The logic of photovoltaic premature aging and survivors

With Buffett’s sentence, “When the tide recedes, I will see who is in the nude swimming.” The photovoltaic industry is now suitable. The giant is on the verge of survival, the industry is shuffling soon, capital and administrative forces are retreating, bitter days. Only entrepreneurs and employees are left. However, in the sorrows and sorrows, there are survivors who survive against the trend. In the first half of 2012, compared with the losses of 200 million to 300 million US dollars, such as Suntech and Saiwei, the largest polysilicon producer in China, GCL-Poly, had a net loss of about 42.5 million US dollars. Although the sustained profit has been broken, its cost Control and technical capabilities are still leading the industry. Jinko Energy is the representative of another PV survivor. Among the 11 PV companies listed on the NYSE in 2011, Jingke is one of only two profitable companies. Although it reported a net loss of more than 300 million in the first half of this year, it is still considered to be the relative in the PV industry. A stable business. "Appropriate is good, not the faster the development, the better." Jingke Energy CEO Chen Kangping told "Chinese Entrepreneur." Chen Kangping, who has been financially elected and was named "Excellent Accounting in Taizhou City" in 2002, has a word hanging in the office of the Shanghai headquarters - a virtue of virtue. In his view, safety and stability are blessings. "The fool also I have thought of a better day, but I can't be too big to be a business ambition, and I can't be too fast," he said. The interview found that in the case of the industry's survival crisis, no PV company can stay out of the way, but a group of companies represented by GCL-Poly, Tianhe, and Jingke rely on their own strong survival logic and genes. In the event of an industry crisis, it is protected from bankruptcy. This aspect is determined by the location and scale of the industry in which they are located. Unlike Suntech and Saiwei, they need to constantly expand their production and maintain their position in the industry. They do not have the same resources as they can easily stimulate the expansion. Ambition. But fundamentally, the past five years have been stories of how they successfully resisted temptation, controlled desires, and increased control. Both Zhu Gongshan and Chen Kangping have experience in traditional industries. Before entering the photovoltaic industry, Zhu Gongshan operated a thermal power plant. The cost, technology and financing have already penetrated the bone marrow for Zhu. Chen Kangping was previously the CFO of Supor Electric, and strict control of cash flow is his compulsory course. This gives them a certain degree of differentiation in terms of industry entry, expansion strategy, cost control and management. Of course, this does not mean that they are perfect, even that GCL-Poly and Jingke have been involved in scandals. But what kind of business logic do they have as “survivors”? Industry integration is coming soon, will they become the industry leader in the future, or will they repeat the mistakes of Suntech and Saiwei? Resist the temptation 　　 In the past six months, Chen Kangping has been the thintest period since entering the photovoltaic industry. The gross profit margin of the top ten PV giants in China is below 10%, and the component gross profit is only a few tenths of a percent. Chen Kangping, who is in charge of finance and management of Shangrao's production base in Jiangxi, runs more frequently between Shanghai and Shangrao. The 39-year-old Chen Kangping is a typical "Gao Fu Shuai". Although his character is slightly introverted but full of resilience, he has struggled from cost accounting to CFO in Supor. In December 2006, he left Supor and founded Jinke Energy with Li Xiande (Chairman, Chen's brother-in-law) and Li Xianhua brothers. Thanks to the rapid growth of the market, Jingke expects the total annual PV module shipments to reach 1000MW from 80MW of wafer production capacity in 2008 to 2012. After the financial crisis in 2008, they changed the positioning of silicon wafer manufacturers and integrated the integration of silicon wafers, batteries and components in order to directly interface with the market. At the peak of 2010, when peers repeatedly called "the world's first" and "Asia's first" in a single field, external suppliers and internal executives were worried that the integration strategy of Jingke would slow down the pace of development. At that time, the silicon wafer and battery market were in short supply. The battery was once sold for 10.3 yuan and 1W, and the component was only 12 yuan and 1W. This means that the silicon wafer is made into a battery and then made into a component. The gross profit margin is less, but it is not as direct as selling. The battery or wafer recovery is faster. There are always local government officials who offer very tempting conditions: "Kangping, how big is Savi, how are you? What policy do you want me?" For Chen Kangping, these are very attractive and easy. It makes people feel dizzy. Resist the temptation to expand capacity in a single field and avoid the need to be disturbed by outside noise. Chen Kangping believes that only by doing integration can the market be nurtured. He insists that the production capacity of the three areas of silicon wafer, battery and module is flat, and the upstream and downstream self-support. Chen Kangping said that thanks to the advance layout, after the European debt crisis in 2011, wafers and battery orders plunged sharply, and Jingke still has a single hand. Chen Kangping’s risk awareness comes from the experience of Supor in the past. In Supor for 16 years, he has become accustomed to not blindly expanding with the wind, but based on his own positioning and potential growth of the market. It is widely believed that Jingke’s contrarian survival benefits from the choice of “no silicon” in the past, and there is no big