In recent months, TBEA Co., Ltd., one of the largest electrical power enterprises in China, has faced a series of disheartening developmentsThis company, renowned for its contributions to the energy sector, particularly in renewable energy and electrical transmission, is currently struggling to maintain its market position amidst declining performance and increasing financial pressures.

On December 24, 2024, TBEA publicly announced the termination of its IPO application for its subsidiary, Xinte Energy, after an arduous 625-day journey towards going publicThis decision has marked a significant juncture in TBEA's narrative, underscoring a difficult period that the company has been navigating.

A couple of weeks later, on January 17, 2025, TBEA revealed its earnings forecast for 2024, projecting a shocking net profit slump of between 3.9 billion to 4.3 billion yuan, reflecting a staggering year-on-year decrease ranging from 59.81% to 63.55%. Such figures suggest that the company’s financial health is deteriorating rapidly, raising red flags among investors and analysts alike.

This downward trend in TBEA’s fortunes has not occurred by chance; indicators of its struggles have been manifesting since at least 2022. After a prolonged period of growth, the company’s business performance began to falter, with revenues and net profits from 2022 to 2023 showing positive figures but at an unmistakably reduced rateThe failure to sustain competitive growth has been particularly concerning, with the firm reporting a revenue decrease of 1.79% and a staggering 54.17% drop in net profit through the first three quarters of 2024.

One of the most alarming aspects of TBEA's current situation is the significant reduction in its market value, which once exceeded 110 billion yuan but has plummeted to around 60 billion yuan—losing a staggering 50 billion yuan in capitalisation

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This loss not only hints at the decline of investor confidence but also signifies broader economic headwinds that have hit the company’s core business areas.

In terms of profitability, TBEA is witnessing a concerning trend of diminishing marginsSince 2023, both the company's gross margin and net margin have experienced a continuous declineThe gross margin fell to 18.94% and net margin to 6.22% in the first three quarters of 2024, indicating that the company is struggling to maintain its profit potential.

Delving deeper into the factors influencing TBEA's downturn, two primary divisions—renewable energy and coal—have been identified as key areas of concernThe renewable energy sector, which TBEA relies upon heavily through its subsidiary Xinte Energy, has been facing significant challengesDespite having fourth-largest production capacity in the global polysilicon market, Xinte Energy’s business model has displayed a troubling overreliance on polysilicon salesFluctuations in polysilicon prices have a direct impact on earnings, and the persistent market downturn has left Xinte struggling, ultimately leading to a drastic net profit decline of 67.37% in 2023. By the third quarter of 2024, the company was reporting a staggering net loss of 14.05 billion yuan, projecting full-year losses approaching 38 to 41 billion yuan.

In an attempt to salvage the situation, TBEA has been injecting capital into Xinte Energy, exacerbating its own financial burdensOn December 7, 2024, TBEA announced the sale of nearly half of its stakes in the subsidiary Zhuozhou Energy to Xinte Energy for 1.508 billion yuan, demonstrating a ‘half-sell, half-gift’ approach to providing Xinte with essential assets amid tough market competition.

The coal business, while characterized by high profit margins, is marked by significant cyclical volatility that can destabilize earnings

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