Tongwei Co.’s Q3 Loss Narrows by Over 60%, Photovoltaic Industry Chain Price Rebound Brings Improvement | Earnings Report Update

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On Friday, Tongwei Co., Ltd. released its third-quarter financial report. Specifically:

Profit Improvement: In Q3, the net loss attributable to shareholders was 315 million yuan, a year-on-year narrowing of 62.69%; the cumulative loss for the first three quarters was 5.27 billion yuan, with the loss margin narrowing by 32.64% year-on-year. The main driver of the performance improvement is the rebound in prices across the photovoltaic industry chain.Revenue Under Pressure: Revenue for the first three quarters was 64.599 billion yuan, down 5.38% year-on-year; Q3 single-quarter revenue was 24.091 billion yuan, down 1.57% year-on-year, with the decline continuing to narrow.Changes in Costs and Expenses: Administrative expenses fell by 34.47% year-on-year to 2.287 billion yuan, mainly due to lower employee compensation; but financial expenses increased by 57.06% year-on-year to 2.072 billion yuan, as expanded bank loans have increased interest expenses.Asset Impairment Improvement: Asset impairment losses for the first three quarters totaled 2.174 billion yuan, down 34.68% year-on-year, with a significant reduction in inventory write-downs, reflecting stabilization in the industry chain prices.Robust Cash Flow: Net operating cash flow was 2.825 billion yuan, down only 5.46% year-on-year, which is significantly better than the profit performance; ending cash and equivalents balance was 18.246 billion yuan, up 27.75% from the beginning of the year.Changes in Liability Structure: Short-term loans increased by 41.84%, while other current liabilities surged by 188.10% due to the issuance of ultra-short-term financing bonds and sale-leaseback business, increasing short-term repayment pressure.

Price Rebound Significantly Narrows Quarterly Loss

Tongwei’s Q3 report shows the company is experiencing the challenges of a deep adjustment period in the photovoltaic industry. Cumulative net loss attributable to shareholders for the first three quarters was 5.27 billion yuan. Although the amount is still substantial, it narrowed by 32.64% year-on-year. Notably, Q3 single-quarter loss was 315 million yuan, narrowing 62.69% year-on-year, with a clear trend of improvement quarter-on-quarter.

The company explicitly pointed out in the report, "Due to price rebounds in all segments of the photovoltaic industry chain during the reporting period," this is the core logic behind the earnings improvement. This statement confirms the market’s observation that prices of polysilicon, solar cells, and other segments stabilized and rose in the third quarter: Asset impairment losses for the first three quarters were 2.174 billion yuan, down 34.68% year-on-year, mainly due to significantly reduced inventory write-downs, indicating the company’s outlook for industry chain prices has shifted from pessimistic in the second quarter to relatively optimistic.

Pressure on the revenue side continues. Revenue for the first three quarters was 64.599 billion yuan, down 5.38% year-on-year, reflecting the complex game between volume and price. However, Q3 revenue was 24.091 billion yuan, with the year-on-year decline narrowing to 1.57%. The continued narrowing of the decline shows the company’s resilience during the industry downturn.

Costs and Expenses: Structural Change of One Down, One Up

Expenses showed clear structural features. Administrative expenses dropped 34.47% year-on-year to 2.287 billion yuan, mainly due to lower employee compensation. R&D expenditure was 816 million yuan, down 22.61% year-on-year.

But financial expenses surged. In the first three quarters, financial expenses were 2.072 billion yuan, a year-on-year increase of 57.06%, with interest expenses reaching 2.181 billion yuan. Short-term loans grew 41.84%, and other current liabilities surged 188.10% to 4.848 billion yuan due to the issuance of ultra-short-term financing bonds and the sale-leaseback business.

It is worth noting that construction in progress decreased from 7.251 billion yuan at the start of the year to 4.351 billion yuan, a decline of 40%.

Cash Flow Resilience and Hidden Risks

Net operating cash flow was 2.825 billion yuan, down just 5.46% year-on-year, significantly better than profit performance, showing the company has maintained a relatively stable attitude in cash collection. Final monetary funds stood at 20.547 billion yuan, up 24.9% from the beginning of the year, with cash and equivalents at 18.246 billion yuan, up 27.75% from the beginning of the year—indicating little short-term liquidity pressure.

However, changes in the liability structure cannot be ignored: Non-current liabilities due within one year reached 12.164 billion yuan, with short-term loans and other current liabilities quickly rising. Notes receivable increased 55.67% year-on-year, mainly due to an increase in accounts backed by letters of credit, and prepayments increased by 45.18%.

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