## Chinese Solar Cell Maker Drinda Aims for Hong Kong IPO Amidst Industry Downturn
Hainan Drinda New Energy Technology Co. Ltd., a leading Chinese manufacturer of photovoltaic (PV) cells, is making a second bid for a Hong Kong listing. The company’s ambitions lie in securing funds for an aggressive overseas expansion strategy, a move driven by a challenging domestic market. While Drinda has witnessed impressive growth in the past few years, the first half of 2024 saw a net loss, highlighting the impact of overcapacity within the PV sector.
Drinda’s journey began in 2003, producing plastic automotive trims, and it entered the Shenzhen Stock Exchange in 2017. However, as China’s auto market slowed down, the company pivoted towards the PV sector in 2019. This shift saw Drinda acquire a majority stake in Jietai Technology, a specialist in P-type PERC cells, for a significant 1.43 billion yuan ($200 million). The company then fully committed to PV cells, abandoning its automotive components business.
Drinda’s foray into the PV sector proved fruitful, leading the charge in developing the more efficient N-type TOPCon cells. This move aligned perfectly with the burgeoning new energy sector, resulting in a surge in revenue. From 1.64 billion yuan in 2021, revenue soared to 11.09 billion yuan in 2022, followed by another substantial increase to 18.61 billion yuan in 2023, representing a remarkable 68% jump. Net profit followed a similar trajectory, multiplying from 53.73 million yuan in 2021 to 617 million yuan the following year and leaping another 32% to 816 million yuan in 2023.
However, this impressive performance was not sustainable. By mid-October 2024, Drinda’s A-share had fallen by almost 75% from its 2022 peak, reaching 43.7 yuan. The culprit? A decline in revenue and a net loss of 166 million yuan in the first half of 2024. The reversal was largely attributed to the overcapacity that emerged in the PV sector during the previous year, pushing down prices across the supply chain. Prices for key materials like polysilicon and silicon wafer fell by over 40% in the first six months of 2024, while cell prices dropped by more than 15%.
While the N-type TOPCon cells, which offer higher efficiency, have been driving Drinda’s revenue, even their prices are facing downward pressure. The average sales price for P-type PERC cells has plummeted from 1.06 yuan/W in 2022 to 0.32 yuan/W in the first half of 2024, a steep decline of over 63%. Similarly, the average sales price for N-type TOPCon cells fell by 61% in the first half of 2024, settling at 0.36 yuan/W.
Despite the current market downturn, Drinda is looking towards global opportunities. The global output of PV cells is projected to reach 1,526.6 GW by 2030, with output outside China expected to grow even faster at a compound annual growth rate of 25.6%. Drinda’s own data reflects this trend, with overseas sales rising from 0.3% in 2021 to 13.8% in the first half of 2024.
Drinda’s IPO strategy hinges on capitalizing on this global growth potential. The company intends to use the funds raised to build an overseas PV production plant with an annual capacity of 5 GW, expanding its total overseas production capacity to around 10 GW. The remaining funds will be dedicated to developing overseas sales and distribution networks, investing in advanced technologies, and supporting general operations.
The company’s success hinges on its ability to secure a favorable IPO valuation in a competitive market. With a strong focus on overseas expansion, Drinda will have to navigate the complexities of global markets and potential challenges like trade tariffs and anti-dumping duties. Whether Drinda can capitalize on global growth opportunities and navigate the current industry headwinds remains to be seen.
