In the solar industry, any company that can seize new technological opportunities has the potential for rapid growth. Sichuan Yingfa Ruineng Technology CO., LTD., which recently submitted its prospectus to the Hong Kong Stock Exchange, exemplifies this phenomenon.

Yingfa Ruineng is a "young" professional solar battery manufacturer. Established in 2016, it has only nine years of operating history. However, it has emerged as a "dark horse" in the solar battery industry in recent years.

According to authoritative data, Yingfa Ruineng was not among the global top five before 2024. In 2024, it entered the top five for the first time, ranking fourth overall and third among specialized TOPCon solar battery manufacturers. In the first half of this year, Yingfa Ruineng advanced further, with shipment volumes ranking third globally.

How did Yingfa Ruineng achieve global third place in just nine years?

**Two Critical Decisions Lead Zhang Fayu Family to Build a Global Third-Ranked Company**

The founder of Yingfa Ruineng is a "cross-industry" entrepreneur.

In 2016, Zhang Fayu, founder of Yingfa Group, identified opportunities in the solar battery industry. At that time, the government launched a new round of the solar "Top Runner Program," promoting higher photoelectric conversion efficiency in solar products, leading to large-scale commercial application of more efficient PERC batteries (P-type batteries). Zhang Fayu accurately judged the potential of P-type batteries and established Yingfa Ruineng to enter the solar battery sector.

Before founding Yingfa Ruineng, Zhang Fayu already had successful entrepreneurial experience. Born in 1963 to an ordinary farming family in Tianchang, Anhui Province, he quit his job in 1986 to return home and start a family workshop, processing high-voltage caps and high-voltage packages for television components, earning his first fortune and accumulating assets exceeding ten million yuan.

In 1990, when Shanghai Pudong became a development zone, Zhang Fayu's keen instincts told him that Pudong would experience rapid development. After multiple site visits, he made a crucial decision: investing over 3.5 million yuan to purchase 50 acres near Pudong Airport and establish Shanghai Pudong Yingfa Electronics Co., Ltd., primarily producing electronic components. This small company later evolved into the diversified Yingfa Group.

After deciding to enter the solar battery industry, Zhang Fayu returned to his hometown in Tianchang, Anhui, where he established Yingfa Ruineng, which quickly developed and established itself in the solar battery industry.

In 2022, Yingfa Ruineng made another critical judgment and decision: entering the N-type TOPCon battery sector. Compared to P-type batteries, N-type batteries have higher mass production efficiency. This decision carried significant risk, as TOPCon battery shipments in 2021 were only 4.8GW, a fraction of PERC battery shipments of 164GW. If TOPCon batteries failed to rapidly replace P-type batteries, Yingfa Ruineng's massive investment would face enormous risk.

However, Yingfa Ruineng's bet paid off. N-type batteries experienced rapid growth, becoming the industry mainstream by 2024 with over two-thirds market share.

Meanwhile, P-type battery market shipments declined from 331.4GW in 2023 to 129.5GW in 2024. Yingfa Ruineng's P-type battery gross margin plummeted from around 11% to -17.3%, leading to the shutdown of P-type battery production lines in September 2024.

However, with its leading N-type battery capacity layout, Yingfa Ruineng leaped into the global top five in 2024 and became the world's third-largest specialized TOPCon battery manufacturer.

From a financial perspective, Yingfa Ruineng's revenue from 2022-2024 was 5.643 billion yuan, 10.494 billion yuan, and 4.359 billion yuan respectively. The significant volatility was mainly due to sharp declines in solar battery prices, with P-type battery average prices falling from 0.67 yuan per watt in 2023 to 0.25 yuan, and N-type battery average prices dropping from 0.44 yuan to 0.28 yuan. Under these circumstances, Yingfa Ruineng's revenue declined significantly in 2024.

Falling battery prices directly caused Yingfa Ruineng to post losses in 2024. From 2022-2024, gross margins were 11.9%, 8.8%, and -7.4% respectively, with annual profits of 350 million yuan, 410 million yuan, and -864 million yuan respectively.

However, in the first four months of this year, due to scale effects from increased production and higher overseas business margins, Yingfa Ruineng achieved revenue of 2.408 billion yuan with a gross margin of 23.8% and period profit of 355 million yuan, achieving a turnaround to profitability, though the sustainability of this profitability remains to be verified.

In the first four months of this year, Yingfa Ruineng's overseas business revenue reached 590 million yuan, accounting for 24.5% of total revenue, with major markets including Vietnam, India, and the United States.

Yibin state-owned assets also contributed significantly to Yingfa Ruineng's development. In 2022, when Yingfa Ruineng decided to deploy N-type TOPCon batteries, it launched Series A financing. After this round, Yingfa Ruineng was valued at 3.885 billion yuan, with Yibin municipal state-owned institutions leading the investment, followed by Yingfa Ruineng establishing a production base in Yibin.

In subsequent Series B and C funding rounds, Yibin state-owned assets continued to increase investment. After Series C financing at the end of July this year, Yingfa Ruineng's valuation reached 8.594 billion yuan. With strong support from Yibin city, Yingfa Ruineng relocated its headquarters from Anhui to Yibin, Sichuan in May this year, changing its name to Sichuan Yingfa Ruineng Technology CO., LTD.

