China's PV companies' debts surged by 70.1 billion yuan in three years

Abstract The photovoltaic giant Wuxi Suntech announced the bankruptcy recently, which has once again pushed the industry to the forefront of public opinion. The debt situation of PV listed companies has also become the focus of attention. Beijing Business Daily Investment Weekly statistics have published 58 annual reports of listed companies found that debt from 2010 2...
The photovoltaic giant Wuxi Suntech recently declared bankruptcy, which has once again pushed the industry to the forefront of public opinion. The debt situation of PV listed companies has also become the focus of attention. The 58 listed companies that have published the annual report of Beijing Business Daily Investment Weekly found that the liability increased from 255 billion yuan in 2010 to 325.1 billion yuan last year, and liabilities increased by 70.1 billion yuan in three years. And half of the companies in the sector have not disclosed their annual reports, which means that the scale of the surge in liabilities is far from this.

According to statistics, as of now, 58 listed companies in the solar energy concept sector have officially disclosed their annual reports. The total liabilities of these 58 listed companies have now reached 325.1 billion yuan, compared with 304.6 billion yuan and 255 billion yuan in the previous two years. This means that the debt of these 58 solar companies surged by 70.1 billion yuan in three years, an average annual increase of 13.7%.

At the same time as the surge in debt, the profit margin of PV listed companies is declining step by step. Statistics show that the 58 listed companies' net profit last year totaled 13 billion yuan. In 2011 and 2010, it was 21.7 billion yuan and 23.6 billion yuan respectively. It is not difficult to see that there is a clear downward trend in net profit.

From the two-party data of the increase in liabilities and the significant decline in net profit, it can be very intuitive to see the current dilemma of PV companies.

Although the industry's prosperity is declining, in recent years, the solar photovoltaic industry has been "heating up" and has been madly sought after by a large amount of capital. Previously, many insiders expected that once the production cost of the solar energy industry chain decreased, the industry market space would be broader. This has led to a large number of PV companies to expand their production lines with almost no cost, with a gambler mentality, in order to expand production capacity and occupy market share. As a result, it has created an objective reality of the current surge in liabilities.

According to iFinD statistics, the average value of non-current liabilities of the above-mentioned 58 listed PV companies is about 25%. This also means that 1/4 of the total corporate liabilities mentioned above are less likely to be converted into income in a short period of time or in the business cycle.

It is worth mentioning that some insiders say that more than 50% of the data will face greater bankruptcy risk than other companies. However, some insiders said that it is still impossible to judge the risk of bankruptcy by relying solely on corporate liabilities or the breakdown of a liability.

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