Among the photovoltaic giants, Li Xiande, the chairman of Jingke Energy, may be an alternative. Even during the peak of the industry, he rarely appears in the spotlight and is very low-key. On January 26, 2022, Jingke Energy (688223) was listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange. On the occasion of the second anniversary of its return to A, Li Xiande gave an interview to media outlets such as Securities Times and E Company to exchange views on current market trends.
Recently, the A-share photovoltaic sector has continued to experience a significant decline, and market panic has spread. In the interview, Li Xiande repeatedly pointed out that at the current stage, there is a need for persistence and patience in strategy. "Strategy is the most important measure when you need to make major decisions, and we will not be affected by individual market opinions or short-term changes in stock prices."
He said that in the current market situation, from a financial perspective, we need to reduce operating expenses, but the first thing that Jingke cannot reduce is research and development, because research and development is the company's strategy; The second thing that cannot be reduced is market promotion, because the market is the most important competitive core.
Emphasize global layout and service capabilities
According to preliminary industry statistics, Jingke Energy is expected to have a component shipment scale of over 75GW in 2023, returning to the top spot in the industry after three years. Prior to 2019, Jingke had ranked first in the industry's shipment volume for four consecutive years.
"A company like Jingke (in terms of scale) will not achieve its current industry position just by doing the right thing, facing strong competitors in the market. In 2021, Jingke reorganized its strategy, which is still very clear today." In Li Xiande's view, the three strategies that guide Jingke back to the top are crucial: continuously improving technology, continuously innovating, and enhancing product competitiveness; The second is global layout, enhancing the company's ability to serve the world; The third is the construction of an efficient management system to enhance business competitiveness.
When asked by a reporter from Securities Times · e Company about Jingke's plans to maintain and expand its advantages, Li Xiande further emphasized the meaning of global layout, "Jingke's market strategy is' global layout, localized marketing ', which allows our team to be closer to the market and better serve customers. At the same time, Jingke is at the forefront of the industry in ESG, which is also an ability for us to better grasp the market."
In terms of continuous technological leadership, Li Xiande added that it is necessary to ensure that Jinko's products are one level higher than other leading enterprises, improve product competitiveness, and this leadership is not phased. For example, Jinko not only initially bet on N-type technology, but also needs to continue to maintain leadership and bring better profits to customers.
This round of production capacity clearance will be faster than expected
How the industry can overcome the current stage of overcapacity is also a frequently mentioned topic. Li Xiande believes that this round of capacity elimination may be faster than the industry imagines, and described the general outline of capacity clearance to reporters. On the one hand, just as polycrystalline production capacity was rapidly phased out from 2017 to 2018, in the case of oversupply, unprofitable production capacity in 2023 will be unsustainable and will be rapidly phased out, referring to some non competitive production capacity.
Li Xiande also mentioned that production capacity without market capacity and continuous production capacity will be quickly phased out, especially because photovoltaic companies need to improve efficiency and reduce costs through continuous production.
In addition, due to the need for continuous efficiency improvement in the photovoltaic industry, Li Xiande believes that production capacity without sustained investment capacity will also be quickly phased out. Taking Jingke as an example, he said that TOPCon batteries have already achieved a conversion efficiency of 26% and are expected to increase to 26.5% by the end of 2024. The power of photovoltaic modules is also above 600W. If a participant's production capacity cannot reach such efficiency and power, it will not be competitive.
In the past two to three years, in addition to the significant expansion of production by leading enterprises, the industry has also attracted a large number of cross-border manufacturers. After this round of industry reshuffle, what is the fate of cross-border manufacturers?
Li Xiande believes that photovoltaic is a very challenging industry, mainly reflected in market fluctuations, rapid technological iteration, and global trade disputes, which require the ability to globalize. "This industry requires more professionalism and focus. Although there are many excellent companies cross-border in photovoltaic production, I have not seen many successful cases. I believe that companies that have survived these fluctuations and done well have strong competitiveness, and future competition will also be among these top companies."
Recently, performance forecasts for listed photovoltaic companies have been released one after another. Due to the sharp decline in the fourth quarter of last year, many companies have underperformed expectations, and the sharp drop in stock prices has become the most direct manifestation.
Regarding this, Li Xiande told reporters that the first quarter itself was a relatively sluggish period in the photovoltaic market, combined with factors of price decline, and now is definitely the worst time in the industry.
"Due to the existence of panic, the market demand in the first quarter of 2024 will be lower than that in the fourth quarter of 2023. However, the decrease in prices has increased the investment return of photovoltaic power stations, and we still have a positive outlook on the market demand in 2024, with a further 20% growth compared to 2023." Regarding the pace of capacity clearance, Li Xiande judged that the first quarter may be the industry's weakest period, while the operating conditions in the second and third quarters are relatively optimistic, but he also reminded that, Practitioners still need to be prepared in advance.
Component prices will return to a reasonable profit level
As mentioned earlier, the decline in product prices is a topic that cannot be avoided in the current photovoltaic market. In recent central enterprise component bidding, some companies even quoted a low price of around 0.8 yuan/W.
Li Xiande believes that at this price, the component business is definitely not profitable or even at a loss. A noteworthy phenomenon is that from January to November 2023, Jingke consistently ranked among the top three in the industry in terms of winning bids. However, by December 2023 and January 2024, Jingke had almost no new winning projects.
"In the process of price reduction in the market, in such an irrational market, Jinko is still very rational and cautious." Li Xiande explained that from this perspective, it cannot be said that a certain enterprise blindly pushed prices down. It is precisely based on the judgment of last year's market that Jinko did not participate in vicious competition in the past two months.
