Is the photovoltaic "involution" affecting auxiliary material suppliers? Xinbo Co., Ltd. plans to terminate the annual 600,000-ton recycled aluminum project

Daily Economic News Reporter | Zhu Chengxiang Daily Economic News Editor | Liao Dan

In recent years, the prices of photovoltaic products have remained low, putting pressure on auxiliary material manufacturers’ performance. Against this background, Xinbo Co., Ltd. (SZ003038, stock price 18.48 yuan, market value 4.5 billion yuan) announced on the evening of March 1 that it plans to terminate the “600,000-ton annual recycled aluminum project” and use the remaining over 120 million yuan of raised funds to permanently supplement cash flow.

It is understood that Xinbo mainly produces aluminum profile products, with over 80% of its business in new energy photovoltaics, mainly providing photovoltaic frames and supports for the industry. The company is located in Tianchang City, Chuzhou, Anhui Province, where Chuzhou and nearby Yangzhou, Taizhou, and Hefei have many photovoltaic module manufacturers.

The raised funds originally intended for the recycled aluminum project were to provide raw materials for aluminum profiles.

Change in Fund Usage

According to reports, Xinbo held a board meeting on February 27, during which the board agreed to adjust the date when the “Digital Construction Project” from the 2023 A-share private placement reaches the predetermined usable state from December 2025 to December 2027; to terminate the “600,000-ton annual recycled aluminum project,” and to permanently use the remaining funds to supplement working capital.

As of February 24, the “600,000-ton annual recycled aluminum project” had used 500 million yuan of raised funds, with a total investment progress of 80.61%; the “Digital Construction Project” had used 1.7056 million yuan, with a total investment progress of 8.53%; and the working capital supplement had used 229 million yuan, with a total investment progress of 100%.

The “600,000-ton annual recycled aluminum project” was planned to be built in three phases, with phases one and two already completed and operational. Regarding the termination of this project, the listed company stated that under the ongoing external market competition pressure, the company continues to promote cost reduction and efficiency improvements. Continuing to invest resources such as equipment and manpower as originally planned would not only cause resource waste but also make it difficult to achieve expected economic benefits, which does not align with the project’s cost-benefit principles. Therefore, continuing this fundraising project no longer meets the company’s current development needs. After careful consideration, the company believes that it is not suitable to continue investing in the “600,000-ton annual recycled aluminum project” at this stage.

Xinbo believes that the decision to terminate the “600,000-ton annual recycled aluminum project” is a prudent decision based on the current project development situation, aimed at making full and reasonable use of the raised funds, ensuring high-quality implementation of the fundraising projects, protecting investors’ interests, and facilitating efficient resource integration and operational efficiency. This termination will not have a significant adverse impact on the company’s normal production and operation and aligns with the company’s long-term development plan.

Photovoltaic Business Under Pressure

According to Xinbo’s 2025 semi-annual report, its new energy photovoltaic business accounted for 82.48% of revenue in the first half of 2025. In the first half of 2024, this proportion was 88.48%.

Additionally, according to Xinbo’s 2023 private placement plan, leveraging its rich technology and experience in the industrial aluminum profile field, along with excellent product quality and a good brand reputation, the company has become one of the main suppliers in the photovoltaic aluminum profile sector. It has established stable cooperation relationships with major component companies such as Longi, Jinko Solar, JA Solar, Jineng Group, Wuxi Sander, Tongwei, and Zhengxin Optoelectronics.

After decades of development, the aluminum profile processing industry has become increasingly competitive. In the mid-to-high-end product market, price is an important factor reflecting market competitiveness. Therefore, under the premise of ensuring stable or high-quality products, controlling production costs has become a key factor in the company’s overall competitiveness. Aluminum rods, as the main raw material for Xinbo’s aluminum profiles, account for over 80% of production costs.

At that time, Xinbo believed that the “600,000-ton annual recycled aluminum project” would help the company further expand into the recycled aluminum industry, utilizing both self-produced and purchased scrap aluminum for industrialized production of recycled aluminum. This would extend the upstream industrial chain, promote the recycling of its own scrap aluminum, ensure the quality and efficiency of raw material supply, and enhance sustainable development.

However, as the photovoltaic industry entered a phase of “involution” competition, Xinbo, as a supplier of auxiliary materials, also faced performance pressure. In the first half of 2025, Xinbo’s revenue from the new energy photovoltaic business was 3.296 billion yuan, down from 3.687 billion yuan in the same period last year; the gross profit margin for this segment was 5.56%, also lower than the previous year.

Clearly, Xinbo’s revenue and gross profit margin from the new energy photovoltaic business are declining. Possibly due to this, the company ultimately decided to terminate the “600,000-ton annual recycled aluminum project.”