Morningstar

Tongwei Co Ltd Class A 600438

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Stock XSHG Rating as of
¥22.83 +2.07 (9.97%)
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As of Delayed Price Closed

Company Report

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Tongwei Earnings: Cutting Fair Value Estimate by 15% on Lower Shipment and Margin Forecasts

Cheng Wang

Tongwei’s first-half CNY 3.1 billion net loss is in line with its preliminary guidance. However, we anticipate a prolonged overcapacity in the solar industry and hence reduce our assumptions for its shipment, average selling price, and gross margin for 2024-28. This leads to a wider 2024 net loss forecast of CNY 6.6 billion from our prior CNY 2.1 billion net loss forecast. We project Tongwei to turn around in 2026 but reduce our net income estimates by 21%-60% for 2026-28. As a result, we cut our fair value estimate by 15% to CNY 21.70 per share. We consider the shares fairly valued.

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Price vs Fair Value

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600438 is trading at a 187% premium.
Price
¥22.83
Fair Value
¥78.10
Uncertainty
High
1-Star Price
¥85.83
5-Star Price
¥56.75
Economic Moat
Qqr
Capital Allocation
Rsnbgsb

Bulls Say, Bears Say

Bulls

The plunge in polysilicon prices will force high-cost players to exit the market, and Tongwei will benefit as a low-cost player.

Bears

Polysilicon prices will remain subdued for years due to massive overcapacity.

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News

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Trading Information

Previous Close Price
¥20.76
Day Range
¥21.45–22.84
52-Week Range
¥15.79–32.20
Bid/Ask
¥22.83 / ¥22.84
Market Cap
¥102.78 Bil
Volume/Avg
95.2 Mil / 27.3 Mil

Key Statistics

Price/Earnings (Normalized)
15.89
Price/Sales
0.99
Dividend Yield (Trailing)
3.96%
Dividend Yield (Forward)
3.96%
Total Yield
3.96%

Company Profile

Tongwei is the largest polysilicon producer in the world. It produced 389 thousand metric tons of polysilicon in 2023, accounting for 27% of total production in China. Polysilicon contributed 32% of revenue and 65% of gross profit in 2023. Tongwei is also a global leading solar cell and module supplier.
Sector
Technology
Industry
Solar
Stock Style Box
Large Value
Total Number of Employees
56,406
Website
http://www.tongwei.com.cn

Competitors

Valuation

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Metric
600438
601012
002129
Price/Earnings (Normalized)
 15.8920.2379.35
Price/Book Value
 1.932.071.12
Price/Sales
 0.991.291.02
Price/Cash Flow
 7.729.964.39
Price/Earnings
600438
601012
002129

Financial Strength

Metric
600438
601012
002129
Quick Ratio
 0.961.030.91
Current Ratio
 1.231.411.49
Interest Coverage
 −6.56−8.18−3.04
Quick Ratio
600438
601012
002129

Profitability

Metric
600438
601012
002129
Return on Assets (Normalized)
 −1.27%−2.19%−3.80%
Return on Equity (Normalized)
 −3.73%−5.16%−11.72%
Return on Invested Capital (Normalized)
 −1.99%−4.70%−3.99%
Return on Assets
600438
601012
002129

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