Heshan Silicon's 5.8 Billion Directed Issuance Revealed: Previously Raised 9.5 Billion to Expand Production Against the Trend, Half of Capacity Idle, Over 35 Billion in Construction Projects, Batch of Major Projects Halted

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Produced by: Sina Finance Listed Company Research Institute

Author: Hao

Recently, Hansheng Silicon announced plans to raise no more than 5.8 billion yuan through a private placement, funding the Shanshan Silicon-Based New Materials Industrial Base Back-Pressure Machine Project, as well as supplementing working capital and repaying bank loans. Against the backdrop of industry overcapacity and deep losses, Hansheng Silicon is once again expanding through large-scale fundraising.

In 2021 and early 2023, Hansheng Silicon conducted two private placements, raising a total of 9.5 billion yuan solely for liquidity replenishment, and made significant investments in 2022 and 2023. However, due to the continued downturn in industry prosperity, the company’s performance and profitability have sharply declined, and debt has rapidly increased. The repeated expansion through private placements amid industry downturn raises concerns about the future prospects.

On one hand, Hansheng Silicon is tirelessly raising funds to expand production, but on the other hand, a large portion of capacity remains idle. Key projects such as industrial silicon, organic silicon, polysilicon, and silicon carbide have been delayed in batches. The company’s ongoing projects exceed 35 billion yuan, with long-term accounts receivable not yet capitalized, combined with over 30 billion yuan in fixed assets, resulting in significant future depreciation pressure.

It is worth noting that after the major shareholder absorbed funds from the previous two private placements, they also engaged in substantial share reductions and pledges. Following a sharp stock price decline, small and medium shareholders suffered heavy losses.

Raising 9.5 billion yuan to expand aggressively against the trend, gross profit margin plummets, interest-bearing debt surges

Hansheng Silicon’s main business is silicon products, with downstream sectors including energy, industrial silicon, organic silicon, carbon materials, new materials, third-generation semiconductors (silicon carbide), photovoltaic industry chain, and energy storage. The company was listed on the Shanghai Stock Exchange Main Board in 2017.

In June 2021 and January 2023, Hansheng Silicon carried out two private placements, raising a total of 9.5 billion yuan, all used for liquidity replenishment.

After raising funds, Hansheng Silicon began a large-scale expansion. In 2022, following the first private placement, the company’s annual capital expenditure reached 11.5 billion yuan, a year-on-year increase of 334%. In 2023, after the second private placement, capital expenditure rose further to 18.7 billion yuan, up 63% year-on-year.

However, amid industry-wide inventory reaching 480,000 tons and silicon material prices falling below cost, Hansheng Silicon’s aggressive expansion quickly faced significant performance pressure.

With gross profit margins continuously declining, from 2021 to 2024, net profits attributable to shareholders were 8.2 billion, 5.1 billion, 2.6 billion, and 1.7 billion yuan respectively. The 2025 full-year forecast projects a net loss attributable to shareholders of -2.8 billion to -3.3 billion yuan, indicating a sharp decline in performance.

Meanwhile, despite raising 9.5 billion yuan through two private placements, interest-bearing debt has surged from 3 billion yuan at the end of 2021 to 27.9 billion yuan by the third quarter of 2025.

Clearly, Hansheng Silicon’s current difficulties are closely related to previous rounds of contrarian bets.

According to the private placement plan, the company intends to invest 4.1 billion yuan in the Shanshan Silicon-Based New Materials Industrial Base Back-Pressure Machine Project, with the remaining 1.7 billion yuan used to supplement liquidity and repay bank loans. The repeated private placements and expansion plans raise concerns about the future.

Massive idle capacity, delayed major projects, and 35 billion yuan in ongoing projects long on the books

While Hansheng Silicon has been aggressively expanding through financing, much of its capacity remains idle. As of the end of June 2025, the company’s industrial silicon capacity was 1.22 million tons per year, with a half-year output of 660,000 tons, and capacity utilization at about 54%. Organic silicon monomer capacity was 1.73 million tons per year, with a half-year production of 720,000 tons, and utilization at only 41.6%.

With nearly half of its capacity idle, key projects for industrial silicon, organic silicon, polysilicon, and silicon carbide are also likely delayed in batches.

During this period of project delays, the company’s ongoing engineering projects have rapidly increased. After reaching 38.2 billion yuan in 2023, the company’s ongoing projects have remained above 35 billion yuan, accounting for about 40% of total assets during the same period.

Long-term accounts receivable and fixed assets totaling over 30 billion yuan mean the company faces heavy depreciation burdens and significant future performance pressure.

Notably, in January 2026, the controlling shareholder Hansheng Group announced a plan to reduce holdings, aiming to sell no more than 35.5 million shares within three months. Between February 11 and March 4, the group cashed out approximately 920 million yuan through block trades and centralized bidding. Additionally, in July 2025, through an agreement transfer, Hansheng Group and early shareholder Fuda Industrial have collectively withdrawn over 4.5 billion yuan from the market.

Furthermore, current major shareholders including Hansheng Group, Luo Yi, Luo Yedong, Luo Liguo, and Fuda Industrial have pledged over 33% of their shares in the company.

While Hansheng Group previously supported the company through private placements, it has also engaged in significant share reductions and pledges. The stock price has plummeted from nearly 250 yuan to less than 50 yuan, with the most injured being the numerous small and medium shareholders.

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Editor: Company Observation