Challenges of Secondary Listings: The Rise and Fall of Sungrow Power and JA Solar Technology

Secondary listings present unique challenges: the rise and fall of Sungrow Power Supply and JA Solar Technology. On September 15, 2025, the “King of Inverters,” Sungrow Power Supply saw its stock price reach new heights, surging over 11% during the trading session to hit a high of 149.32 CNY per share. By the close on September 24, the price stood at 154.20 CNY, giving the company a market capitalization of 319.7 billion CNY, surpassing the combined market value of Longi Green Energy (131.9 billion CNY) and Tongwei Co., Ltd. (97.9 billion CNY), thus ranking first in the photovoltaic equipment sector. Over the year, the company’s stock has increased by 111.96%, setting it apart in the industry.

The recently released mid-year report also showcased impressive results, with revenues growing by 40.34% to 43.53 billion CNY in the first half of the year, and net profits rising by 55.97% to 7.735 billion CNY. According to data from Dongfang Caifu Choice, Sungrow Power Supply reported the highest net profit in the photovoltaic equipment sector for the first half of 2025. Most of the top ten profitable companies are involved in inverters and photovoltaic processing equipment, while the ten companies with losses are primarily in the photovoltaic cell, module, and silicon materials sectors. Clearly, from any perspective, Sungrow Power Supply is steadily improving.

Furthermore, on August 26, 2025, the company announced plans to issue H-shares and apply for a listing on the main board of the Hong Kong Stock Exchange to deepen its global strategy, enhance its international brand image, and improve its core competitiveness. The ongoing innovations and breakthroughs at Sungrow Power Supply are indeed encouraging. However, the market competition is complex and ever-changing, and the fortunes of individual companies can vary greatly. In contrast to the overseas energy transition, inverter companies are developing energy storage as a second growth line. Under the shadow of overcapacity, many leading photovoltaic companies are still struggling, waiting for a turning point, as evidenced by the declining performance of JA Solar Technology, which is also planning a secondary listing. Given the market uncertainties, can Sungrow Power Supply maintain its leading position, and what gaps still need to be filled? When will JA Solar Technology experience a turnaround?

Profit Growth and Financial Concerns: Sungrow Power Supply was founded in 1997, but the early years were challenging, relying on traditional power products to sustain operations. It wasn’t until 2003, under the leadership of founder Cao Renxian, that the company developed China’s first photovoltaic inverter with complete independent intellectual property rights, successfully connecting to the grid in Shanghai and breaking the monopoly of foreign companies. Following this breakthrough, the company decisively shifted its focus entirely to photovoltaic inverters in 2004, entering the energy storage market in 2006 and gradually accelerating its growth. The company went public on the Shenzhen Stock Exchange in 2011, becoming the first stock in China’s new energy power supply industry.

After going public, the company continued to expand, establishing Sungrow New Energy in 2014 in Hefei High-tech Zone to focus on the research and development of new energy power plants, project development, and solution sales, gradually building a diversified business model. However, with years of expansion, the company’s debt ratio has been on the rise. According to data from Dongfang Caifu Choice, the debt ratio was only 25.01% in 2011, but surpassed 50% and 60% in 2014 and 2019, respectively, and reached 61.33% by mid-2025, with total liabilities of 72.612 billion CNY, an 18.9% increase year-on-year.

Notably, during an investor survey on August 26, 2025, the company revealed it had officially established an AI Data Center (AIDC) division and plans to launch related power products in 2026. On September 14, reports surfaced that Sungrow Power Supply plans to establish a battery storage factory in Egypt with an annual capacity of 10 GW. While these strategic moves are forward-looking, they also imply significant financial investment, which could intensify financial pressure. By the end of the first quarter of 2025, the company’s receivables amounted to 27.02 billion CNY, which further increased to 29.101 billion CNY by the end of the second quarter, and inventory grew by 5.58% to 29.706 billion CNY, with impairment losses reaching 577 million CNY, significantly higher than the previous year. The cash ratio dropped to 0.5, with the net cash flow from operating activities only 0.44 times the net profit.

To alleviate financial pressures, Sungrow Power Supply has engaged in various financing activities in recent years. According to Shenzhen Business News, since its A-share listing in 2011, the company has raised over 18.3 billion CNY. This includes 8.154 billion CNY from direct financing, accounting for 44.51%, and indirect financing of 10.165 billion CNY, which makes up 55.49%. Additionally, data from Tianyancha shows that from 2013 to July 2025, the chairman and actual controller, Cao Renxian, has conducted 51 share pledge operations, with 28 occurring in the last five years alone (from September 16, 2020, to present). Although each pledge remains below 3% and 18 have been released, the frequent pledging has raised concerns among some commentators about the controlling shareholder’s ongoing financial needs.

