TCL Zhonghuan has suffered nearly 10 billion yuan in losses for two consecutive years. Did Li Dongsheng's photovoltaic gamble fail?

From a long-established state-owned enterprise in Tianjin to a photovoltaic giant under TCL, TCL Zhonghuan (002129.SZ) was once considered a “blue-chip stock” by capital markets. However, the 2025 annual report disclosed on the evening of March 24, 2026, was like a bucket of cold water, dashing the hopes of many that its “cycle had bottomed out.”

The 2025 annual report shows that in 2025 TCL Zhonghuan achieved operating revenue of 29.050 billion yuan. While this was a slight year-on-year increase of 2.22%, net profit attributable to shareholders of the listed company recorded -9.264 billion yuan. This is the second consecutive year of losses for the company, with the loss amount nearing the 10 billion yuan mark. At a time when the photovoltaic industry is entering deep waters, TCL Zhonghuan is not only enduring the industry’s collective “pain,” but also swallowing the “bitter consequences” brought by its own strategic development.

I. Financial predicament of a photovoltaic giant

Financial data show that over the past two years TCL Zhonghuan has continued to record massive losses. In 2024, its net profit was -9.818 billion yuan, and in 2025, it was -9.264 billion yuan. This is already the second consecutive year that TCL Zhonghuan has posted losses on the order of 10 billion yuan. Since the fourth quarter of 2023, the company has been in a loss position for nine consecutive quarters.

Although the company’s total operating revenue in 2025 achieved a modest growth of 2.22%, the performance of its business segments is not encouraging. As the company’s main business, the new energy photovoltaic business achieved sales revenue of 22.725 billion yuan in 2025, down 0.28% year over year, accounting for 78.23% of total revenue. Among them, its photovoltaic silicon wafer business generated revenue of 12.238 billion yuan, down 26.49% year over year, with a gross margin of -19.44%; its photovoltaic cell and module business generated revenue of 9.324 billion yuan, up 60.45% year over year, but its gross margin is also negative, reaching -6.22%. This means that both of the company’s two core products are in a situation of “selling more but losing more.”

The additional provision for asset impairment further increased the performance burden. In 2025, TCL Zhonghuan made total asset impairment provisions of 4.622 billion yuan. This included 3.185 billion yuan in provisions for inventory price declines, 0.502 billion yuan in provisions for impairment of fixed assets, and 0.107 billion yuan in provisions for bad debt reserves.

In addition, due to factors such as the continued imbalance between supply and demand in the photovoltaic industry, weak market demand, changes in target-market policies, and the fact that Maxeon Solar Technologies, Ltd.’s own operations have not improved significantly, in 2025 its production was essentially at a standstill. The company made provisions for goodwill impairment of 0.56 billion yuan for it. These impairment losses totaled more than 3.9 billion yuan in total impact on pre-tax profit, becoming an important component of the company’s massive losses.

The deterioration of the asset-liability structure is also not to be ignored. As of the end of 2025, TCL Zhonghuan’s total assets were 117.997 billion yuan, down 6.05% from the end of 2024; net assets attributable to shareholders of the listed company were 21.968 billion yuan, down sharply by 28.92% year over year. The company’s asset-liability ratio further rose to 66.73%, up 3.73 percentage points from the end of 2024. This was the first time since 2018 that it returned to above 60%, after a six-year gap, and the pressure to repay debt increased significantly.

Even more severe is that the net cash flow from operating activities was only 1.144 billion yuan, down 59.72% from 2.839 billion yuan in 2024. The company explained that this was mainly because the sales scale of its photovoltaic product business increased, accounts receivable turnover increased, and sales cash collections decreased.

II. Management changes and strategic adjustments

Along with the 2025 performance report, a series of major personnel changes at TCL Zhonghuan were also disclosed. The company’s board of directors has recently received resignation requests from non-independent directors Shen Haoping, Liao Qian, and Zhang Changxu. For personal reasons, they applied to resign as company directors and as members of the corresponding special committees under the board. Among them, Zhang Changxu will continue to serve as the company’s senior vice president, but no arrangements for Shen Haoping and Liao Qian were announced.

