In 2021, the rising price of photovoltaic upstream raw materials will undoubtedly make related companies a lot of money, but for the photovoltaic cell and module companies in the middle and lower reaches, life is not easy.Jiangsu Runyang New Energy Technology Co., Ltd. (hereinafter referred to as "Runyang Shares"), which plans to IPO on the Growth Enterprise Market, is one of them.
Runyang is mainly engaged in the research and development and production of solar cells. In 2020 and 2021, the company's cell sales will firmly rank third in the world. Favored by large component manufacturers such as Ke Energy.
At the end of 2021, the price of Runyang's main raw material silicon wafers rose significantly, up 177% from the beginning of the year, resulting in a setback in the company's gross profit margin for the year.Runyang Co., Ltd. plans to raise 4 billion yuan on the Growth Enterprise Market this time, and is expected to use 2 billion yuan for the high-purity polysilicon project with an annual output of 50,000 tons. The company said that this is an extension of the upstream raw material field.
As of the end of the reporting period, Runyang Co., Ltd. had one self-developed invention patent related to heterojunction batteries, and three other invention patents were being applied for.The company stated in its prospectus that some breakthroughs have been made in its related technologies.The heterojunction battery products of many peer companies, including Tongwei, have entered the late stage of research and development, and even entered the production and sales stage in advance.
Low gross profit, entering the field of raw materials
From 2020 to 2021, the installed capacity of the global photovoltaic application market will grow rapidly, with new installed capacity of 130GW and 170GW respectively. The compound growth rate during 2018-2021 is as high as 21.58%.The International Renewable Energy Agency (IRENA) predicts that the cumulative installed capacity of global photovoltaics will increase from 926GW in 2021 to 8519GW in 2050.
At present, the only listed companies with photovoltaic cells as their main business in the A-share market are Tongwei Co., Ltd. (600438.SH) and Aixu Co., Ltd. (600732.SH), which are also the top two photovoltaic cell manufacturers in the world.The planned listing of Runyang shares is the third.
No matter in terms of scale or industry status, Aixu and Runyang are not the opponents of Tongwei.
In 2021, Tongwei's product sales will reach 34.93GW, while the sales of Aixu and Runyang will be 18.85GW and 13.43GW respectively during the same period.In terms of production capacity, the gap between Runyang and the first two companies is even more obvious. The annual production capacity of Tongwei and Aixu are 45GW and 36GW respectively, while Runyang is only 21GW.Tongwei's revenue in 2021 is also more than twice the combined revenue of the latter two companies.
The performance of Tongwei is mainly contributed by the silicon material segment.In addition to photovoltaic cells, Tongwei is also the world's largest polysilicon leader, occupying a 21.6% market share in the domestic silicon material market in 2021.
Since the beginning of 2021, the price of silicon wafers has risen significantly, and the price at the end of the year has risen by 177% compared with the price at the beginning of the year. Taking advantage of this wave of market conditions, the revenue of Tongwei's silicon material business in 2021 will increase by 186.89% year-on-year, and the gross profit margin will be as high as 66.69%.
Unlike Tongwei Co., Ltd., Runyang Co., Ltd. has a very simple business structure, and currently has no silicon material production capacity, and more than 99% of its performance relies on photovoltaic cells.Affected by the rise in silicon wafer prices, Runyang's net profit in 2021 will drop by 5.4% year-on-year, and the gross profit margin will also drop from 16.57% in 2020 to 9.74%.
The prospectus shows that in 2021, the cost of silicon wafers will account for more than 70% of the business cost of Runyang's solar cells.As the only company among the "Big Three" that has the ability to produce raw materials by itself, Tongwei's performance is obvious to all.The "Tongwei Model" has also pointed out a way for many companies in the industry.
At present, a number of listed companies have thrown out the expansion project of silicon raw materials. Daqo Energy (688303.SH) plans to invest 4 billion yuan for the polysilicon project with an annual output of 35,000 tons. Fixed increase plan for pure silicon-based material projects.Tongwei also officially announced a high-purity crystalline silicon project with an annual output of 50,000 tons.
Runyang Co., Ltd. plans to use 2 billion yuan of the 4 billion yuan funds raised in this IPO for the annual output of 50,000 tons of high-purity polysilicon project, which is planned to be implemented by the subsidiary Runyang Silicon Materials, with a total investment of nearly 5 billion yuan.
The frequent news of capacity expansion has failed to suppress the rising trend of silicon material prices. Judging from the gross profit margin of Tongwei's silicon raw material products as high as 66%, if the production capacity is successfully implemented, the gross profit margin of Runyang Co., Ltd. may be improved. Performance or will get a new growth engine.But on the other hand, in the context of the expansion of production by peers, Runyang's silicon raw material business will also face greater competitive pressure after its completion.
