TCL Central 2025 Annual Report Analysis: Net loss attributable to parent narrows to 9.264 billion yuan, operating cash flow drops by 59.72%

Core Profitability Indicator Interpretation

Operating Revenue

In 2025, TCL Zhonghuan achieved operating revenue of CNY 29.05 billion, up 2.22% year over year, with a pace of growth that slowed significantly compared with prior years. By business segment, the photovoltaic module business became the core driver of growth. Revenue from photovoltaic modules increased significantly by 60.45% year over year to CNY 9.324 billion, with shipment volume rising by more than 80% year over year. Revenue from semiconductor materials increased by 21.75% year over year to CNY 5.707 billion. However, revenue from photovoltaic silicon wafers decreased by 26.49% year over year to CNY 12.238 billion, becoming the main drag on revenue growth. By region, domestic sales revenue was CNY 25.53 billion, up 2.49%; export revenue was CNY 3.52 billion, up only 0.33% year over year, indicating weak momentum in overseas market expansion.

Net Profit

During the reporting period, the company’s net profit attributable to shareholders of listed companies was -CNY 9.264 billion, a year-over-year reduction in losses of 5.65%, with the scale of losses narrowing. The losses were mainly driven by “involution-style” competition in the photovoltaic industry: product prices adjusted at the bottom, and prices across the industrial chain remained continuously below full cost. In addition, the company’s battery module business was still at the expansion stage, resulting in substantial cost pressure. However, through measures such as technological innovation and cost reduction and efficiency improvement, the company’s EBITDA improved by CNY 1.92 billion year over year, and operating quality was further strengthened.

Non-GAAP Net Profit

The net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses was -CNY 9.768 billion, with losses reduced by 10.39% year over year. The reduction in losses exceeded the change in net profit, indicating that the drag from non-recurring gains and losses on the company’s profitability was reduced to some extent. During the reporting period, total non-recurring gains and losses amounted to CNY 0.504 billion, mainly including government grants recognized in profit or loss for the period of CNY 0.542 billion, and reversals of allowance for impairment of accounts receivable—made via separate impairment testing—of CNY 0.028 billion, etc.

Basic Earnings Per Share and Non-GAAP Earnings Per Share

Basic earnings per share were -CNY 2.3190 per share, up 5.84% year over year. Basic earnings per share after deducting non-recurring gains and losses were -CNY 2.4410 per share, up 10.39% year over year. The improvement in earnings per share is consistent with the trend of reduced losses in net profit.

Expense Structure Analysis

Total Expense Situation

In 2025, the company’s total period expenses were CNY 0.439 billion, up 4.2% year over year. Expense scale increased slightly with revenue, while the expense structure was optimized.

Selling Expenses

Selling expenses were CNY 0.563 billion, down 2.31% year over year. This was mainly because the company optimized its sales strategy, reducing certain unnecessary market promotion and channel expenses. In terms of structure, labor costs increased by 44.8% to CNY 0.319 billion year over year, mainly because the expansion of the photovoltaic module business led to an increase in personnel in the sales team. Rental warehousing costs, sample fees, and other items declined year over year, showing that cost control on the sales side has shown early results.

Administrative Expenses

Administrative expenses were CNY 1.427 billion, down 15.29% year over year, indicating a significant impact from cost reduction. This was mainly because the company promoted organizational changes, optimized management processes, reduced redundant management layers and personnel, and simultaneously lowered fees for engaging intermediary institutions. During the reporting period, fees for engaging intermediary institutions decreased by 54.9% year over year to CNY 0.121 billion.

Finance Expenses

Finance expenses were CNY 1.578 billion, up 36.17% year over year significantly. The main reason was an increase in the size of interest-bearing debt. During the reporting period, interest expense increased by 21.4% year over year to CNY 1.642 billion, while interest income decreased by 22.7% year over year to CNY 0.132 billion. As a result, net interest outflow increased significantly.

R&D Expenses

R&D expenses were CNY 0.826 billion, up 10.31% year over year, with R&D investment continuing to increase. The company focuses on industry-forward technology investments and process innovation that have intellectual property protection. During the reporting period, R&D investment reached CNY 1.06 billion, accounting for 3.65% of operating revenue, slightly lower than the previous year. R&D projects mainly focus on areas such as large-size silicon wafers, high-efficiency photovoltaic battery modules, and semiconductor materials, laying a technical foundation for the company’s future development.

R&D Personnel Overview

In 2025, the company had 1,238 R&D personnel, down 11.57% year over year, but the quality of R&D personnel improved. Among them, the number of R&D personnel with a master’s degree or above increased by 51.97% year over year to 231 people. The number of R&D personnel with a PhD increased by 60.00% year over year to 8 people. The proportion of high-educated talent in the R&D team continued to rise. The number of R&D personnel aged 30–40 increased by 8.45% year over year to 642 people, becoming the core strength of the R&D team, while the number of R&D personnel aged below 30 decreased by 34.43%. This may be due to the company optimizing the R&D team structure and eliminating some young R&D personnel lacking experience.