Before this IPO, the Zhang Fayu family collectively held 49.10% of Yingfa Ruineng's equity, Yibin Municipal State-owned Assets Supervision and Administration Commission and related parties held 26.51%, and the National Green Development Fund held 7.86%. Additionally, star shareholders including Donghe Venture Capital and C&D Group also invested in Yingfa Ruineng.

After nine years of development, Yingfa Ruineng has become a dark horse in the solar battery industry. However, behind the spotlight, the development challenges facing Yingfa Ruineng cannot be ignored.

**Walking a Tightrope Among Giants: Customer, Technology, and Internationalization Challenges**

Yingfa Ruineng is a specialized solar battery cell company. Its prospectus describes its mission as "focusing solely on battery cells, making better quality battery cells." However, with solar giants expanding into integrated operations, specialized battery cell manufacturers face challenging business conditions, essentially "walking a tightrope" among giants.

Data shows that global solar battery cell shipments reached 605.4GW in 2024, including 410.8GW of TOPCon batteries. However, most of this large shipment volume was internally consumed by integrated solar giants, with external market shipments of only 188GW, including 157GW of TOPCon external shipments.

Solar battery external procurement represents only about 30% of the market, with 2024 TOPCon external shipments at nearly 40%, possibly due to rapid replacement of P-type batteries by N-type batteries, causing insufficient internal N-type battery capacity among solar companies and increased external procurement.

In the solar industry, specialized battery cell companies like Yingfa Ruineng have highly concentrated downstream customers, mainly industry giants like LONGi Green Energy and JinkoSolar. The "third-party" nature of specialized battery manufacturers allows them to conduct business among giants.

However, since late last year, Yingfa Ruineng's "third-party" status appears to have changed.

In December 2024, Yingfa Ruineng signed a strategic cooperation agreement with LONGi Green Energy to build HPBC battery cell projects using LONGi's patented technology. This project uses LONGi's technology, with LONGi contracting at least 70% of the capacity, and LONGi deciding on sales of the remaining 30%. From this perspective, Yingfa Ruineng appears to have become a "contract manufacturer" deeply tied to LONGi.

This cooperation may have affected procurement cooperation with some existing customers. From 2022-2024, LONGi was consistently Yingfa Ruineng's largest customer, though they had not yet cooperated on BC batteries, while JinkoSolar was consistently the second-largest customer with annual revenue contributions exceeding 10%.

However, following Yingfa Ruineng's cooperation with LONGi, JinkoSolar disappeared from the top five customer list in the first four months of this year, with procurement of only 77.287 million yuan, representing just 3.2% of revenue. In the same period last year, JinkoSolar's procurement was 315 million yuan, accounting for 27.62% of Yingfa Ruineng's total revenue. Additionally, from 2022-2024, JinkoSolar was also a small supplier to Yingfa Ruineng, supplying silicon wafer products. In the first four months of this year, Yingfa Ruineng no longer procured silicon wafers from JinkoSolar.

Currently, Yingfa Ruineng has not disclosed details about its cooperation with JinkoSolar, and whether this important customer's procurement has changed requires more information for confirmation.

Beyond customers, technology is the core of solar battery companies. Yingfa Ruineng rose by seizing the opportunity of N-type replacing P-type, but during technological transitions, many companies experience ranking changes.

Take Runyang Stock as an example: from 2020-2022, it ranked third in solar battery shipments for three consecutive years, but due to failure to timely transition to N-type batteries, its market ranking dropped to fifth in 2023 and completely exited the top five in 2024, with its solar facilities even temporarily shutting down in 2024.

For Yingfa Ruineng, if it fails to grasp the next generation of solar industry technological opportunities, it will face significant development risks.

In battery technology, Yingfa Ruineng's competitors include not only specialized battery manufacturers but also integrated industry giants.

From 2022-2024, Yingfa Ruineng's R&D expenses were 125 million yuan, 219 million yuan, and 281 million yuan respectively, continuously increasing but still far below industry giants like LONGi. In 2024, LONGi Green Energy's R&D expenses reached 1.815 billion yuan.

Currently, Yingfa Ruineng appears to be "hugging the giant's leg," cooperating with LONGi to produce HPBC batteries and obtaining LONGi's patent authorization.

However, the current agreement between both parties has only a five-year term, is non-exclusive, and cannot be automatically renewed, requiring mutual agreement for renewal or extension. In this cooperation, LONGi is the dominant party. If cooperation changes occur, Yingfa Ruineng will face significant risks.

According to the prospectus, Yingfa Ruineng is currently focusing on overseas markets. In 2024, it built a production base in Indonesia to accelerate overseas expansion. In this IPO, approximately 60.6% of Yingfa Ruineng's fundraising will be used to establish and upgrade the Indonesia base, about 15.2% of net proceeds will be used to enhance domestic and overseas sales channels, with about 10% for expanding and optimizing international sales business.

Additionally, 15.2% of net proceeds will be used for advanced technology research and development, and 9.1% for working capital and general purposes.

After achieving profitability in the first four months of this year through high-margin overseas markets, Yingfa Ruineng is expanding overseas markets, but overseas markets also involve greater risks. Whether this recent "dark horse" in the solar industry can continue its rapid growth remains to be seen.