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LONGi Green Energy Technology Co. Ltd. (SHA:601012), formerly Xi’an Longi Silicon Materials Corporation, is a major manufacturer of photovoltaic solar modules and solar energy products.
Founded in 2000 and headquartered in Xi’an, China, the company mainly makes mono-crystalline silicon, mono-crystalline modules, solar cells, photovoltaic systems and photovoltaic power stations. The company has set up manufacturing facilities as well as sales networks in over 150 countries.
In 2014, LONGi acquired LERRI Solar as part of an international brand strategy. Three years later the overseas brand was renamed to LONGi Solar. LONGi is mainly operating in China, with seven domestic production facilities and three additional in Malaysia, India and Vietnam.
LONGi Green Energy Business model
LONGi Green Energy’s declared mission is ‘Utilising Solar Energy, Building a Green World’, starting internally, using clean energy and green production practices where possible. Since 2015, for example, the company uses local hydropower resources to provide clean energy in its operations in Yunnan, China, and Kuching, Malaysia.
The green energy company has established five business sectors, including mono silicon wafers, cells and modules, commercial and industrial distributed solar solutions, green energy solutions and hydrogen equipment. The company has a long-term commitment to Research and Development, with about 12 bn Yuan (~ $ 1.8bn) spent on R&D as of December 2021. On July 25, 2022, LONGi’s Central R&D Institute officially opened at Xi’an. It will mainly carry out research and development in the photovoltaic industry with plans to attract more than 4000 high-end scientific research talents.
Research partners include Germany Iotar Institute, Centre Suisse d’Electronique et de Microtechnique (CESM), National University of Singapore and Fraunhofer Institute for Solar Energy Systems. According to company data, LONGi secured 1,808 authorised patents, and invested 3.670 bn yuan (~ $ 0.5bn) in R&D, accounting for 7.28% of the operating revenue in the first half of this year.
LONGi Green Energy has been on the Fortune China 500 list for six consecutive years, rising from 495th to 168th position since its first inclusion in 2017.
LONGi’s operating performance increased steadily
The latest financial reports of LONGi Green Energy Technology show that the company’s consolidated operating revenue increased 43.64% year-on-year in the first half of 2022, achieving 50.417 bn yuan (~ $ 7.3 bn).
The overseas market has become an important sales ground for the company over the past three years, with overseas revenue of LONGi accounting for 38.38% (2019), 39.32% (2020) and 46.89% (2021).
The company plans to achieve operating revenue of more than 100 bn yuan in 2022. However, the company had said in April 2022 that its profits are likely to be reduced by higher power costs. Yunnan province, which is home to 54% of LONGi Green Energy’s wafering capacity, cancelled the preferential electricity prices it had been offering Longi since 2016.
As per the latest company report of HY1 2022, the basic earnings per share came in at 0.86 yuan, up 30.3% year-on-year.
Stock movement of LONGi
Listed on the Shanghai Stock Exchange, LONGi has a market capitalization of $53.2 bn. The company’s stock has fallen over 12% in the past year, as of September 21, 2022. It has a PE ratio of 36.41, and a forward PE ratio of 26.49. LONGi has a price-to-book ratio of 7.11.
Since September 2020, the stock has risen over 50%, hitting an all-time high in November 2021.
What is next for LONGi
In a recent report, the International Energy Agency (IEA) observed that over the last decade the global solar photovoltaic panel manufacturing capacity has gradually shifted from Europe, Japan and the United States, to China. In addition, China Photovoltaic Industry Association said that the global photovoltaic market development may start acceleration, and is expected to install 205-250GW this year, of which 85-100GW is expected to be installed in China.
Given this market potential, LONGi seems well positioned and seeks expansion. For 2022, the company has set its global shipment target of monocrystalline silicon wafers around 90GW-100GW (including internal use) and shipment target of modules around 50GW-60GW (including internal use).
The company has set up a Zero-carbon Industrial Park in the Ordos, Mongolia, this year, and several other projects are either under construction or in the preparation phase.