Cash Flow Analysis

Total Cash Flow Situation

In 2025, the company’s net increase in cash and cash equivalents was -CNY 3.182 billion, a substantial year-over-year decline of 196.13%, indicating that its cash flow situation deteriorated. This was mainly because net cash flow from operating activities fell sharply, while net cash flow from investing activities remained a large net outflow, and net cash flow from financing activities also decreased significantly.

Net Cash Flow from Operating Activities

Net cash flow generated from operating activities was CNY 1.144 billion, down 59.72% year over year. The main reason was that while the sales scale of the photovoltaic product business increased, accounts receivable turnover increased, and cash collected from sales declined. As of the end of the reporting period, the ending balance of accounts receivable was CNY 6.393 billion, up 33.52% year over year, while cash received from sale of goods and the provision of services was CNY 27.304 billion, up 10.3% year over year. The rate of cash collection grew far slower than the revenue growth rate, leading to a sharp decline in net cash flow from operating activities.

Net Cash Flow from Investing Activities

Net cash flow from investing activities was -CNY 6.505 billion, with losses reduced by 8.66% year over year. During the reporting period, cash paid for purchasing fixed assets, intangible assets, and other long-term assets was CNY 5.379 billion, down 22.6% year over year. This was mainly because some projects under construction were converted to fixed assets, and the company also slowed the pace of expanding new capacity. Cash paid for investments was CNY 31.026 billion, down 4.6% year over year, and the scale of investment contracted somewhat.

Net Cash Flow from Financing Activities

Net cash flow generated from financing activities was CNY 2.151 billion, down 71.71% year over year substantially. The main reason was that the financing scale decreased. During the reporting period, cash received from obtaining borrowings was CNY 17.217 billion, down 29.4% year over year. Meanwhile, cash paid for repaying debt was CNY 15.765 billion, up 11.4% year over year, resulting in a significant decrease in net cash flow from financing activities.

Potential Risks

Industry Policy Risk

Governments around the world are promoting localized photovoltaic manufacturing and introducing a series of trade protection policies. Domestic market policies have also emerged frequently, which has a significant impact on the supply-demand landscape. If industry policies change in an unfavorable direction, it may lead to obstacles in the company’s product exports and fluctuations in domestic market demand, affecting the company’s operating performance.

Market Competition Risk

The photovoltaic industry attracts large amounts of capital, leading to rapid expansion of capacity across each link. Products become increasingly homogenous, and market competition is growing more intense. The industrial landscape faces reshaping. Supply-demand imbalances created by phased investments and ramp-up cycles at levels such as polysilicon material, monocrystalline silicon wafers, batteries, and modules cause industrial-chain prices to continue staying below full cost, bringing uncertainty to the company’s market environment and operations.

Risk of Volatility in Raw Material Prices

The company’s main products’ raw material is polysilicon. Volatility in raw material prices directly affects the company’s production costs. Price transmission has a certain cycle, which causes timing mismatches and brings uncertainty to the company’s profitability. If raw material prices rise significantly while product prices cannot be passed through in a timely manner, it will compress the company’s profit margins.

Globalized Business and Maxeon Risk

The company’s globalized business faces numerous challenges, including geopolitical issues, energy policies, tariffs, exchange rates, as well as local cultural and legal compliance. The difficulty of operations and the level of risk are relatively high. The company’s controlling subsidiary Maxeon’s reform and restructuring did not meet expectations, and its financial performance and liquidity face significant pressure. If Maxeon’s operating conditions continue to deteriorate, it will adversely affect the company’s overall performance.

Compensation of Directors, Supervisors, and Senior Management

Chairman’s Total Pre-Tax Compensation During the Reporting Period

The chairman, Li Dongsheng, did not separately disclose the total pre-tax compensation received from the company during the reporting period; he received compensation from its related party TCL Technology.

GM’s Total Pre-Tax Compensation During the Reporting Period

The general manager, Wang Yanjun, received total pre-tax compensation of CNY 1.4442 million from the company during the reporting period.

Deputy GM’s Total Pre-Tax Compensation During the Reporting Period

The deputy general manager, Ouyang Hongping, received total pre-tax compensation of CNY 1.0432 million from the company during the reporting period; the deputy general manager, Zhang Changxu, received total pre-tax compensation of CNY 0.9242 million from the company during the reporting period.

CFO’s Total Pre-Tax Compensation During the Reporting Period

The financial director (CFO), Yang Fan, did not separately disclose the total pre-tax compensation received from the company during the reporting period. His term of appointment began on December 1, 2025, and his tenure was relatively short.

Overall, in 2025, TCL Zhonghuan, amid difficulties in the photovoltaic industry, narrowed losses through measures such as optimizing product structure and cost reduction and efficiency improvements. However, industry competitive pressure, raw material price volatility, and risks related to globalized business still pose significant challenges to the company’s operations. In the future, the company needs to further strengthen its core technical advantages, accelerate its integrated layout, and expand overseas markets to enhance its ability to withstand risks and improve profitability.

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Responsible editor: Xiao Lang Express