On the evening of July 14th, after achieving a turnaround from losses to profits in the first quarter of this year, silicon-based leader Hesheng Silicon Industry (603260. SH) announced a performance forecast for the first half of this year, further clarifying the company's performance recovery trend. Specifically, benefiting from the year-on-year increase in the utilization rate of industrial silicon production capacity, the company has achieved significant growth in production and sales volume. It is expected that the company will achieve a net profit of 320 million to 380 million yuan in the first half of 2026, completely getting rid of the loss situation in the same period last year.

Q2 net profit increased by over 200% month on month

According to the forecast data, it is speculated that Hesheng Silicon Industry will continue to improve in both quarter on quarter and year-on-year trends in the second quarter, highlighting the profitability resilience of the industry leader. According to Q1 data, the company achieved a net profit attributable to its parent company of 77.34 million yuan in the first quarter of 2026. Based on this, it is estimated that its net profit for Q2 of 2026 will be approximately 243 million yuan to 303 million yuan, an increase of 213% -291% compared to Q1, and the profit scale will achieve a leap forward.

On a year-on-year basis, the company's Q2 performance showed a significant reversal compared to the same period in 2025, with a single quarter profit level reaching its best performance since Q1 2025.

According to market analysts, the performance of Hesheng Silicon Industry has significantly improved in this round, driven by the improvement in supply and demand in the silicone industry, which has led to product price increases and economic recovery. In 2025, the organic silicon industry will be in a long-term state of overcapacity and low prices, putting pressure on the overall profitability of the industry and significantly impacting the company's performance. Entering 2026, the industry landscape will undergo fundamental optimization, and domestic enterprises will continue to implement collaborative emission reduction strategies. Since June, the industry's phased emission reduction ratio has reached 40%, and the overall operating rate of the industry has fallen to around 60%, effectively shrinking the market's ineffective supply. At the same time, the supply and demand gap in the organic silicon industry will gradually emerge in 2026, completely reversing the previously sluggish pattern of long-term internal competition. Under the reshaping of supply and demand, the price of organic silicon market continues to rise, and the industry's prosperity continues to rise. Since the price hit a bottom of around 11000 yuan/ton in October 2025, the price of organic silicon has continued to rebound, steadily rising to over 14500 yuan/ton by 2026. The significant price recovery directly drives the expansion of the company's main product profitability.

As a global leader in organic silicon monomer production capacity, Hesheng Silicon Industry has a production capacity of 1.73 million tons of organic silicon monomers and a complete industrial silicon production capacity, fully benefiting from the current industry price increase dividend. Its main business revenue and gross profit margin have improved synchronously. In the first quarter of 2026, the company's comprehensive gross profit margin has increased to 19.08%, a year-on-year increase of 4.46 percentage points. The total gross profit has increased by 24.97% year-on-year, and the momentum of profit recovery continues to be released.

Integrated layout of coal and electricity helps companies overcome industry cycles

From the perspective of business quality, the company not only achieved a turnaround in performance and increased profits, but also maintained a stable operating cash flow. In the first quarter of 2026, the net cash flow from operating activities reached 1.262 billion yuan, providing solid support for the company's production capacity operation, technology research and development, and industrial upgrading with abundant cash flow. At the same time, the company continues to focus on optimizing its silicon-based main business, gradually shrinking non core pressure bearing businesses, and further concentrating resources towards core advantageous sectors such as organic silicon and industrial silicon. The profitability of its main business continues to strengthen.

In addition to the industry prosperity dividend, relying on the complete "coal electricity silicon integration" industrial chain layout in Xinjiang, the core competitive advantages of Hesheng Silicon Industry have been further amplified in the current environment. It is understood that the cost of electricity accounts for 30% to 40% of the production cost of silicon chemical industry, and the ability to control energy directly affects the profitability level. Against this backdrop, the company has industry-leading cost control capabilities and can be the first to achieve profit recovery during the industry recovery stage. Compared with most enterprises in the industry, the advantage of integration can maximize the benefits of industry prosperity and become the core driving factor for the significant increase in the company's Q2 performance compared to the previous quarter.

Overall, the net profit performance of over 300 million yuan in the first half of 2026 marks that Hesheng Silicon Industry has officially emerged from the bottom of the cycle, and the impressive performance in Q2 also confirms the core logic of the industry's recovery. Looking ahead to the future, the supply and demand pattern of the organic silicon industry is expected to continue to improve, with the implementation of emission reduction and price protection policies. Downstream demand for photovoltaics, construction, electronics, and other industries is steadily recovering, and the industry's prosperity is expected to continue.

Under the background of peak season driving and industry pattern optimization, Hesheng Silicon Industry, as the absolute leader in the industry, will continue to highlight its advantages in production capacity, cost, and industrial chain integration, and the space for performance repair is expected to be further opened up.