(Yicai Global) Nov. 28 -- Shuangliang Eco-Energy Systems said the Chinese maker of photovoltaic wafers aims to keep its competitive edge by adding a new solar wafer plant to its production capacity at a cost of CNY10.5 billion (USD1.5 billion).

The plant will be built near its production base in Baotu in China’s Inner Mongolia Autonomous Region and will be able to turn out 50 gigawatt-hours of large-size monocrystalline silicon wafers a year, the Jiangyin, Jiangsu province-based company said in a statement on Nov. 25.

While China’s silicon wafer production capacity is tending toward oversupply and prices may drop, Shuangliang said it needed to expand further to maintain its leading position in the large-size wafer market as competition in the monocrystalline wafer sector is shifting toward the comprehensive market strength of industry players.

Shuangliang’s first solar wafer plant in Baotu, with a planned annual capacity of 40 GWh, while still being built, began shipping products late last year and has helped the company secure about CNY90 billion (USD12.5 billion) of long-term supply deals from 11 big customers since September last year.

Construction work on the new plant is expected to kick off in the first half of next year, with shipments starting in the second year, and full capacity reached in the fourth year, the firm said.

Shuangliang expects to raise between CNY3 billion ad CNY7 billion (USD417 million and USD972 million) through bank loans and financial leasing, it said, with the rest coming from its own funds or the sale of new shares, if necessary. At the end of September, the firm had as much as CNY6.1 billion of cash in hand, plus an ample credit line with financial institutions, it added.

Net profit at Shangliang surged 369 percent from a year ago to CNY830 million in the first three quarters of 2022, its latest earnings report showed in mid-October. Revenue jumped 286 percent to CNY8.7 billion. The company attributed the robust performance to higher silicon wafer prices, higher output due to new production capacity, a swelling order book, and strong demand for processing equipment.

Concerns over industry-wide overcapacity knocked Shuangliang’s stock price today. The company’s shares [SHA: 600481] slipped 3.1 percent to close at CNY14.22 (USD1.98). The broader Shanghai market fell 0.8 percent.

Editor: Futura Costaglione