Trading resumes today! Tongwei Co., Ltd. releases the silicon material acquisition plan, with multiple listed company shareholders behind the target

Deep Adjustment in the Photovoltaic Industry: Tongwei Co., Ltd. (SH600438) Announces Silicon Material Acquisition Plan, Resuming Trading on March 11

On the evening of March 10, Tongwei Co., Ltd. announced its acquisition plan. The company intends to acquire 100% equity of Qinghai Lihao Qingneng Co., Ltd. (hereinafter referred to as “Qinghai Lihao”), controlled by former director and key executive Duan Yong, through issuing shares and paying cash. The transaction involves up to 57 shareholders. The share issuance price is set at 15.20 yuan per share.

Notably, due to supply and demand imbalances in recent years, Qinghai Lihao has reported losses for two consecutive years. Industry insiders told reporters that this acquisition marks a significant milestone in the deepening of supply-side structural reforms in the photovoltaic industry. It indicates a shift from passive capacity reduction and administrative intervention to proactive mergers and market-driven integration led by industry giants. Under the industry-wide consensus to “counteract involution,” China has clarified that no new polysilicon capacity will be added in the near future, making low-cost polysilicon capacity a scarce resource.

The target includes multiple listed companies and Sichuan regional capital

On the evening of March 10, Tongwei disclosed its acquisition plan. The valuation date for the issuance of shares and cash payment is based on the resolution date of the seventh meeting of Tongwei’s ninth board of directors. After friendly negotiations, the share issuance price is set at 15.20 yuan per share, not lower than 80% of the average trading price of Tongwei A-shares over the 20 trading days prior to the valuation date.

Regarding share lock-up arrangements, the plan makes clear distinctions. Duan Yong and his controlled entity, Hainan Zhuoyue Enterprise Management Partnership (Limited Partnership), will not transfer any newly acquired Tongwei shares within 24 months from the end of the issuance. Shares obtained by other specific transaction counterparts will face lock-up periods of 6 or 12 months.

Interestingly, the plan shows that over 50 Qinghai Lihao shareholders, including Duan Yong, participated in this transaction. Analyzing Qinghai Lihao’s complex equity structure reveals that these investors mainly fall into three major groups:

1. Several listed companies are among the shareholders. For example, Chint Power’s actual controller, Nan Cunhui, owns 10.0075% of Qinghai Lihao through Chint New Energy Technology Co., Ltd.; Aiko Solar is held via its subsidiary Zhejiang Aiko Solar Technology Co., Ltd.; Huajin Capital has invested through multiple private equity funds such as Zhuhai Huajin Lingyi Emerging Technology Industry Investment Fund (Limited Partnership); and long-established securities firm Changjiang Securities has deep involvement through Changjiang Securities Innovation Investment (Hubei) Co., Ltd.

2. In terms of industrial capital, multiple Sichuan regional investors are involved. Yibin Green Development Industry Investment Fund Partnership (Limited Partnership), controlled by the Yibin Municipal State-owned Assets Supervision and Administration Commission, holds Qinghai Lihao equity; Sichuan Green Low-Carbon Industry Development Fund Partnership (Limited Partnership), controlled by Sichuan Provincial Finance Department, also holds shares.

3. Besides industrial and state-owned funds, the transaction includes investment funds such as Zhuhai Huajin Lingyi Emerging Technology Industry Investment Fund (Limited Partnership) and Zhuhai Huajin Fengying No. 8 Equity Investment Fund Partnership (Limited Partnership).

Industry impact: the company has reported losses for two consecutive years

The plan states that Qinghai Lihao was established on April 29, 2021, with a registered capital of approximately 1,006.9135 million yuan, with Cui Peng as legal representative. Its main business involves R&D, production, and sales of photovoltaic-grade high-purity crystalline silicon and electronic-grade polysilicon. As of the signing date, Duan Yong directly owns 4.7530% of Qinghai Lihao and controls 23.8456% of voting rights, making him the actual controller.

Duan Yong previously served as a director and key executive at Tongwei. In 2014, during the darkest period of the silicon material industry’s losses, he became General Manager of Tongwei’s subsidiary Sichuan Yongxiang Co., Ltd.

Affected by recent industry cyclical supply-demand imbalances and significant drops in product prices, Qinghai Lihao’s financials are under pressure. Financial data shows that by the end of 2025, Qinghai Lihao’s total assets will be 11.068 billion yuan, total liabilities 5.917 billion yuan, and owner’s equity 5.151 billion yuan. In 2024 and 2025, operating revenues are projected at 3.959 billion yuan and 2.651 billion yuan, respectively, showing a downward trend; net profits are expected to be -738 million yuan and -379 million yuan. Although the loss in 2025 narrows, two consecutive years of losses indicate ongoing operational challenges.

Despite the current losses, the plan emphasizes Qinghai Lihao’s core competitiveness. The company’s technical team has mastered Siemens’ modified method, with N-type product quality and market share ranking among the top in the industry. Cost control per unit is also leading in the sector. Additionally, Qinghai Lihao’s location in Qinghai provides significant energy cost advantages and green traceability, leveraging abundant local wind, solar, and hydropower resources.

On March 10, industry insiders told reporters that Tongwei’s acquisition marks a key event in the deepening of supply-side reforms in the photovoltaic industry. It signifies a shift from passive capacity reduction and administrative measures to proactive mergers and market-driven consolidation led by industry giants. Under the industry-wide consensus to “counteract involution,” China has made it clear that no new polysilicon capacity will be added in the near future, making low-cost polysilicon capacity highly scarce. Qinghai Lihao’s advantage in green energy resources places its production costs among the top tier. This acquisition will accelerate the concentration of high-quality resources into leading enterprises. Moreover, this complements previous platform company models aimed at stockpiling capacity, which sought to stabilize supply and prices by acquiring high-quality capacity and phasing out inefficient production, thus preventing systemic risks. If this acquisition proceeds, it will significantly enhance the industry’s concentration in China’s polysilicon sector.

(Source: Daily Economic News)