Industry insiders refer to Shen Haoping as the “soul person” at TCL Zhonghuan. He has worked at TCL Zhonghuan for more than 40 years and previously served as CEO for as long as 17 years. In August 2024, considering both work needs and personal capacity, he stepped down as CEO, but still retained positions such as vice chairman and non-independent director. Some industry observers believe that this departure means Shen Haoping has further moved away from the company’s core management team, and he may completely shed his core management roles.

The person originally positioned to replace Shen Haoping as CEO was Wang Yanjun, a “post-80s” president who had followed him for many years and was cultivated by him. However, according to the latest announcement, to focus on the management of the company’s semiconductor materials business, Wang Yanjun recently applied to resign as CEO and as the company’s legal representative. After resigning, Wang Yanjun will focus on the company’s semiconductor materials business and, in the role of vice chairman, continue to support the company’s long-term strategy and business development.

Regarding management adjustments, the board of directors agreed to appoint Ouyang Hongping as the company’s CEO and legal representative, acting in place of the company’s Chief Operating Officer; and to appoint Zhang Haipeng as the company’s senior vice president, focusing on the management and development of the new energy photovoltaic materials business. The announcement shows that Ouyang Hongping previously served as senior vice president at TCL Huaxing, general manager of MCSBU, general manager of the OLED back-end platform, and general manager of Huaxian Optoelectronics, among other roles; Zhang Haipeng currently serves as senior vice president of the company and general manager of the photovoltaic materials business unit.

Over the past year, there have been multiple changes in the directors, supervisors, and senior executives (D/S/SE) at TCL Zhonghuan, with several management positions successively taken over by executives from the TCL group. In August 2025, Hu Wei resigned as secretary to the board of directors, and Li Lina took over. In December 2025, Zhang Changxu resigned as CFO and was transferred to senior vice president, focusing on power station business and strategic project management, while Yang Fan took over as CFO. These personnel changes have been interpreted by the market as a clear signal that controlling shareholder TCL Technology is strengthening control over the company.

At the strategic level, TCL Zhonghuan is undergoing a transition from a specialized silicon wafer company to an integrated module supplier. In January 2026, the company announced that it plans to invest in DaoYin New Energy through multiple methods, including acquiring shares, accepting voting-right delegation, and capital increases. According to industry research report data, among the global module shipment rankings for 2025, TCL Zhonghuan and DaoYin New Energy are tied for 10th. If the 2026 acquisition and integration are completed smoothly, the merged company is expected to move into a higher tier in the industry.

Semiconductor materials business has become one of the few bright spots for the company. In 2025, this business achieved operating revenue of 5.707 billion yuan, up 21.75% year over year, and accounted for 19.64% of total revenue; the gross margin reached 18.94%, up 5.70 percentage points year over year. The company stated that the semiconductor materials business adheres to the strategy of “leading domestically and catching up globally.” With product shipments exceeding 1200MSI, both revenue and shipment volume continue to rank among the top in the domestic semiconductor silicon wafer industry.

III. Intensifying industry competition and challenges from excess capacity

The predicament faced by TCL Zhonghuan today is, in essence, the result of multiple factors interweaving: industry cycles, strategic decisions, and management capabilities. From the perspective of the industry environment, the photovoltaic industry is experiencing severe “involution-style” competition. Supply and demand remains imbalanced across the main segments of the industrial chain, product prices are adjusting at the bottom, and the industry overall is in a severely loss-making state. This supply-demand imbalance directly leads to negative gross margins for the company’s core business, and it is difficult to reverse in the short term.

