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H1 projected loss exceeds RMB 3.4 billion, Hillhouse Capital cuts losses and reduces stake; Longi Green Energy bets everything on BC technology in a do-or-die move

Produced by | Bullet Finance

Author | Qiong Ma

Editor | Egg Chief

Art Direction by | Qianqian

Reviewed | Songwen

"The most difficult period for Longi is already behind us," Chairman Zhong Baoshen conveyed this message to the market in the company's 2025 annual report. However, the latest earnings guidance shows that the company expects a net loss of RMB 3.4 billion to RMB 3.8 billion in the first half of 2026.

Eleven consecutive quarters of losses since the fourth quarter of 2023 signal that an operational inflection point has yet to arrive for this photovoltaic industry leader.

Facing a market landscape where TOPCon technology holds absolute dominance, LONGi Green Energy has opted to fully commit to back-contact (BC) battery technology. By the first quarter of 2026, BC shipments accounted for 66.1% of total output, with costs now roughly on par with TOPCon, marking initial success in its technological breakthrough.

However, risks such as looming patent disputes, increasing competition diluting the scarcity premium of its technology, and shrinking pricing power continue to cloud the outlook for LONGi Green Energy’s strategic pivot.

Amid deepening losses, LONGi Green Energy’s share price has plunged more than 80% from its peak, prompting institutional investors to exit their positions.Hillhouse Capital entered the company in 2020 at a high price of RMB 70 per share, investing RMB 15.8 billion. After multiple rounds of share reductions, it exited the top ten shareholder list by the first quarter of 2026, concluding the investment with multi-billion-yuan losses.

As BC technology gradually overcomes cost and scalability hurdles while the entire industry remains mired in overcapacity and price wars, Hillhouse Capital—the self-proclaimed 'friend of time'—has chosen to retreat. Can LONGi Green Energy pull off a turnaround through this 'do-or-die' bet?

1. Industry supply-demand imbalance leads to eleven consecutive quarters of losses

As a leading integrated player in China’s photovoltaic sector, LONGi Green Energy’s core businesses include monocrystalline silicon wafers, solar cells and modules, and it provides diversified solutions across distributed rooftop PV systems, utility-scale ground-mounted solar farms, and building-integrated photovoltaics (BIPV).

Yet even this PV industry leader cannot escape the earnings pain brought about by the sector’s cyclical downturn.

On July 14, LONGi Green Energy announced that it expects a net loss attributable to shareholders of listed companies of RMB 3.4 billion to RMB 3.8 billion for the first half of 2026, compared to a net loss of RMB 2.569 billion in the same period last year. This indicates a further widening of losses year-over-year in the first half of this year, marking the company’s eleventh consecutive quarterly loss since the fourth quarter of 2023.

Regarding the reasons for its loss in this reporting period, LONGi Green Energy explained that the supply-demand dynamics in the photovoltaic (PV) industry have not significantly improved, continuing to exert pressure on corporate operations. Due to multiple factors—including insufficient renewable energy curtailment and a high base from last year’s installation rush—China’s newly installed PV capacity dropped sharply in the first half of the year.

During the reporting period, LONGi Green Energy experienced a year-over-year decline in module sales volume and revenue, suffered from underutilized production capacity and low gross margins, and incurred additional losses from equity investee impairments and foreign exchange losses due to RMB appreciation, collectively resulting in an operating loss.

According to its 2025 financial report, LONGi Green Energy’s capacity utilization rates for monocrystalline wafers and modules stood at 60.62% and 59.67%, respectively, reflecting a persistently weak industry environment, which directly impacted its 2025 performance.

(Chart / LONGi Green Energy Announcement)

In 2025, LONGi Green Energy reported revenue of RMB 70.347 billion, down 14.82% year-over-year, with a net loss of RMB 6.42 billion. In the first quarter of 2026, the company recorded revenue of RMB 11.192 billion, down 18.03% year-over-year, and a net loss of RMB 1.92 billion. According to Choice data, its gross profit margin for the same period was -1.19%.

(Chart / East Money)

By business segment, prices for both monocrystalline wafers and modules declined significantly, leading to notable decreases in revenue and gross margins for the module and cell business.The module and cell business, which accounts for over 85% of the company’s total revenue, posted a gross margin of only 0.19% in 2025, down 6.08 percentage points from 2024. Meanwhile, the wafer and ingot segment recorded a gross margin as low as -5.3%, although this represented an improvement compared to 2024.

The company’s power plant business was adversely affected by the full marketization of renewable power generation, combined with lower grid-connected tariffs and reduced electricity output, leading to a year-over-year decline in gross margin. Other business segments generated relatively small revenues and had minimal impact on overall income.

