Two Questions About The Soul Behind Longji'S Share High: Is The Size 182 Conservative Or The Next Big Game?

When Zhang Lei and his hillhood capital took 10 billion shares in Longji (601012. SH), the 100 billion photovoltaic giant's share price was ignited on December 21. After trading, the company's total market value reached a record high of 322.2 billion yuan.

In fact, when the stock price tripled this year and the market value successively exceeded 200 billion and 300 billion, Longji shares also faced valuation disputes. If not for the stimulation of Hillhouse capital, the company may have to struggle around the 75 yuan stock price for a period of time.

And behind the hesitation of the market, Longji shares are entering the mode of "guarding the river and mountain".

From betting on single crystal line several decades ago to becoming the absolute king in the field of single crystal, Longji shares has ushered in an important moment this year: it has become the largest supplier of photovoltaic modules in the world, and is striving to build a closed-loop manufacturing chain with vertical integration. But competitors are constantly challenging it. On the one hand, this year's competition for large-scale modules is related to the business division in the module field in the next 3-5 years; on the other hand, in the hot debate on who is the next generation of photovoltaic cell line, the outside world rarely sees the figure of Longji. How long will the dividend last?

In the discussion of these new technology routes, Longji has become a "conservative" Party: it does not intervene in 210 size and is not keen on hjt (heterojunction) research and development.

"It is inconclusive how far the future is." An insider at Longji has responded to these queries to the 21st century economic reporter.

But in the photovoltaic industry with rapid technology iteration and fierce competition, such an answer seems to be difficult to dispel the doubts of the outside world.

What is the ambition of the size 182 of "die knock"?

If we want to summarize the important events in the domestic photovoltaic industry this year, the competition for abnormal large-scale modules near the end of the year will be selected.

Since the establishment of the size alliance of M182 (182mm × 182mm) silicon wafers in June with Jinke energy, Jingao technology and other companies to convey the advantages and cost performance of 182 size components in different occasions this year, Longji shares has taken a clear position in this year's competition for large-scale components.

When the competition for large-scale is fierce this year, including many leading photovoltaic enterprises, the new capacity invested this year is 210mm and compatible downward, so as to keep a wait-and-see situation. However, Longji shares does not intend to leave a "back road" for itself. Wang Yingge, the company's brand general manager, said in an interview with the 21st century economic report that "the new production line this year is mainly designed according to 182 dimensions, and 210 sizes are not considered."

According to the incomplete statistics of 21st century economic reporter, since this year, Longji has announced a number of plans to expand the production of single crystal. From the beginning of this year announced the construction project of 20GW monocrystalline silicon wafers in Chuxiong, Yunnan Province, to the construction project of 10GW single crystal cells per year in Qujing (phase I) of Yunnan Province in November this year, the company has announced nine expansion plans with a total investment of 27.938 billion yuan.

Even, Longji shares on 182 size of the "dead knock" caused peer complaints. Some insiders of photovoltaic enterprises told the 21st century economic report that "in the photovoltaic industry, many times in the technological competition, they always only said that they were good, but did not say that the competitors were not good. Longji was a bit abnormal this year."

Indeed, even if the "war of words" on which size 182 or 210 is better or worse is in full swing, the final conclusion is nothing more than "giving the market choice" -- the discussion on the advantages and disadvantages of the two component sizes has already been "fair and fair, and women are reasonable".

Even when the industry organizations predict the mainstream market share in the component field 3-5 years later, the coexistence of size 182 and size 210 is almost a consensus.

However, there must be "extrusion" in addition to "coexistence". "Dead knock" 182 size behind, Longji shares is bound to want to continue to consolidate the market position.

With a month to go before the end of the year, Longji has officially announced a message to the public that the company has delivered more than 20GW of high-efficiency components this year, surpassing the original component market leader, Jingke energy.

But even so, the domestic module industry is the most competitive manufacturing link in the whole photovoltaic industry chain at present. There are many giants such as Longji, Jingke energy, Jingao technology, Trina Solar, Dongfang Risheng, and so on.