wrong investment. When the photovoltaic giants such as Saiwei and Suntech are deeply involved in the investment of polysilicon and thin-film batteries, Jingke, which has no obvious investment burden, can be “lightly loaded”. Polysilicon prices have skyrocketed all the way. At the beginning of 2008, when Jingke and the capital market were in contact with the listing, investment funds and brokerages generally proposed that “there is no long list how to go public?” In the capital market pressure, Jingke signed a contract with the US HOCO. The long order of two or three hundred tons per year is much smaller than that of giants such as Suntech. However, since the signing of the agreement, Chen Kangping has always been uneasy. "Signing a long-term order requires a prepayment of 20 million US dollars, and at the same time locking in such a high price. Once the market changes, the cost will be extremely high." In May 2010, Jingke became the first PV company listed in the US after the financial crisis. In order to prevent night dreams, they quickly transferred half of their long singles to others. In the era of “silicon is king”, many PV companies have begun to get involved in the production of silicon materials. Local governments such as Inner Mongolia and Xinjiang have repeatedly extended their olive branches to persuade Chen Kangping to invest in the local area and provide extremely attractive conditions. Whether to follow the wind to invest in polysilicon, Chen Kangping and Li Xiande have several trade-offs. Jingke also planned to build a silicon material plant in Xinjiang, but it was still stranded in the early planning stage. "At that time, too many companies poured in, the government offered us cheap electricity prices will also be provided to others, we do not have strong project experience and competitive advantage, I feel that we have to wait." Chen Kangping is very clear, the government gives more The money is borrowed instead of sent. Cao Yu, director of energy and power at Martec's Investment Management Consulting Co., Ltd., gave another interpretation: "Some companies didn't want to expand production at the time, but got so much money and support without Suntech and Saiwei. If Jingke and Yuhui can easily acquire various resources like Suntech and Saiwei, and may expand like them.” The strategy focuses on the era of opportunities, from polysilicon to silicon wafers, batteries, components, and every chain in the industry. Make money in one link. From which link, the upward or downward extension involves the control of the entrepreneur's expansion strategy and strategic direction, which has profoundly affected the status quo of its existence. Compared with Saiwei covering the entire industry chain of polysilicon, silicon wafers, batteries, components and downstream power system systems, GCL-Poly focuses on three links: polysilicon, silicon wafers and downstream photovoltaic power plants; Jingke in 2008 After the transition, more focus on the development of the component field, as well as expansion to downstream power stations. The focus of the up-and-coming talents is also their survival logic. At the end of 2005, Zhu Gongshan hoped to expand the industrial chain to the solar energy field. It was a problem from where to start. At that time, Saiwei and Suntech had been in the field of silicon wafers and batteries. The market is seriously lacking in silicon materials, but it is an indisputable reality. After studying the silicon giants such as the United States and Germany, Zhu Gongshan decided to go on in this field with high investment and technical thresholds. In 2006, GCL-Poly invested more than 7 billion yuan to acquire more than 60% of Jiangsu Zhongneng's equity, and entered the photovoltaic industry from upstream polysilicon, which was a gamble at the time. The 44-year-old Lu Jinbiao served as the assistant to the chairman of the Poly GCL Group. After 2006, he served as the deputy general manager of Jiangsu Zhongneng. He witnessed and participated in the rise of GCL-Poly in the polysilicon field. At that time, two of the small shareholders of Jiangsu Zhongneng, Hanwha New Energy Co., Ltd. and JA Solar Energy Co., Ltd. are planning to withdraw from the low confidence in polysilicon production. Under the persuasion of Zhu Gongshan, they left less than 10% of the shares. Zhu Gongshan said that work and risks are borne by themselves, and they can reserve seats for them, but they hope that they will stay with themselves and give the outside world, such as the bank a little confidence, and don't let the outside world feel that this is a "bad mess." Jiangsu Zhongneng cooperated with the Institute of Chemistry of the Chinese Academy of Sciences to design and promote the project. They procured equipment from abroad and hired a large number of technicians from Jiangsu's petrochemical system to participate in equipment installation. At that time, Peng Xiaofeng copied his experience in wafer production in the past, and invited the Fluor Group from Texas to build a 15,000-ton polysilicon project in Mahon. The industry believes that Fluor does indeed help some companies in the United States to do polysilicon plants, but mainly "build according to the map", the soul is in the owners. As a system engineering, polysilicon production needs to involve the operators at the early stage of construction. Jiangsu Zhongneng's expansion rate is extremely fast. Its first phase of the project took 17 months, and the second phase of 1500 tons was reduced to about 10 months. The third phase suffered a financial crisis, when the crystalline silicon including Saiwei was suspended or When the business was tightened, Jiangsu Zhongneng expanded against the trend and expanded its production in the third phase. The expansion of the three production lines reached 15,000 tons. “It is easier to extend from polysilicon to silicon wafers, and it is much harder to extend from silicon wafers to polysilicon.” Lu Jinbiao believes that the pace of capacity expansion of GCL-Poly is