By geographic region, in 2025, LONGi Green Energy’s sales revenue from Europe, Asia-Pacific, the Americas, and the Middle East & Africa accounted for 15.62%, 12.17%, 13.15%, and 3.81% of total revenue, respectively. With intensifying overseas trade protection measures, the company faces significant risks in its international operations.

(Chart / United Credit Rating)

In fact, Longi Green Energy's losses are not an isolated incident. According to the first-half 2026 earnings forecast, Tongwei Co., Ltd. expects a loss of RMB 4.8 billion to RMB 5.4 billion; TCL Zhonghuan anticipates a loss of RMB 3.0 billion to RMB 3.3 billion; and GCL System Integration forecasts a loss of RMB 320 million to RMB 450 million.

It is evident that as the entire industry grapples with overcapacity and a 'price war,' profit margins across all segments of the supply chain continue to be squeezed, with pressure on specific business lines directly reflected in companies' financial statements.

Faced with industry-wide operational challenges, Longi Green Energy is aggressively advancing the full-scale adoption of BC technology across its photovoltaic business,continuously expanding its product portfolio for diverse application scenarios, significantly increasing overseas sales volume and the proportion of BC product sales. Measures to enhance efficiency and reduce costs through BC technology are being steadily implemented, and ACM (Nano-alloy Matrix Contact) cells have entered mass production.

Meanwhile, the company is accelerating its integrated solar-plus-storage strategy, launching the 'LONGi ONE' all-scenario integrated solar-storage product line covering utility-scale power plants to commercial and industrial parks, rapidly building localized capabilities in overseas markets, and strengthening its system solutions capabilities and competitive advantages.

Regarding questions on the company’s second-quarter utilization rates for monocrystalline wafer and module capacity, current market share of its BC products, and gross margins, Bullet Caijing sent an inquiry letter to Longi Green Energy, but had not received a response as of publication time.

2. Betting on BC Technology in a Do-or-Die Move

BC (Back Contact) cells feature a structure where both the positive and negative electrodes are placed on the rear side of the cell, eliminating front-side gridline shading and maximizing sunlight absorption to enhance photoelectric conversion efficiency.

BC cell technology is one of the three major N-type technology pathways, alongside TOPCon and HJT. Among them, TOPCon has become the dominant product in the photovoltaic market, overtaking PERC thanks to its relatively lower manufacturing cost barrier. In contrast, BC technology has seen slower adoption due to its complex processes, low yield rates, and difficulty in cost control.

According to TrendForce data, global PV module output will reach 669 GW in 2025, of which TOPCon modules will account for 516 GW, representing a market share of approximately 77.1%. Ping An Securities forecasts that BC technology’s market share could exceed 10% in 2026.

Against the backdrop of TOPCon's overwhelming dominance, LONGi has chosen a more challenging path of differentiation. LONGi Green Energy began laying out back-contact (BC) technology as early as 2017, formally announced in September 2023 its firm commitment to vigorously develop photovoltaic BC cells, and 2025 marks a pivotal year for comprehensive breakthroughs in its BC technology, with BC cell production line yields reaching 98.5%.

A greater variable lies in cost breakthroughs. Chairman Zhong Baoshen stated during the April 2026 earnings call that as of March this year, the cost of BC products had already become broadly aligned with that of TOPCon, and the company expects to achieve profitability in its module business by the third quarter of this year.

Technological advances are translating into market share. In 2025, LONGi’s global shipments of BC modules reached 22.87 GW. In the first quarter of 2026, BC module shipments surged to 8.34 GW, accounting for 66.1% of total shipments—up from 25% the previous year. The company plans to ship approximately 80 GW of modules in 2026, with BC modules representing over 65% of the total.

(Image / Shutterstock, licensed under VRF agreement)

Vice President Jiang Dongyu stated that the company will go 'all-in on BC,' gradually retrofitting its existing TOPCon production lines to BC technology.

However, between 'cost parity' and 'profitability,' multiple challenges remain.

First, there is an undercurrent of patent-related risks.Competition in the photovoltaic industry has intensified dramatically, turning patents into strategic weapons for capturing market share. BC technology involves a complex intellectual property landscape. To strengthen its core competitiveness, LONGi Green Energy has built a 'technology forest' and, as of the end of 2025, had secured 510 granted patents related to BC technology. Nevertheless, patent compliance costs in overseas markets remain a significant variable that cannot be ignored.

Second, there is the risk that ongoing projects may fall short of expectations.Since 2025, the company has continued to advance capacity expansion and upgrade projects for BC technology. As of the end of March 2026, the remaining total investment for its major ongoing projects stood at RMB 6.255 billion. Given the severe supply-demand imbalance in the photovoltaic manufacturing sector and the rapid pace of cell technology iteration, these ongoing projects carry risks of underperforming on expected returns and failing to effectively utilize installed capacity.