Since the acquisition of 85% equity of Zhejiang Leye photovoltaic technology in 2014, Longji shares has become the first module shipment in 6 years. But it is easier to fight than to defend.

"The competition of size is actually the competition of market share." A new energy industry analyst commented on the reporter of the 21st century economic report that the industry knows that the largest mainstream of the component market next year will not be 182 or 210, but 166. However, whether Longji shares is "alliance" or rapidly launch 182 size production capacity, it wants to take a quick step in the longer-term market.

At present, the general view of photovoltaic industry is that the trend of large-scale is irreversible, which means that a size is inevitable to be iterated by the next generation size.

According to the prediction of pvinfolink, by 2023, 210 size component products will replace 182 size to occupy the largest market share, and by 2025, its market share will be several times of 182 size.

If the forecast comes true, there won't be much time left for Longji. The investment of the 182 size production capacity project with tens of billions of Yuan needs to be recovered as soon as possible. More importantly, its huge inventory also needs to be "absorbed". With the continuous increase of production capacity, Longji's inventory is increasing. As of the end of the third quarter of this year, the company's inventory balance was as high as 10.604 billion yuan, nearly double the same period last year.

What is Longji's bet on the future?

At the annual conference of China's photovoltaic industry in December this year, leading photovoltaic enterprises gathered and all the major executives of each company appeared. However, the senior management of Longji did not appear on this occasion. Although the company is the vice president unit of China Photovoltaic Industry Association, Trina Solar energy, one of the association's chairman units that CO organized this meeting, is a 210 size camp.

Different from Jinke energy and Jingao technology, which are the same as the M10 alliance, Longji's "stealth" seems to release a clear attitude. But this also caused some people to Longji stock future "worry".

"Whether Longji's future valuation can continue to rise depends on whether the photovoltaic industry and the company itself can have new" bright spots. " The aforementioned new energy industry analysts told the 21st century economic reporter that the era of high profits of single crystal products in the past will inevitably become the past. The price game caused by full competition of products and the downward trend of overall gross profit rate after the industry matures are inevitable.

After becoming the largest component supplier in the world, the gross profit margin of Longji will decrease due to the increase of component business proportion. On the one hand, the current module sector has become a part of the PV industry chain with low gross profit margin; on the other hand, although the price of module products has rebounded to some extent due to the rise of upstream raw materials this year, after the release of a large amount of capacity next year, the price of modules will decline. According to the research report recently released by Guojin securities, the contribution of cost reduction of various links in the industrial chain is expected to reduce the component price to the range of 1.5 to 1.55 yuan / W in the next year.

Longji's financial report also shows that its gross profit margin is falling. At the end of the third quarter of this year, the company's overall gross margin was 27.84%, nearly 4% lower than the beginning of the year.

It is undeniable that Longji is consolidating its moat by building vertical integration. In a controversial move this year, the company announced in November that it would invest 5.6 billion yuan in Qujing (phase I) to build an annual output of 10GW single crystal battery project. According to the vertical integration strategy of "silicon wafer battery module terminal application market", Longji's output in the single crystal battery segment has been increased to 30GW, which will directly share the cake of Tongwei in the battery field.

However, at present, all actions of Longji stock are pointing to, and its future is serving for the continued expansion of component business. Wang Yingge confirmed in an interview with the 21st century economic reporter that the expansion of the above battery project is the need of the module expansion.

The rejection of 210 size and indifference to hjt and other new battery technology routes seem to give Longji a panoramic view of the future.

It is worth mentioning that Hillard capital, which has just invested 10 billion yuan in Longji shares, is not "putting all his eggs in one basket" when it is optimistic about the development prospect of photovoltaic industry. In June this year, Hillhouse capital's fund of 500 million yuan subscribed for Tongwei shares. At present, Tongwei shares are vigorously involved in the two popular technical routes of hjt and 210 inch.