Splitting and Reductions: A Careful Examination of Growth Uncertainties: In December 2023, the company announced plans to spin off Sungrow New Energy for listing and to increase its capital by 1 billion CNY. Subsequently, several investors joined in, and after a series of capital operations, Sungrow New Energy’s pre-investment valuation exceeded 19 billion CNY. In October 2024, Sungrow Power Supply announced that its holding subsidiary, Sungrow New Energy, plans to acquire 10.24% of Taihe Intelligent; by June 2025, Taihe Intelligent announced plans to acquire 100% of Sungrow New Energy’s subsidiary, Sungrow Yuchu; by September of the same year, Sungrow New Energy increased its stake in Taihe Intelligent to 26.03%, strengthening its control. This series of actions has been interpreted by some as a strategic deployment for “backdoor listing,” which, if successful, would not only enhance capital independence but also relieve financial pressure on the parent company.

In addition to seeking a secondary listing on the Hong Kong stock market, Sungrow Power Supply also plans to issue Global Depositary Receipts (GDR) in Frankfurt by the end of 2024, aiming to raise funds primarily to support technological upgrades and capacity expansion in the energy storage business, including a 2 billion CNY investment in an advanced energy storage equipment manufacturing project in Anhui. In the first half of 2025, revenue contributions from photovoltaic inverters, energy storage systems, and new energy investment development were 15.327 billion CNY, 17.803 billion CNY, and 8.398 billion CNY, reflecting growth rates of 17.06%, 127.78%, and -6.22%, respectively, with new energy investment development being the only segment in decline. According to financial reports, Sungrow New Energy is the primary executor of this business.

From 2022 to 2024, Sungrow Power Supply’s revenue was 40.26 billion CNY, 72.25 billion CNY, and 77.86 billion CNY, with new energy investment contributing 11.604 billion CNY, 24.734 billion CNY, and 21.003 billion CNY, accounting for 28.82%, 34.23%, and 26.98% of total revenue. Sungrow New Energy’s revenue was 12.877 billion CNY, 26.575 billion CNY, and 23.318 billion CNY, making it the backbone of this business field. However, revenue saw a decline in 2024, and although the first half of 2025 showed a slight increase from 9.87 billion CNY to 9.94 billion CNY, net profit fell from 640 million CNY to 596 million CNY. Furthermore, the gross margins of the other two major businesses, photovoltaic inverters and energy storage systems, also decreased by 1.88 and 0.16 percentage points, respectively, to 35.74% and 39.92%.

It is noteworthy that the business structure of Sungrow Power Supply has undergone significant changes; in the first half of 2025, revenue from photovoltaic inverters and other power electronics conversion devices reached 15.327 billion CNY, representing a year-on-year increase of 17.06%, making up approximately 35.21% of total revenue. Revenue from energy storage systems reached 17.803 billion CNY, a remarkable year-on-year growth of 127.78%, accounting for approximately 40.89% and surpassing inverters to become the primary business for the first time. However, in February of this year, relevant departments clearly canceled mandatory energy storage requirements. While the energy storage market was not entirely adversely affected, multiple policies encouraging “demand-based” and “reasonable” energy storage showed positive effects, opening up broader space for long-term development. Whether short-term demand expectations will fluctuate significantly and impact the release of business orders remains to be observed by Sungrow Power Supply, as energy storage has become an essential growth point.

Looking toward the overseas market as another potential growth area, it contributed 36.294 billion CNY in revenue in the first half of the year, accounting for 40.29% of total revenue, with a gross margin of 40.29%. While this performance is commendable, potential risks cannot be overlooked. For instance, the U.S. market, a critical component of overseas business, is currently facing numerous uncertainties, such as the final results of anti-subsidy measures and ongoing adjustments to the IRA guidelines. If these policy changes are not managed properly, they may pose challenges to the company’s business expansion and, in turn, undermine overall overseas performance and market confidence. On July 25, the company announced that some directors and executives plan to reduce their holdings by no more than 329,700 shares between August and November. Although this reduction accounts for a small percentage of total shares, it could raise investor concerns about the company’s prospects during this sensitive market period, negatively affecting short-term market sentiment.

In summary, while Sungrow Power Supply appears robust, underlying concerns persist as it navigates a critical period of growth. Strong profit increases are encouraging, but addressing liquidity and eliminating business uncertainties is urgent. To effectively engage the market, it must focus on improving and refining its operations.