Low R&D investment and slow progress in new technologies
The most interesting topic in the new energy battery market is the future technology route.
At present, traditional P-type batteries are close to the ceiling of conversion efficiency, and the room for improvement is extremely limited.The average conversion efficiency of battery mass production of Tongwei's battery products is 23.53%, that of Aixu is 23.5%, and that of Runyang's products is slightly lower at 23.2%.
In this context, N-type batteries stand out, and many opinions on technical routes have also been derived. At present, the routes that battery manufacturers are optimistic about mainly include Topcon and Heterojunction (HJT).
The current main product of Runyang Co., Ltd. is monocrystalline PERC cells, which belong to P-type cells.Among the fundraising projects, the production project of heterojunction cells with an annual output of 5GW has also attracted attention. Runyang shares plans to invest 500 million yuan and hand it over to its subsidiary Runyang Yueda for implementation.
From 2019 to 2021 (hereinafter referred to as the "reporting period"), the R&D expense ratios of Runyang were 3.31%, 2.98%, and 3.79%, which were at the average level in the industry.In addition, during the reporting period, the revenue of Tongwei and Aixu were higher than that of Runyang. It was not until 2021 that Runyang gradually narrowed the gap with Aixu. Compared with the revenue of 63.491 billion yuan, the gap is not small.This also led to a more obvious gap between Runyang's total R&D investment and its peers during the reporting period.
In addition, there is also a gap between the number of R&D personnel in Runyang and Tongwei and Aixu.As of the end of 2021, Tongwei has 3,335 R&D personnel, Aixu has 1,415, and Runyang has only 420 R&D personnel.
The gap between R&D investment and R&D efforts is more intuitive in R&D results.
Aixu said in its 2021 semi-annual report that the company's high-efficiency N-type ABC battery products are expected to have a large-scale production capacity of 8.5GW in mid-2022, including two production lines of 2GW in Yiwu and 6.5GW in Zhuhai; Wei shares also officially announced that "the industry's first GW-level HJT production line will be built in 2021"; Jinchen shares said at the 2021 performance briefing that "the high-efficiency battery technology route is now at the end of the research and development stage, and is expected to start in the fourth quarter of 2022. market sales."
According to the prospectus of Runyang Shares, as of the end of the reporting period, the company has 1 self-developed invention patent related to heterojunction batteries, and 3 invention patents are under application. The time is expected to be December 2023.
It can be seen that on the road of catching up with new technologies, Runyang shares seem to be unable to keep up with the progress.
The debt ratio is high, and financing is urgently needed to "quench thirst"
The prospectus shows that during the reporting period, Runyang has adopted a variety of financing strategies in order to seize the new round of opportunities in the photovoltaic market.This also results in a higher gearing ratio for the company.At the end of each period of the reporting period, the asset-liability ratios of Runyang were 78.84%, 75.48% and 81.39%, significantly higher than the average level of 60%-70% of peer companies.
By the end of 2021, the balance of monetary funds in Runyang's account is only 2.2377 million yuan, but there are more than 30 million yuan in accounts payable and 140 million yuan in other payables.
Compared with Tongwei Co., Ltd. and Aixu Co., Ltd., the scale of Runyang Co., Ltd. is still small, but the industry opportunities will never "wait for passengers to get on the bus".Therefore, Runyang shares seem a bit aggressive in the past financing methods.In the "issuer's internal control" section of the prospectus, it can be found that there are many compliance problems in its financial internal control.
In order to meet the management requirements of financial institutions and the funds required for daily operations, the amount of on-lending of subsidiary Runyang Yueda in 2019 and 2020 is 140 million yuan and 100 million yuan respectively.After 2020, the company has no new on-lending events.
At the same time, Runyang shares and subsidiaries still have bills circulation without real transaction background. Runyang shares, Runyang Yueda and other subsidiaries have all had related behaviors, and the total amount of bill circulation at the end of each period is nearly 500 million yuan.In addition, the company also has problems receiving and disbursing payments through personal cards.
In order to ease the cash flow pressure, Runyang shares also obtained debt financing by using assets such as monetary funds, real estate, land use rights, and production equipment as collateral.For this reason, the asset book value of restricted assets accounts for 40.46% of the company's total assets.
In this IPO, the company plans to use 1.5 billion yuan to supplement its working capital to ease debt repayment pressure and reduce its reliance on debt financing.For Runyang shares, this 1.5 billion yuan is tantamount to a timely rain.If the IPO fails to get its wish, Runyang shares may need to live another "hard time".