Li Xiande is not optimistic about the sustainability of orders at the current price level, and Jingke will not compete for orders at the current price level. Correspondingly, in the second and third quarters, the price level of the industrial chain will be adjusted.
Li Xiande believes that the strength of the rebound in component prices will be adjusted to a reasonable profit level, "This may be the trend for the next two to three quarters, but the first quarter will definitely be particularly poor; because the rapid decline in capacity utilization will cause panic among many enterprises, and I believe that many enterprises' price judgments on the future supply chain are irrational, which is why current quotations appear. I believe that the price of orders signed now will definitely form a burden on relevant enterprises in the future delivery process."
Balancing production capacity construction and reducing debt ratio
When it comes to the background of photovoltaic companies going abroad to build factories in recent years, Li Xiande said that firstly, due to the US 201, 301 and other laws, as well as some countries' anti Japanese laws, photovoltaic companies need to establish factories in third countries before they can enter markets such as the US. "When we build factories overseas, the first issue we need to consider is geopolitics, the second is industrial infrastructure and industrial chain competitiveness, which is mainly related to costs, and the third is changes in monetary policy."
Regarding the US market, Li Xiande admits that due to certain targeted factors, Jingke did not perform well in 2022 and 2023, but still has a positive outlook on the performance of the US market in 2024. "Jinko's shipment volume in the United States will significantly increase, mainly due to its smooth entry into the US market and customs clearance, and Jinko is also the only Chinese photovoltaic enterprise that complies with anti circumvention investigations."
In terms of other markets, Jingke has already achieved a market share of over 40% in the Middle East in 2023. Li Xiande believes that the demand in the Middle East market will continue to increase significantly in 2024. As for the European market, inventory is a widely concerned topic in the industry. When component prices fall, customers may not have a strong willingness to pick up goods, but it does not mean there is no demand. After the recent Red Sea incident, inventory in Europe has been continuously decreasing. "Overall, although the industry is under great pressure, Jingke's shipment volume in 2024 will significantly increase compared to 2023."
Regarding production capacity construction, Li Xiande also mentioned Jingke's consideration in reducing debt ratio. In his view, this is Jingke's most important battle. Especially looking at the entire year of 2024, Jingke will clearly and strategically reduce its asset liability ratio. "Jingke's debt ratio has decreased in the fourth quarter of 2023, and there are plans to continue reducing it every quarter in the future. We will find a balance between profitability and expansion to continuously reduce the company's debt ratio."
It is reported that in this context, Jinko has almost stopped all investment plans and only retained the construction of a large base in Shanxi and one project investment in Vietnam. Li Xiande explained that Vietnam's investment is mainly aimed at the US market, because orders are there and there is clear demand; The construction of Shanxi base represents the trend of future manufacturing, and the industry not only needs technological innovation, but also model innovation, so we must persist in completing it.
"Although the market is facing some challenges of overcapacity, the construction of production capacity in Shanxi and Vietnam will provide good support for Jinko to improve industry competitiveness in the future. At the same time, it will not increase the company's asset liability ratio due to Shanxi's investment. We can achieve balance and ensure a decrease in asset liability ratio." said Li Xiande.
Technological innovation enters a "no man's land"
Another keyword frequently mentioned by Li Xiande in the interview is "unmanned zone". In his opinion, Jinko has entered a unmanned zone in exploring cutting-edge technologies. According to him, Jinko currently has a research and development team of over 2000 people, with a research and development investment of over 5 billion yuan in 2022 and further improvement in 2023. "We will focus on a certain field, but as technology has entered the 'no man's land', the R&D team will follow up on all technical routes."
"TOPCon, HJT, BC, and even more distant perovskites in the future will be covered by Jingke." Jingke was one of the first leading companies to bet on TOPCon. Li Xiande introduced that Jingke's TOPCon products have a cost advantage of 1 to 2 cents per watt compared to other companies; At the same time, the efficiency of Jingke TOPCon also has an advantage of 1 to 2 levels compared to other top enterprises. "This subtle gap, due to the reasons of scale, amplifies product competitiveness and production costs in terms of performance."
When it comes to other technological routes, Li Xiande believes that HJT technology itself is not a problem, but from the perspective of industrialization progress, TOPCon has already run very fast, especially the TOPCon efficiency will reach 26.5% by the end of this year, which is very small compared to HJT. However, HJT still faces cost pressure, and in the current industry background of overcapacity, it may be difficult for HJT to have opportunities.
Regarding BC, Li Xiande believes that one of the possible directions for future crystalline silicon batteries is the combination of TOPCon and BC in TBC. "BC technology extends the grid line to the back of the battery. In fact, TOPCon can also be stacked with BC technology, but BC's biggest problem is that the double-sided rate is not high. Therefore, in segmented markets, especially roofs, BC will still have some opportunities to rely on its positive high efficiency advantage."
As for perovskite, Li Xiande introduced that Jingke has also invested heavily in perovskite technology, and has increased the conversion efficiency of TOPCon stacked perovskite batteries to 32.33%, but the attenuation can only be maintained for 6000 hours. "From now on, the cycle for perovskite to form sufficient production capacity and participate in market competition may be longer than expected. The industry may believe that perovskite batteries will form a scale in 3 years, but Jingke believes that it may take about 5 years to form a certain scale of market competition and gradually promote it."
Li Xiande also mentioned the layout of Jingke in terms of patents. It is reported that Jingke has applied for more than 3500 patents and has obtained more than 2000 patents, especially in the TOPCon field, where Jingke holds the vast majority of patents. "As a global enterprise, it is necessary to respect intellectual property rights, which is the responsibility that enterprises should have. At the same time, patent issues can be solved through many ways, such as authorization, purchase, exchange, rather than avoiding them."