Continuous Losses and Negative Gross Margins in Core Business: In contrast, JA Solar Technology faces even greater challenges, still battling to return to profitability. In the first half of 2025, the company reported revenues of 23.905 billion CNY, a decline of 36.01% year-on-year, with net losses reaching 2.580 billion CNY, widening by 195% from an 874 million CNY loss in the same period last year. Analyzing quarterly performance since 2024, the company has experienced losses in five of the last six fiscal quarters, with only a brief profit in the third quarter of last year. While the loss in the second quarter of 2025 was notably smaller than in the first quarter, the overall profitability remains under significant pressure.

The primary reasons for these challenges can be attributed to two key factors: first, overcapacity in the photovoltaic industry has led to a persistent decline in product prices; second, international trade barriers have impacted overseas operations. For instance, in the first half of 2025, revenue from the core photovoltaic module business was 21.777 billion CNY, a drastic decline of 38.35%, which still accounted for 91.10% of total revenue and directly dragged down overall performance. Revenue from photovoltaic power station operations increased by 20.12% to 729 million CNY, but its 3.05% share in total revenue limited its impact on performance. Other business revenues slightly decreased by 2.11% to 1.399 billion CNY, representing a relatively stable contribution.

It is crucial to note that the gross margin for photovoltaic modules has dropped to -5.98%, down 10.51 percentage points year-on-year, even falling below the company’s overall gross margin level of -3.53%. This indicates that sales revenue from the main product is insufficient to cover production costs, reflecting significant operational pressure. Regionally, domestic revenue reached 12.063 billion CNY, accounting for 50.46%, while overseas revenue was 11.842 billion CNY, making up 49.54%. The latter is particularly vulnerable to trade policies in regions like Europe and the U.S., especially with the rise of anti-dumping measures and carbon border adjustment mechanisms, which could impact pricing and shipping.

Fortunately, the domestic market has benefited from an increase in photovoltaic installations, leading to a relatively small decline; however, it remains unable to completely escape the adverse effects of overall industry price declines. As the industry undergoes significant adjustments, companies are actively seeking transformation. JinkoSolar is focusing on the energy storage sector, Longi Green Energy is aggressively advancing differentiated competition with BC technology while entering the energy storage market, and Trina Solar’s energy storage segment has started contributing stable revenue. In this context, JA Solar Technology has also set clear turnaround goals through an employee stock ownership plan, with performance assessment years set for 2025 and 2026. The 2025 assessment aims for a net profit reduction of no less than 5% based on the 2024 net profit, while the 2026 target is to achieve positive net profit. While these goals are inspiring, the challenge lies in execution, as evidenced by the dual decline in profit and the worsening losses in the first half of the year, making it difficult to meet these targets. The second half of the year will test the management team’s strategic acumen.

Short-term Debt Reduction and Long-term Debt Increase: Beware of Idle Capacity Risks: By the end of the first half of 2025, JA Solar Technology’s net assets attributable to shareholders stood at 24.80 billion CNY, down 11.10% from the end of the previous year, primarily due to the 2.58 billion CNY loss during the reporting period, leading to an increase in the debt ratio from 74.74% to 75.91%. The good news is that the company is actively optimizing its short-term liabilities: short-term loans decreased by 37.67% in the first half of the year, and the net cash flow from operations reached 4.508 billion CNY, allowing for the repayment of some short-term debts, thereby improving the current ratio to 1.25 and effectively alleviating short-term liquidity risks and enhancing financial security. However, long-term debt continues to rise, increasing by 30.34% year-on-year during the reporting period and accounting for 46.34% of total liabilities. This debt primarily supports the construction of overseas capacity, such as the Oman factory and integrated solar storage projects, aligning with the company’s strategy to establish a global supply chain. Nevertheless, the corresponding interest expenses for long-term debt have reached 648 million CNY; if the industry remains sluggish, there is a risk that the interest burden could erode profitability.

Assessing capacity utilization does not seem overly harsh. By the end of 2024, the module capacity had reached 100 GW, but based on the estimated shipment volume of 33.79 GW in the first half of 2025, the capacity utilization rate was less than 70%. Meanwhile, the fixed asset scale was 38.2 billion CNY, making up 36.18% of total assets, indicating significant depreciation pressure. Among long-term borrowings, 18.56 billion CNY (49.96% of non-current liabilities) was allocated for capacity construction. If future industry recovery falls short of expectations, the company may face a scenario of idle capacity alongside debt burdens. In this context, advancing the H-share issuance plan is critically important. If successful, JA Solar Technology expects to raise 5 to 8 billion CNY, which could help reduce the debt ratio to below 70%, significantly easing long-term repayment pressures and providing essential funding for its global strategy. The raised funds are primarily intended for overseas capacity construction, expanding overseas marketing channels, and repaying bank debts, fully reflecting the company’s strategic commitment to overseas markets. However, the IPO process still faces uncertainties. The company announced on May 26 that the China Securities Regulatory Commission had accepted its H-share listing filing, but on June 6, it was requested to provide additional explanations regarding safety production penalties and whether they constitute significant violations or affect eligibility for listing.

