operating revenue of 21.107 billion yuan and a net profit of 2.563 billion yuan in the third quarter, with a year-on-year growth rate of 54.17% and 14.39% respectively; In the first three quarters of 2021, the company achieved an operating revenue of 56.206 billion yuan and a net profit of 7.556 billion yuan, with a year-on-year growth rate of 66.13% and 18.87% respectively.
The quarterly net profit of 601.1 billion yuan and 601.2 billion yuan slowed down from 2.5 billion yuan in the same quarter of last year, respectively.
On the other hand, faced with the continuous price increase of the upstream, Longi Green Energy Technology Co.Ltd(601012) also raised the quotation of silicon wafers for many times. Since 2022, the price of Longi Green Energy Technology Co.Ltd(601012) has been adjusted five times. namely:
On January 16, the product price rose by 2.4% – 5.1%;
On January 27, the product price rose by 3.7% – 4%;
On February 22, the price of silicon wafers of different sizes of the company increased by 0.1-0.12 yuan / piece, an increase of nearly 2%;
On March 7, the company announced the p-type M10 165 of monocrystalline silicon wafer μ M thickness (182 / 247mm) ￥ 6.70, up 3.08%.
On March 25, Longi Green Energy Technology Co.Ltd(601012) again raised the price of monocrystalline silicon wafer, and the price of the whole product increased by 1.8% – 1.9%.
At the beginning of 2022, the photovoltaic sector performed poorly and experienced a correction. As of the closing on April 1, Longi Green Energy Technology Co.Ltd(601012) share price was 72.60 yuan, with the higher point down nearly 30%. At present, the total market value is 393 billion yuan.
While the share price is falling, institutions are buying frequently. On April 1, Longi Green Energy Technology Co.Ltd(601012) obtained 5.2592 million additional shares held by Shanghai Stock connect, with the latest shareholding of 683 million shares, accounting for 12.61% of the total A-share capital of the company. Just in February this year, Hillhouse also spent 15.8 billion to buy Longi Green Energy Technology Co.Ltd(601012) , and successfully entered the top ten circulating shareholders of the company.
