Chapter 1

Grid and Polysilicon

TBEA Co., Ltd. (600089.SS) is a Changji, Xinjiang industrial group that has reported almost exactly ¥97 billion of revenue for four straight years — yet its profit fell from ¥15.9 billion in 2022 to ¥4.1 billion in 2024 before recovering to ¥6.0 billion in 2025. That gap is the company. A durable, share-gaining grid-equipment franchise sits alongside a high-purity polysilicon business whose gross margin collapsed from 58% to near zero. This chapter maps what TBEA is; the report works through whether the steady half is worth owning through the cyclical half.

What the company does

TBEA listed on the Shanghai Stock Exchange in June 1997 and today runs four businesses [1]. The first is power transmission and transformation (输变电): transformers, wire and cable, switchgear, capacitors, and turnkey international EPC projects — the equipment that steps grid voltage up and down, including China's ultra-high-voltage backbone. The second is new energy (新能源): high-purity polysilicon, inverters, and the design, build and operation of solar and wind plants. The third is energy (能源): coal mining plus power and heat generation. The fourth is new materials (新材料): high-purity aluminum and electronic foils [2].

The polysilicon operation runs through Xinte Energy (新特能源, 1799.HK), a Hong Kong–listed subsidiary TBEA controls — its stake was raised to 66.61% in 2025 [3] [4]. Coal sits in another controlled subsidiary, Tianchi Energy, which mines the Zhundong field in Xinjiang [5]. So TBEA is a holding structure: a wholly-owned grid-equipment group, plus controlling stakes in a listed polysilicon maker and a coal miner.

Sources: revenue, net income and total assets from FY2025 Annual Report, Key Accounting Data [6]; market cap and P/E derived from 5.05bn shares at ¥22.01 (share price as reported, 3 July 2026) and reported earnings.

Flat revenue, a swinging bottom line

Revenue has been remarkably steady — between ¥96.5bn and ¥98.2bn every year since 2022 [7]. Profit has not. Net income attributable to shareholders more than halved from 2022's ¥15.9bn to 2023's ¥10.7bn, then fell again to ¥4.1bn in 2024, before a partial rebound to ¥6.0bn in 2025 [8] [9]. A stable top line hiding a profit line that fell three-quarters and bounced is the signature of a commodity cycle running underneath a steady core.

Source: FY2025 Annual Report, Key Accounting Data [10]; FY2024 comparatives from FY2024 Annual Report [11].

The mechanism shows up in the consolidated gross margin, which fell from 38.6% in 2022 to 18.2% in 2024 and held at 18.9% in 2025 — revenue stayed put while the profit inside each sales dollar was cut roughly in half.

Source: derived from reported revenue and cost of sales, FY2022–FY2025 Annual Reports [12].

The two engines

The 2025 business mix is best read segment by segment. Electrical equipment — the transformer core — is now the largest line and the one whose margin is rising. New energy, once the profit engine, earned essentially nothing on ¥13.6bn of sales. Coal and power generation quietly throw off high-margin cash.

Source: FY2025 Annual Report, Principal Business by Product [13].

The number that carries the story is the 0.6% gross margin on new energy. Three years earlier it was 57.8%, on ¥34.4bn of revenue [14]. High-purity polysilicon — the raw material for solar cells — went from a windfall to break-even as Chinese polysilicon prices crashed under industry-wide overcapacity. The transformer business moved the other way: electrical-equipment margin rose to 19.8% as grid demand and capacity additions lifted volumes [15].

Sources: FY2022 Annual Report [16] and FY2025 Annual Report [17].

How concentrated the cycle is

Because Xinte is a majority-owned subsidiary, the polysilicon swing is visible in one clean line: minority interest. In 2023, minority shareholders — chiefly Xinte's — took ¥3.39bn of profit. In 2024 they absorbed a ¥537m loss, a swing of nearly ¥3.9bn at that line alone [18]. The same year, asset-impairment losses reached ¥3.56bn, driven by inventory and fixed-asset write-downs at Xinte, more than double the ¥1.60bn booked in 2023 [19]. Much of the earnings volatility a shareholder feels originates inside one listed subsidiary.

Management's response has been to throttle output rather than chase share. Xinte produced 198,800 tonnes of polysilicon in 2024 [20]; in 2025 it made just 96,400 tonnes, down 51.5%, running its plants at only 37.1% of capacity [21]. The polysilicon engine has been idled, not repaired — the price signal, not company choice, will decide when it restarts.

The durable core, and what it costs to keep

Against that volatility, two things are steady. The grid-equipment franchise is growing — electrical-equipment revenue rose 19.7% in 2025 — and China's ultra-high-voltage and grid-investment cycle underpins demand for exactly the transformers, cable and turnkey projects TBEA builds [22]. And the coal-plus-power complex is a genuine cash engine: coal earned a 22.4% gross margin on ¥17.0bn of sales, power generation 54.8% on ¥7.2bn [23].

What complicates the "durable core" read is capital intensity. TBEA spends ¥17–22bn a year on capex, and in 2024 and 2025 that outlay outran operating cash flow, turning free cash flow negative — from +¥6.9bn in 2023 to −¥4.3bn in 2024 and −¥12.7bn in 2025 [24]. The company kept investing heavily even as polysilicon economics collapsed. Total assets grew to ¥227bn and long-term debt to ¥38.6bn, up from ¥25bn in 2022 [25]. Whether that spend is building the next franchise or funding a down-cycle at the wrong time is a question later chapters take up.

Source: FY2025 Annual Report, Consolidated Cash Flow Statement [26].

Size, valuation and what is priced

At ¥22.01 (3 July 2026), TBEA's 5.05 billion shares are worth roughly ¥111bn — about 19 times trailing earnings. The company still pays a dividend, declaring ¥0.36 per share for 2025, a yield near 1.6% held up through the downturn [27]. Sell-side consensus looks for revenue to reaccelerate roughly 10% in each of 2026 and 2027 — a bet, in effect, that polysilicon has bottomed and the grid business keeps compounding.

That framing sets the question this report exists to answer: TBEA pairs a durable, share-gaining grid-equipment franchise and a coal-and-power cash engine with a high-purity polysilicon business whose margin has fallen from roughly 58% to near zero — and the case turns on whether the steady core is worth owning through the polysilicon down-cycle, and through the ¥20bn-plus of annual capex still flowing into it, at today's ~19x earnings. Everything that follows tests one part of that sentence.