Additionally, the overseas expansion strategy brings new development opportunities, but it also comes with various challenges. Trade barriers, compliance costs, and other factors could impact overseas profitability. The company’s financial reports also highlight the risk that “international trade frictions may erode overseas gross margin advantages.” Overall, JA Solar Technology’s proactive efforts to optimize its debt structure and actively push for public financing reveal their development potential. However, both internal and external challenges remain considerable, as the company continues to fight in challenging circumstances while hoping for an upturn. Even if the H-share issuance is successfully completed, future focus will need to be on enhancing fund utilization efficiency, optimizing asset structures, strengthening product competitiveness, reinforcing business resilience, and effectively managing overseas operational risks.

Leveraging Valuable Adaptability: Preparing for Launch: Businesses have their ups and downs, and industries experience their cycles. The key is to confront problems head-on and resolve them, using operational resilience to navigate through uncertainty and achieve sustainable growth. In the face of the severe challenges posed by the industry’s downturn, both JA Solar Technology and Sungrow Power Supply have shown a determination to respond to change, with some positive developments providing encouragement. For instance, in the first half of 2025, JA Solar Technology made significant strides in cash flow management, achieving a net cash flow from operating activities of 4.508 billion CNY, a substantial improvement compared to a net outflow of 1.859 billion CNY in the same period of 2024, representing an impressive year-on-year increase of 342.44%. Further analysis of cash flow structure reveals that the cash flow from investment activities also improved, resulting in a net inflow of 877 million CNY, significantly better than the net outflow of 8.114 billion CNY in the previous year; the financing cash flow maintained a net inflow of 1.608 billion CNY, indicating that the company’s financial control strategies are yielding positive results.

In the face of declining revenues and falling module prices, JA Solar Technology has adhered to a “produce according to sales” model, effectively controlling inventory size. The ending inventory balance was 9.98 billion CNY, a year-on-year decrease of 5.58%, thus reducing capital occupancy. Additionally, through optimized supply chain management, accounts payable decreased by 15.34%, further releasing operating funds and showcasing the company’s proactive and effective execution in responding to industry challenges, thereby providing more room to withstand market pressures.

On the other hand, Sungrow Power Supply continues to confront industry changes through ongoing technological innovation and global expansion. The company is committed to development driven by technology, closely aligned with market demand, and continually breaking through critical core technologies to transform research advantages into product barriers. Currently, Sungrow Power Supply has established six major R&D centers in Hefei, Shanghai, Nanjing, Shenzhen, Germany, and the Netherlands. It has also set up a central research institute responsible for tackling cutting-edge technology challenges and high-value patent layouts. In the first half of 2025, the company invested 2.037 billion CNY in research and development, a 37% year-on-year increase. By the end of the reporting period, the total number of R&D personnel reached 7,120, with the R&D team accounting for approximately 40%. In terms of intellectual property, during the reporting period, the company applied for 1,211 new patents, bringing the total patent applications to 10,541, including 5,690 invention patents, showcasing Sungrow Power Supply’s significant technological accumulation and achievements in independent innovation. The company strictly implements an Integrated Product Development (IPD) process, ensuring quality control throughout the entire process from demand analysis to product mass production.

Reflecting on the business front, the energy storage sector saw significant growth in the first half of the year, surpassing the inverter business for the first time, thus creating a new growth point that validates the company’s forward-looking layout. Regarding international expansion, the company established a global strategy from its inception, and its overseas photovoltaic inverter capacity has reached 50 GW, with over 20 branches, more than 60 representative offices, and over 520 service outlets worldwide. As the impact of tariffs lessened in the second quarter, risks in the U.S. business also eased, coupled with rising demand in European markets, leading to rapid growth in the energy storage business. Years of global networking efforts have finally started to yield results.

Overall, while both companies exhibit differing strategies for responding to challenges, they both demonstrate strong adaptability and resilience for development. Indeed, the evolving circumstances provide support for their secondary listings. As the saying goes, “No winter lasts forever.” The recovery observed in the inverter sector during the first half of the year may signal that the turning point for the photovoltaic industry is not far off. Those who can seize this pivotal moment of preparation and build a solid foundation through innovation and skill may emerge as leaders in the upcoming recovery phase. Will it be Sungrow Power Supply or JA Solar Technology?