On January 19, Junda Co., Ltd. officially announced its IPO in Hong Kong to lay out overseas markets through Hong Kong stock financing. The company hopes to take the lead in breaking through the vicious cycle of photovoltaic cell internal circulation by going overseas.

As a successful player in the cross-border transformation of photovoltaics, Junda Co., Ltd. acquired 51% of Jietai Technology's shares in 2021, accurately entered the photovoltaic cell field, and focused on the TopCon technology route, enabling the company to set in at the point where the industry exploded in 2022 - 2023, and its performance skyrocketed.

Junda Co., Ltd. chose to go overseas in 2024. What does this choice mean for the industry?

Junda Co., Ltd. took the lead in seizing overseas cakes

On the evening of January 19, Junda Co., Ltd. announced that in accordance with its overall development strategy and operational needs, the company plans to issue shares (H shares) overseas and apply for listing on the main board of the Hong Kong Stock Exchange Limited.

The company announced that the funds raised will be used to build overseas production capacity for high-efficiency batteries, expand overseas markets and establish overseas sales and operation systems, build a global R&D center, and supplement working capital.

1) The opportunity for specialized battery manufacturers has arrived. This year is the best time to go overseas.

There is excess PV production capacity, and it is nothing new for companies to enter overseas markets, but in fact, it is more of a downstream PV module company that goes overseas. Since component products directly face users, have stronger consumer attributes, and focus on brand effects, component giants such as Longji Green Energy, Jingke Energy, Trina Solar, and Jingao Technology have already entered overseas markets.

In the first half of 2023, the four leading companies accounted for 43.77%, 62.38%, 57.61% and 58.67% of overseas revenue, mainly overseas business. Compared to modules, photovoltaic cells have a low export rate. For example, BC Battery specialist supplier Aixu Co., Ltd. accounted for 11.76% of overseas revenue in 2022, and Junda Co., Ltd. accounted for 4.18% of overseas revenue in the first half of 2023.

The company has more thoughts about Junda Co., Ltd., which first went overseas for photovoltaic cells.

Junda Co., Ltd. told Wall Street Insight Research that along with the rapid increase in overseas module production capacity, overseas demand for photovoltaic cells has also increased, which has brought great opportunities for specialized photovoltaic cell manufacturers to go overseas.

In this context, Junda believes that investing in the construction of photovoltaic cell factories overseas can better meet the needs of overseas markets, and at the same time, establishing an overseas financing platform can better collaborate with the capital requirements of overseas factory construction, so it has planned the current Hong Kong stock IPO to raise capital to support overseas factories.

2023 is a key year for Junda Co., Ltd.'s overseas expansion. It marks the initial completion of the company's global sales channel layout. The company has cooperated in Turkey, Europe, South America, Europe and the United States, etc., and has also actively completed the certification of customers in emerging markets such as North America, Latin America, Australia, etc., and continues to build a global customer sales system.

Compared with 2022, overseas revenue accounted for only 0.29% of total revenue. By the first three quarters of 2023, the company's overseas sales revenue had increased to 4.66%. Since 2023, domestic component manufacturers have continued to expand production to overseas regions other than Southeast Asia (the US, Middle East, etc.). At the same time, the expansion of production by component companies in India, Europe, and the United States is gradually accelerating. However, the new overseas production capacity is mainly based on modules, and there is no support for battery production capacity. The company's overseas battery production capacity is expected to meet the supporting needs of these component manufacturers.

Regarding Junda's overseas plan for 2024, Junda Co., Ltd. indicated to Insight Research that the company will further step up its overseas market development efforts in 2024, with the goal of accounting for more than 10% of overseas sales in 2024.

2) Going public in Hong Kong is more conducive to overseas business development.

According to the 2023 three-quarter report of Junda Co., Ltd., the company's net cash flow from operating activities for the first three quarters of 2023 was 475 million yuan, and the monetary capital for the same period was 3.127 billion yuan. Judging from the books, Junda shares seem to have no shortage of capital. Why did they choose to go public in Hong Kong?

Junda Co., Ltd. told Wall Street Insight Research that the company's current book capital is sufficient to meet domestic development needs. The Hong Kong stock listing was selected to achieve a supporting overseas capital market platform for long-term overseas development, and also hopes to cooperate deeply with overseas customers. Regarding the listing schedule, the company said there is nothing to disclose yet.

In addition, another focus of market attention was the emphasis on “global R&D center construction” in the Junda share offering announcement.

Photovoltaic cells are the most technologically advanced link in the photovoltaic industry chain. Although China is currently leading the world in photovoltaic technology, the structural principles of mainstream crystal silicon technology come from research institutes of overseas universities, and the prototype technology was born from overseas laboratories.

Regarding the construction of a global R&D center, Junda Co., Ltd. also indicated to Insight Research that the company will use the global R&D center resource platform to actively develop in-depth cooperation with universities and research institutes at home and abroad to continuously expand the company's technical advantages.

In the era of inner volume, I'm most afraid it won't have any features

Over the past few years, the integrated development of the photovoltaic industry has become the main theme. Leading companies in the field of components, batteries, and silicon materials have expanded to other parts of the industrial chain, forming coverage of the entire industry chain. For example, component leaders have expanded to upstream silicon wafers and cells, battery leaders have expanded to downstream components, and silicon leaders such as Tongwei Co., Ltd. have also expanded into the terminal component business. This integrated layout showed synergy effects and strong cost reduction capabilities during the PV industry explosion period from 2021 to 2023, improved resilience to risks, and enabled these companies to enjoy the dividends of the times.

However, in the second half of 2023, with the surplus of the entire photovoltaic industry chain, the disadvantages of integrated enterprises began to show, especially in the context where production capacity is no longer scarce. The photovoltaic industry is beginning to become more fragmented. Due to technical barriers and relative scarcity, only manufacturers such as Tongwei, GCL, and Daquan can produce specific links, such as N-type materials and granular silicon, which has become a competitive advantage for leading specialized companies.

In the battery sector, although Aixu Co., Ltd., which operates professionally, faced challenges during the period of soaring silicon prices in 2021, as silicon prices declined and BC technology gradually became popular in the market, its adherence to the ABC route gradually showed advantages.

Meanwhile, Junda Co., Ltd. achieved significant revenue and profit growth during the year of mass production of N-type TopCon through accurate selection of timing and technical routes. The company's revenue in 2021 was only 2,863 billion yuan, and 2022 revenue reached 11.595 billion yuan, up 304.95% year on year. The first three quarters of 2023 achieved revenue of 14.38 billion yuan, an increase of 93.59% year on year. Net profit due to mother in 2022 was 717 million yuan, which turned a loss into a profit in 2021; net profit returned to mother reached 1,638 billion yuan in the first three quarters of 2023, an increase of nearly 300% over the previous year.

Against the backdrop of increased competition in the photovoltaic industry, companies that can produce scarce structured products are more competitive, and the future PV era will rely more on specialized competition.

On the contrary, those professional manufacturers with low production thresholds and mediocre products, especially second- and third-tier enterprises, will face greater survival challenges. They are not only difficult to compete with integrated industry leaders in terms of cost, but they also lack a clear advantage in specialization. In the face of a general decline in industry profits, these companies may be the first to be eliminated from the market.