The capital operation track of Li Dongsheng, the company’s actual controller, is worth paying attention to. In 2020, TCL Technology acquired Zhonghuan Group for 12.5 billion yuan, completing the mixed-ownership reform. Li Dongsheng proposed the strategic goal of “global TOP1 in silicon wafers and global TOP3 in modules.” This acquisition has been viewed as Li Dongsheng’s attempt to replicate his cross-industry success experience in the panel industry. However, the competitive landscape and cyclical characteristics of the photovoltaic industry are significantly different from those of the panel industry, and simply copying the model did not produce the expected results.

The difficulties of the Maxeon investment project highlight the challenges of the company’s internationalization strategy. In 2019, TCL Zhonghuan invested 298 million US dollars to take a stake in Maxeon, which had been spun off from SunPower, attempting to open up the market with its patents and overseas channels. However, Maxeon was hit by factors such as the rollback of subsidies in Europe and the United States and high interest rates. In 2023, it incurred a loss of 275 million US dollars, dragging TCL Zhonghuan’s impairment down by more than 1.8 billion yuan. In 2025, due to Maxeon’s operations not improving significantly, production was essentially at a standstill, and the company made a goodwill impairment provision of 0.56 billion yuan for it. This case shows that risk control capabilities in overseas acquisitions are crucial to the company.

Changes in employee headcount reflect the transmission of operating pressure. As of the end of 2025, the company’s total number of employees in service was 12,598, down 10.11% from 14,015 at the end of the prior year, and continuing to shrink from 19,489 at the end of 2023. This data reflects personnel optimization and structural adjustments made under operating pressure, but it may also affect long-term talent reserves and technical accumulation.

In terms of future challenges, TCL Zhonghuan needs to seek breakthroughs across multiple dimensions. First is how to control costs and improve cash flow at the bottom of the industry cycle, avoiding the vicious cycle of “the more you produce, the more you lose.” Second, whether the integrated transformation of the module business can succeed will require the company to achieve substantive progress in brand building, channel expansion, and technological innovation. Third, whether the semiconductor materials business can continue to grow and become a stabilizer for the company to get through the cycle. Fourth, adjustments to its overseas footprint, especially in disposing of and revitalizing investment projects such as Maxeon.

From the perspective of financial risk indicators, the company has multiple issues that need attention. According to the analysis of the Tonghuashun financial diagnosis large model, over the past five years TCL Zhonghuan’s overall financial condition has been below the industry average. Specifically, its growth capability, operating capability, and solvency are generally average. The return on net assets averages -3.60%, the operating profit margin averages -8.65%, and the total asset turnover averages 0.24 times per year. These indicators all show that the company’s operating efficiency and profitability face serious challenges.

For fiscal year 2025, the company clearly will not distribute profits, will not pay cash dividends, will not issue bonus shares, and will not increase share capital by converting capital reserve into share capital. This is the company’s second consecutive year without implementing dividends, reflecting the company’s high emphasis on cash flow under the current operating conditions. According to the announcement, for 2025 the net profit attributable to shareholders of the listed company in the consolidated statements was -9.264 billion yuan, and the distributable profits at period-end were -3.845 billion yuan, meaning it does not meet conditions for dividends.

Looking ahead to 2026, TCL Zhonghuan said it will adhere to the operating philosophy of “strategy leading, innovation-driven, advanced manufacturing, and global operations,” strengthen its weaknesses in business, actively promote mergers and acquisitions restructuring and new capability building, strengthen domestic business, expand into overseas markets, and reshape core capabilities. However, in the face of performance losses that have continued for two consecutive years, along with an industry cycle that has not yet bottomed out, whether the company can get out of its predicament in 2026 remains the focus of market attention.

From a more macro perspective, TCL Zhonghuan’s case reflects the transformation pains faced by China’s photovoltaic industry after rapid development. Factors such as excess capacity, price wars, and accelerated technology iterations together constitute the industry’s current difficulties. For TCL Zhonghuan, how to balance short-term survival with long-term development, how to find differentiated advantages in fierce market competition, and how to achieve a balance between capital operations and real-economy business operations will be key to determining its future fate. (Produced by the “Wealth Management Weekly - Caishi Hui”)