Shares in China’s Longi, world’s largest maker of solar equipment, fall after firm reports more than 40% drop in quarterly profit

The stock fell by 4 per cent to 23.97 yuan in Shanghai on Tuesday. It has also declined 80 per cent from a peak of 125.68 yuan in February 2021. Longi’s capitalisation has been reduced to 189.3 billion yuan (US$25.96 billion) from an all-time high of more than 500 billion yuan in 2021.

Longi, the world’s largest manufacturer of solar equipment, said in an earnings report on Monday that its net profit for the third quarter of the 2023 financial year stood at 2.5 billion yuan, a decrease of 44 per cent year on year. It is also the firm’s first quarterly profit decline since the fourth quarter of 2018.

Its quarterly revenue stood at 29.4 billion yuan, a year-on-year decrease of 19 per cent and also its first quarterly revenue decline since the second quarter of 2017.

“We think … its earnings downcycle could persist,” Pierre Lau, head of Asian utilities and clean energy research at Citi, said in a report on Tuesday. The profit fall was due to an asset impairment loss in Longi’s cell production lines, and smaller investment gains from polysilicon sales amid a price war in China’s solar module market, he added.

Amid falling solar equipment prices, Longi’s earnings are likely to continue to drop in the fourth quarter of this year and into 2024, Lau said.