Third, intensifying industry competition is eroding the scarcity premium.BC technology was once a proprietary technological stronghold of Longi, but as more companies enter the field, its scarcity is at risk of being eroded. Whether the influx of followers will repeat the homogenization dilemma seen with TOPCon remains to be closely watched.

Fourth, the premium pricing space for BC faces downward pressure.Although BC modules currently command a premium of USD 0.01–0.02 per watt over TOPCon, it remains uncertain whether this premium can be sustained—or whether it can cover the costs of transitioning—amid rapidly scaling TOPCon capacity from competitors and ongoing price wars.

3. The share price has continued to decline, and Hillhouse Capital has exited the top ten shareholders list.

According to media reports, at the annual general meeting held on May 22 this year, an investor stated that his investment of RMB 15 million in LONGi Green Energy had dwindled to just RMB 9 million, while other investments made during the same period had already doubled or even multiplied sevenfold. He said he 'felt the pain deeply' and questioned whether the company had made strategic missteps.

In response, Chairman Zhong Baoshen acknowledged that the stock price decline over the past few years has caused losses for investors and expressed understanding of their sentiments. He added that the company maintained strategic discipline over the past two years and refrained from blindly expanding capacity along with the industry.

This investor’s experience epitomizes LONGi Green Energy’s prolonged share price slump. In this multi-year downturn, heavy losses have been suffered not only by retail investors but also by institutional giants—Hillhouse Capital, once hailed as Asia’s largest private equity firm, similarly faced a 'Waterloo' with its investment in LONGi Green Energy.

Hillhouse Capital’s investment in LONGi Green Energy began in 2020, the peak year of exuberance in the photovoltaic sector.

At that time, 'carbon neutrality' was the dominant investment theme, and LONGi Green Energy, dubbed the 'Moutai of photovoltaics,' saw its share price surge nearly threefold that year amid extremely optimistic market sentiment.

In December 2020, Hillhouse Capital invested approximately RMB 15.8 billion through its fund—HHLR Management Co., Ltd. – China Value Fund—to acquire 226 million shares (6% of the company’s total share capital) from Li Chun’an, LONGi’s former second-largest shareholder, at RMB 70 per share, roughly a 10% discount to the prevailing market price.

Shortly after the transaction was completed, Longi Green Energy’s share price surged to RMB 125 per share in February 2021, giving Hillhouse Capital a paper profit of approximately RMB 12.4 billion at one point.

(Chart / East Money)

However, the good times did not last long. As the photovoltaic industry shifted from supply shortages to mismatches between supply and demand and overcapacity, the operating environment for companies deteriorated sharply. Longi Green Energy’s performance began to decline significantly starting in Q3 2023 and slipped into losses by Q4.

Meanwhile, Longi Green Energy’s share price continued to fall from its peak. As of the close on July 22, the stock was trading at RMB 12.57 per share, down more than 80% from its all-time high in November 2021, with a market capitalization of RMB 95.256 billion.

Hillhouse Capital, as a top-tier investment firm, had already attempted in 2023 to indirectly reduce its stake via securities lending arrangements to circumvent disclosure obligations. This action was deemed by the China Securities Regulatory Commission (CSRC) as 'suspected violation of restrictions on share transfers' and triggered a formal investigation, forcing Hillhouse to suspend its divestment plan.

In 2024, under regulatory requirements, Hillhouse Capital repurchased 1.2813 million shares of Longi Green Energy, bringing its stake back up to 5%. As HHLR further fulfilled its prior commitment to increase holdings, its ownership stabilized at 5.5%.

It was not until the second half of 2025 that Hillhouse Capital resumed its divestment.

Between June and August 2025, Hillhouse sold approximately 37.5572 million shares through centralized bidding, raising about RMB 5.84 billion at an average price ranging from RMB 14.88 to RMB 16.62 per share. Following this sale, its stake was precisely reduced to 4.999999%, just below the 5% disclosure threshold.

(Source: Longi Green Energy announcement)

Thereafter, shielded by the fact that no further disclosures were required, Hillhouse continued large-scale divestments. By Q4 2025, its stake had fallen to 3.07%; as of Q1 2026, Hillhouse had completely exited Longi Green Energy’s list of top ten shareholders.

For investors, the story of Longi Green Energy serves as a profound case study on 'cyclical judgment and technology roadmap selection.' Even elite institutions were not immune to emotional biases at cyclical peaks.

Whether Longi Green Energy has already passed its most difficult phase in this brutal elimination round, and whether it can ultimately navigate through the cycle with its BC technology, will require further financial reports for validation.

*The featured image in this article is sourced from SheTu.com under the VRF license.

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