TONGWEI CO.,LTD(SH:600438)2025-10-27 12:06Summary of Tongwei Co. Ltd. Conference Call Company Overview - Company: Tongwei Co. Ltd. - Ticker: 600438.SS - Industry: China Utilities - Market Cap: Rmb99,989.1 million - Current Share Price: Rmb22.21 (as of October 24, 2025) - Price Target: Rmb21.85 - 52-Week Range: Rmb32.05 - Rmb14.89 - Average Daily Trading Value: Rmb1,517 million Key Financial Highlights - 3Q25 Performance: - Reported a net loss of Rmb315 million, a significant improvement from losses of Rmb2.4 billion in 2Q25 and Rmb2.6 billion in 1Q25 [3][8] - Revenue remained stable at Rmb24.1 billion, slightly down from Rmb24.6 billion in 2Q25 [3] - Gross margin improved to 7.2%, up from 2.0% in 2Q25 and -2.9% in 1Q25, attributed to the recovery in polysilicon prices [3][8] - EBIT turned to a mild profit of Rmb88 million in 3Q25 after consecutive losses since 1Q24 [8] Industry Context - Polysilicon Price Recovery: The recovery in polysilicon prices since early July has positively impacted Tongwei's gross profit margin and reduced asset impairment [8] - Asset Impairment: Reduced to Rmb247 million in 3Q25 from -Rmb1.6 billion in 2Q25 and -Rmb796 million in 1Q25, indicating improved inventory management and market conditions [3][8] Investment Thesis - Market Outlook: The overall industry view is considered attractive, with expectations of meaningful upside in the next 12 months [2][5] - Consensus EPS Direction: Financial results are seen as aligning with or exceeding consensus expectations, leading to a revision of earnings forecasts higher [2] Risks and Considerations - Upside Risks: - Higher-than-expected photovoltaic (PV) installations globally - Less-than-expected new polysilicon capacity from new entrants - Higher-than-expected polysilicon prices - Faster development in next-generation solar cell technologies [11] - Downside Risks: - Lower-than-expected PV installations worldwide - Intensified competition and pricing pressures across the supply chain - Slower overseas market exploration for its module business - Intensified trade tensions [11] Valuation Methodology - Valuation Approach: Price target derived from discounted cash flow (DCF) methodology, capturing long-term cash flows for 2026-2036 with a WACC of 9.5% [9] Conclusion - Investment Rating: Equal-weight, indicating a neutral stance on the stock with potential for moderate returns in line with industry performance [5][29]