UOB Kay Hian
Date of Report: Tuesday, 2 September 2025
LONGi Green Energy Technology: 1H25 Performance Review — Margins Remain Challenged, Recovery Hinges on Product Mix and Cost Discipline
Overview: LONGi Green Energy Technology Faces Prolonged Margin Pressure in 2025
LONGi Green Energy Technology, the world’s largest solar module manufacturer, delivered its 1H25 financial results with a net loss that, while improved year-on-year, still fell short of market expectations. The company’s path to profitability is now projected for 4Q25, contingent on ramping up its back contact (BC) product shipments and executing further cost control measures. The stock is maintained at HOLD with a DCF-based target price of Rmb16.90.
Company Snapshot
- Ticker: 601012 CH
- Sector: Information Technology
- Market Cap: Rmb129.4bn (US\$18.1bn)
- Shares Outstanding: 7,578.1 million
- Major Shareholder: Li Zhenguo (14.1%)
- 52-Week Range: Rmb21.17 – Rmb12.71
- FY25 NAV/Share: Rmb7.49
- FY25 Net Cash/Share: Rmb0.69
1H25 Financial Performance: Losses Narrow but Still Disappoint
| Metric |
1H24 |
1H25 |
YoY Change |
| Revenue (Rmbm) |
38,528.7 |
32,813.1 |
-14.8% |
| Cost of Sales (Rmbm) |
35,579.2 |
33,081.0 |
+7.0% |
| Gross Profit (Rmbm) |
2,949.5 |
-268 |
-109.1% |
| SG&A (Rmbm) |
3,229.9 |
2,318.2 |
+28.2% |
| R&D (Rmbm) |
885.2 |
751.1 |
+15.1% |
| Operating Profit (Rmbm) |
-6,266.2 |
-2,864.8 |
+54.3% |
| Net Profit (Rmbm) |
-5,230.6 |
-2,569.4 |
+50.9% |
| Gross Margin (%) |
7.7 |
-0.8 |
-8.5ppt |
| Net Profit Margin (%) |
-13.6 |
-7.8 |
+5.7ppt |
Key Observations:
- 1H25 net loss narrowed to Rmb2,569.4m from Rmb5,230.6m in 1H24, primarily due to lower asset impairment charges and improved cost controls.
- Revenue declined sharply by 14.8% year-on-year, reflecting ongoing average selling price (ASP) pressure across the value chain.
- Gross margin for 1H25 was negative at -0.8%. Notably, 2Q25 saw a sequential improvement as revenue grew 40% quarter-on-quarter and gross margin turned positive.
- Management’s focus on cost discipline is evident in the significant reduction of SG&A and R&D expenses.
Strategic Focus: Shipment Growth, Product Mix, and Technology Upgrades
- Strong Shipment Momentum, but Margin Pressures Persist:
- Wafer shipments reached 52.08GW (+17% YoY), with 24.7GW sold externally (+12% YoY).
- TaiRay wafers made up 90% of wafer volumes, while overseas sales grew over 70% YoY.
- Module shipments of 39.57GW (+26% YoY) were supported by robust domestic demand and resilient exports.
- Back Contact (BC) modules accounted for over 20% of total module shipments in 1H25, with Hybrid Passivated Back Contact (HPBC) 2.0 shipments reaching around 4GW and delivered to more than 70 countries.
- 2Q25 volumes more than doubled YoY, attributed to strong domestic demand and capacity expansion.
- BC Product Expansion to Drive Margin Recovery:
- Management targets a sharp ramp-up in BC product shipments in 2H25, with >10GW of BC deliveries planned for 4Q25 (vs ~2GW in 2Q25).
- HPBC 2.0 cell capacity is expected to exceed 60% of total cell capacity by year-end 2025.
- BC modules are projected to account for around 50% of total shipments by 2026, with Europe contributing approximately 60% of BC volumes.
- Breakeven Pushed to 4Q25:
- Management now guides to main-business operating breakeven in 4Q25, later than the previous 3Q25 target.
- Recovery is expected to be driven by BC shipment ramp-up and continued cost optimization as production scales up.
- LONGi aims for BC gross margins to be at least 10 percentage points above market-average Tunnel Oxide Passivated Contact (TOPCon) modules.
- Product mix upgrades, including application-specific premium modules (3-5ppt higher margin), are key to restoring profitability.
- Industry Outlook:
- Management advocates for industry consolidation through higher technology standards rather than blanket output cuts.
- Weaker players are expected to exit gradually as they fail to meet new quality and cost benchmarks, leading to a healthier industry structure over time.
Key Financials: 2023–2027 Outlook
| Year Ended 31 Dec (Rmbm) |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net Turnover |
129,498 |
82,582 |
68,640 |
84,111 |
102,090 |
| EBITDA |
12,611 |
-2,998 |
3,857 |
11,705 |
15,125 |
| Operating Profit |
7,632 |
-9,988 |
-4,344 |
1,979 |
4,423 |
| Net Profit (Adj.) |
10,751 |
-8,618 |
-3,468 |
2,685 |
5,226 |
| EPS (Fen) |
141.5 |
(113.5) |
(45.7) |
35.3 |
68.8 |
| PE (x) |
12.1 |
n.a. |
n.a. |
48.3 |
24.8 |
| Dividend Yield (%) |
1.0 |
0.0 |
0.0 |
0.0 |
0.0 |
| ROE (%) |
16.2 |
-13.1 |
-5.9 |
4.6 |
8.3 |
Outlook and Key Risks
- Industry Risks: The absence of a clear industry rationalisation path and potential further pressure from rising polysilicon prices may weigh on margins in the near-term.
- Earnings Forecast Adjustments: Earnings estimates for 2025/26/27 have been cut by 19%/19%/13%, reflecting a later-than-expected breakeven timeline and lower margin assumptions.
- Execution Risk: A sustained recovery in fundamentals is dependent on consistently delivering BC margin premiums and successful industry consolidation.
- Valuation: HOLD is reiterated with a DCF-based target price of Rmb16.90 (WACC: 11%, Terminal growth: 3%).
Balance Sheet and Cash Flow Highlights
| Year Ended 31 Dec (Rmbm) |
2024 |
2025F |
2026F |
2027F |
| Total Assets |
152,844.6 |
146,109.7 |
153,393.6 |
166,998.3 |
| Shareholders’ Equity |
60,895.3 |
57,427.1 |
60,111.7 |
65,338.1 |
| Net Debt/(Cash) to Equity (%) |
-34.6 |
-9.2 |
-10.2 |
-22.9 |
| EBITDA Margin (%) |
-3.6 |
5.6 |
13.9 |
14.8 |
| Operating Cash Flow (Rmbm) |
-4,725.0 |
2,510.0 |
13,096.3 |
16,851.5 |
Investment Summary: Waiting for Tangible Margin Recovery
While LONGi Green Energy Technology maintains its technology leadership, scale, and cost advantages, a cautious view is warranted until there is tangible evidence of margin recovery and meaningful capacity rationalisation. The company’s fortunes hinge on the successful ramp-up of high-margin BC modules, continued cost optimisation, and the broader industry’s move towards higher quality and cost standards. Early signs of module price stabilisation or a faster-than-guided breakeven could serve as catalysts for the share price.
Share Price Catalyst
- Stabilisation of module prices
- Achieving breakeven ahead of the revised 4Q25 guidance
