TONGWEI CO.,LTD(SH:600438)2025-11-18 09:41Summary of Tongwei (600438.SS) Conference Call Company Overview - Company: Tongwei - Industry: Solar Energy and Polysilicon Production - Market Position: Largest polysilicon producer globally with a capacity of 900,000 MT and over 30% market share; also the largest solar cell supplier with 150 GW capacity [doc id='26'][doc id='27']. Key Financial Insights - 2023 Financials: Net profit of Rmb 13,574 million, diluted EPS of Rmb 3.015, with a significant decline in profitability expected in 2024 and 2025 [doc id='5']. - 2025 Estimates: Expected net loss of Rmb 5,958 million, with diluted EPS of Rmb -1.323, but a projected recovery in 2026 with a reduced loss of Rmb 2,155 million and EPS of Rmb -0.479 [doc id='5'][doc id='13']. - 2026 Projections: Anticipated return to profitability in 2027 with a net profit of Rmb 2,365 million and EPS of Rmb 0.525 [doc id='5']. Market Dynamics - Polysilicon Pricing: Current average selling price (ASP) for polysilicon is above Rmb 50/kg, with expectations for further increases in 2026 [doc id='3'][doc id='4']. - Production Costs: Competitive production costs at Rmb 30/kg on a cash basis and below Rmb 50/kg on a total cost basis [doc id='4']. - Sales Volume: Anticipated decline in polysilicon shipment volume in 4Q25 due to weak demand, despite profitability in the polysilicon segment [doc id='3']. Strategic Outlook - Anti-Involution Efforts: Management indicated that the industry trough may be over, with potential positive catalysts from government policies aimed at reducing excessive production capacity [doc id='2'][doc id='12']. - Global Solar Installation Forecast: Tongwei forecasts global solar installations of 560 GW in 2025, with a conservative estimate of 520 GW in 2026, reflecting a potential decline in domestic demand [doc id='12']. - Investment Strategy: Rated as a "Buy" with a target price of Rmb 30.00/share, based on expected benefits from supply-side reforms and a competitive cost structure [doc id='27'][doc id='28']. Risks and Challenges - Downside Risks: Potential risks include unexpected provincial government support for less efficient solar manufacturers and higher-than-expected solar installations in China [doc id='29']. - Operational Challenges: Production lines in Sichuan and Yunnan have been suspended, impacting overall production capacity [doc id='3']. Conclusion - Investment Recommendation: The company is positioned to benefit from market reforms and is expected to return to profitability by 2027, making it a compelling investment opportunity in the solar energy sector [doc id='27'][doc id='28'].