just stepping on the footsteps of increased demand in the domestic market. The progress of polysilicon production in Saihong in Mahong is relatively slow. By the end of September 2011, the third 5,000-ton production line was completed, delaying multiple opportunities for polysilicon profitability. In terms of risk control, Solarbuzz China analyst Lian Rui believes that although the GCL-Polysilicon polysilicon production capacity is expanding rapidly, it is gradually gradual, and it is relatively stable through the first phase of expansion, and Saiwei plans to do three at the Mahon base. 5,000 tons, when the strategic path is delayed and unable to reach production, it is passive. "Gu Lishan, the head of GCL-Poly, should be a big-scale person, doing everything to the first place, but always staying focused while expanding." Lian Rui said that Zhu Gongshan's focus includes resolutely not involved in the battery and component fields. , does not compete with customers. And Saiwei took the amount before the silicon, battery, and polysilicon were not doing the best, which made the risk double. "In the period of short supply, the more you do, the more you make money, but in times of fierce competition, only the best can survive." Lian Rui said. Strict control of costs When the photovoltaic industry is in full swing, Suntech's component gross margin is as high as 20% or more. At that time, the photovoltaic industry took a high-tech aura, which is believed to be a high-tech company like Microsoft, Intel, and Apple. %, 60%. However, the gross profit margin of Shangde fell to 0.6% in the first quarter of this year, and the impact of past investment in the second quarter fell to -10%. The photovoltaic industry has returned to the profitability level of traditional manufacturing, and strict cost control has become a necessity. Chen Kangping introduced to this magazine that Jingke cost control is mainly based on non-silicon cost, and the cost optimization is carried out by adjusting the process in the production process. In the first half of this year, Jingke opened up the silicon wafer, battery, and component divisions, requiring departments to strengthen coordination and reduce losses in the production process. Another control cost path of Jingke is to closely link R&D and production. “To avoid high-efficiency technology in the laboratory, but ultimately not to produce energy, which will lead to the loss of manpower and capital.” Jing Jing, global brand director of Jingke Energy Say. The cost control capability of GCL-Poly has always been a mystery in the industry. In the past five years, GCL-Poly has reduced the cost of polysilicon from $66 per kilogram in 2008 to around $18 today. Compared with the rising global polysilicon industry OCI, the OCI cost has dropped from 40 USD/kg to 25 USD/kg for 4 and a half years, while the same cost range has only been used for 1.25 years. Another famous polysilicon manufacturer in China. Big new energy has not dropped to $30/kg at the end of last year. In the first phase of production, Jiangsu Zhongneng mainly relied on imported equipment. Later, they bought the technology package imported from abroad, and subcontracted the equipment into the domestic market, gradually digesting the cost. In 2009, Jiangsu Zhongneng began to use cold hydrogenation equipment with independent intellectual property rights, which caused a significant cost reduction. GCL-Poly also reduces costs through continuous technological transformations, such as minimizing power consumption through technology optimization. The power consumption per kilogram of polysilicon is less than 70 degrees, which is about 30% lower than that of international manufacturers. Lu Jinbiao believes that the cost control of GCL-Poly is also benefited from the early centralized planning. In 2006, GCL-Poly planned a production base of 10,000 tons in Xuzhou. Although the initial production capacity was only 1,500 tons, the capacity has expanded to 65,000 tons in 2012. . On the one hand, the concentration effect reduces the cost of public water and electricity equipment; on the other hand, the operation team and construction team of different production lines are in a factory, technically interoperable, and problems are found during operation, which can be quickly fed back to the new production line. Transformation. This also reduces the time and production costs associated with repairs. Lu said that through the concentration of production lines, synergies between production lines can be achieved. When one of the production lines is inspected and repaired, equipment from other production lines can be used to provide support, and production will not be stopped. The performance of GCL-Poly shows the strong control ability of Zhu Gongshan. It is said that Zhu Gongshan is a person who is willing to take the burden. When he opens the board of directors, he will take the initiative to say to the directors what I will do next year and pressurize myself. "He is both management and executive. If there are 8 points. Power will definitely make 12 points." Lu Jinbiao said that after a long-term process of building trust, the directors from Poly and CIC will actually operate and decentralize with Zhu Gongshan. However, the days of "king of cost" are not good. In the first half of this year, although the output doubled and the sales volume reached 5 times last year, the cost of polysilicon fell by 14.5%, but the gross profit margin fell by 24.3%, resulting in a loss of HK$330 million in the first half of the year. . At the investor conference in the second quarter of this year, 54-year-old Zhu Gongshan hoped that investors could give him some time and confidence. He said that GCL-Poly is developing new polysilicon technology, and the cost will be lowered again in the second half of next year. Finally, the descendants of the old Red Army said in a strong Northern Jiangsu accent that "I will personally take charge of this project."

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