1H21 financial statements of vertically integrated companies

After the release of Jinko’s first half 2021 financial results, major PV manufacturers have all followed suit, publishing their operational performances. Overall, leading manufacturers saw stagnant, or even declining, gross profits and revenues, thanks to price hikes of raw materials, especially polysilicon, and rising transportation costs due to logistic disruption. InfoLink estimates the performance of five leading manufacturers and provides insights of industrial trends in the second half.

 

Longi

In the first half of the year, Longi shipped 38.36 GW of mono-Si wafers, of which sales volume accounted for 18.76 GW, a 36.5% YoY increase. Mono-Si module shipment reached 17.01 GW, including 16.6 GW of sales volume, a 152.4% of YoY increase.

Production capacities of wafers, cells, and modules are expected to reach 105 GW, 38 GW, and 65 GW, respectively, by the end of this year.

As shipment volume surged in the first half of the year, Longi posted RMB 35.1 billion of revenue, a 74.3% increase on the same period last year, while gross profit growth was 35.5%, primarily owing to polysilicon price hikes that sent operation costs to rise faster than revenue. Longi’s enormous wafer businesses enabled it to benefit from wafer price hikes in the first half, with gross margin sustaining at 22.7%, higher than its counterparts, but a setback as compared to 29.2% last year. Sapped by larger volume of low-price orders in the first half of this year, profit of the module segment is expected to improve in the second half, when the low-price orders decrease.Meanwhile, the wafer segment will see profits erode in the second half, given different paces of polysilicon and wafer price increases.

Longi is expected to see 40 GW of module shipment this year, securing 23-25% of market share and aiming for 30%. Its wafer segment sustains at 45-50% of share.

Longi 1H21 semiannual report
 

Trina

Trina shipped 10.5 GW of modules in the first half of the year, an 81% YoY increase, with 5 GW of which comprising 210mm modules. Shipment of large format modules are expected to rise continually in the second half. By the end of this year, cell production capacity may climb to 35 GW, with 70% of which being 210mm cells, whilst module production capacity reaches 50 GW.

Trina posted RMB 20.2 billion of operating revenue and RMB 2.7 billion of gross profit in the first half of the year, each indicating a 60.9% and 38.3% YoY increase. Gross margin dropped, from 15.6% in the first half of last year to 13.4% the same period this year, as raw material issues pushed up operation costs. Trina believes 210mm products to continue enjoying premium margins, and thus expects profits to continue recovering, as shipment volume of large format modules increase.

Trina 1H21 semiannual report
 

JA Solar

JA Solar saw 10.12 GW of cell and module shipment in the first half of the year, of which 63% were shipped to overseas markets. (Module shipment in the corresponding period last year was 5.46 GW). PV module accounted for over 90% of shipment volume, whilst gross margin sat at 12.3%. Presently, business in China, which has better gross profit, saw proportion increase, with gross margin coming in at 17.2%. (Gross margin of foreign businesses was 10.5%).

By the end of 2021, module capacity will reach 40 GW, whilst that of wafers and cells remain at 80%.

JA Solar saw RMB 16.2 billion of revenue in the first half of the year, a 48.8% YoY increase. However, hit by increased raw material and logistic costs, operation costs were up 60.8% YoY, resulting in 0.7% of gross profit decrease compared to corresponding period last year, whilst gross margin dropped from 23.3% to 13%.

JA Solar 1H21 semiannual report
 

Jinko

In the first half of the year, Jinko saw 8.5 GW of module shipment, an 8.4% YoY increase. The total shipment reached 10.6 GW, if wafers and cells are included. Jinko reported that they have adjusted shipment proportions due to raw material price hikes, raising sales volume for wafers, which enjoy higher gross profit.

Production capacity of mono-Si wafers, cells, and modules will increase to 32.5 GW, 24 GW (940 MW for n-type cells), and 45 GW, respectively, by the end of the year.

Jinko posted RMB 15.9 billion of revenue in the first half of the year, a 6.3% YoY decline. This could be largely attributed to lower shipment volume in the second quarter, which saw 11% of YoY decrease. Given impacts of rising raw material prices, module shipment volume dropped, dragging gross profit down to RMB 2.7 billion, a 14.3% YoY decline, with gross margin sitting at 17.1%.

Jinko is expected to see 5-5.5 GW of total shipment (4.5-5 GW of module shipment) in the third quarter this year. Annual shipment volume is expected to come in at 25-30 GW, of which 50% will be contributed by large format modules in the second half. Modules for distributed projects are estimated to take up 40% of share, as compared to the 20-25% last year.

Jinko 1Q21 and 2Q21 financial report
 

Canadian Solar

In the first half of the year, Canadian Solar saw 6.8 GW of module shipment, a 32.8% YoY increase. Based on data from the second quarter, the company raised shipment volume of modules for distributed projects, which sat currently at 50%. To hedge from risks of exchange rates and high ocean freight rates, the company raised proportion of shipment within China, which took up 27% for the time being.

In the wafer segment, ingot and slicing lines are expected to reach 5.1 GW and 11.5 GW, respectively. Cell and module segments each sees 13.9 GW and 22.7 GW of production capacity.

Canadian Solar posted RMB 2.5 billion (USD/RMB: 6.4706) of revenue in the first half of the year, a 65.6% YoY increase, thanks to growths of shipment volume and average selling prices. Operation costs rose by 85.9%, leading gross profit to increase merely by 2.4% and gross margin to drop from 24.3% in the first half of last year to 15.1% this year. CSI Solar, which is chiefly responsible for manufacturing and businesses in China, and Global Energy, which is accountable for PV station businesses, each saw 11.9% and 16.6% of gross margin.

Canadian Solar set to see 3.8-4.0 GW of module shipment volume in the third quarter. It revised down annual shipment volume to 16-17 GW, because several clients demand to defer deliveries and longer shipping time made it unable to deliver orders this year. Another reason is that the company declined low-price orders to maintain basic earning yields.

Canadian Solar 1H21 and 2H21 financial report
 

Conclusion and industrial trends

Overall, leading manufactures saw revenue growing, due to increased shipments in the first half of the year. Five PV supermajors dominated 70% of total shipment volume, indicating increasingly market concentration. However, impacted by raw material price hikes and logistic reasons, gross profits and gross margin did not rise in accordance with increasing revenues.

Generally, manufacturers are optimistic towards global demand in the second half of this year, especially strong demand in overseas markets. Against this backdrop, InfoLink revises full-year forecast for demand overseas upwardly to 115 GW, and global demand to 165 GW. However, amid vigorous demand the supply chain is still dealing with challenges.

As downstream demand picked up in the second half, cell and module makers raised utilization rates, driving up wafer purchase volumes. This gives wafer manufacturers bigger rooms for price increases, and again pressuring downstream profits. Polysilicon, experiencing the most intensified shortage since the misdistribution of production capacities across the supply chain last year, only see new capacity of Tongwei’s unit of Yongxiang coming online by the end of this year. Doubled with the promulgation of dual-control on energy intensity, the high energy-consuming polysilicon, ingot, and BOM manufacturers may fall victims to power rationings, deteriorating short supply. Presently, module makers negotiated actively with the end users, hoping to adjust prices or postpone installations to next year. However, as costs of raw materials, BOM, and shipping simultaneously surged, many variables still exist, in terms of annual installations and profits of downstream manufacturers.