Due to the drag from surging silver prices and the slowdown of core products, Dico Co., Ltd. suffered a loss of 276 million yuan last year | Financial Report Review

Source: Titanium Media

When the explosive growth of the commodity market encounters the weak links in corporate risk control, a performance “black swan” event becomes unavoidable.

On March 20, leading photovoltaic conductive paste company Dike Co., Ltd. (300842.SZ) announced its annual report for 2025, showing that the company achieved operating revenue of 18.046 billion yuan, a year-on-year increase of 17.56%; the net profit attributable to the parent company was -276 million yuan, a year-on-year decrease of 176.80%; the net profit excluding non-recurring items was 163 million yuan, a year-on-year decline of 62.78%.

Although the company attributed the loss to substantial fair value changes due to futures hedging and silver leasing business amid rising silver powder prices, signals such as a decline in both production and sales of its core products, rising inventory, and decreasing gross margins expose the dual pressure of ineffective cost transmission and demand concerns.

Soaring Silver Prices Disrupt Performance

According to the financial report, the performance changes at Dike Co., Ltd. were mainly due to non-recurring gains and losses, with a negative impact on net profit attributable to the parent company amounting to -440 million yuan. In order to further reduce the risk of fluctuations in silver point prices, the company hedged the silver price difference in sales and purchase orders through silver futures; to lower the procurement costs of silver powder and respond to the risks of silver powder price fluctuations, the company engaged in silver leasing business. During the reporting period, the silver point rose rapidly and sharply, leading to significant fair value change losses on silver futures and silver leasing based on the silver point on the balance sheet date.

Data shows that Dike Co., Ltd. is a global leader in photovoltaic conductive paste, with its main product being photovoltaic cell metallization conductive paste, which primarily requires silver powder as a raw material. The procurement price of silver powder is influenced not only by processing fees but also by fluctuations in silver prices and exchange rates, leading to considerable volatility and uncontrollability.

Due to a structural imbalance in supply and demand, U.S. Federal Reserve monetary policies, geopolitical conflicts, and a surge in investment demand, silver prices have exhibited extreme volatility. Since 2025, silver price fluctuations have been particularly pronounced, with spot silver prices soaring from about 7,500 yuan/kg at the beginning of 2025 to a peak of 30,000 yuan/kg at the beginning of 2026, marking a cumulative increase of nearly 300%, along with short-term fluctuations of 40%-50%, showcasing the significant characteristics of rapid price surges followed by sharp declines and increased volatility.

The rise in silver prices has directly reshaped the cost structure of photovoltaic cells. According to a research report released by CITIC Securities in February, the cost of silver paste in M10 N-type cells has increased by approximately 42.81% compared to early 2025, now surpassing silicon costs, becoming the highest cost component in the battery structure.

The industry’s demand for cost reduction has sharply intensified, and the consensus is to replace silver with cheaper metals. From the perspective of metal pricing and conductivity, copper is seen as a more ideal alternative for photovoltaic paste. Dike Co., Ltd. has made it clear that it will focus on promoting ultra-low silver content copper-coated silver technology, pure copper paste technology, and the full-chain development of new sintering technology and interconnection packaging technology, prioritizing reliability to drive the industrialization verification and implementation of relevant technologies.

Looking ahead, the risk of silver price fluctuations has not dissipated. According to a recent research report from Guolian Futures, the ongoing U.S.-Iran conflict is driving up global energy prices, triggering strong stagflation expectations in the market, which have significantly adjusted the Federal Reserve’s interest rate cut pace. The precious metals sector remains under pressure until the conflict is resolved; meanwhile, stagflation expectations have raised risks in U.S. stocks and credit markets, leading to tightening liquidity. Silver, influenced by liquidity shocks and its inherent characteristics, faces short-term risks of decline. This means that Dike Co., Ltd.'s hedging strategies will still face high uncertainty, and financial volatility may be difficult to calm quickly.

Decline in Sales and Rising Inventory of Main Products

Dike Co., Ltd. relies heavily on revenue from photovoltaic conductive paste. In 2024, this product generated revenue of 12.865 billion yuan, accounting for 83.81% of total revenue. In the 2025 annual report, the company reclassified photovoltaic conductive silver paste revenue into “photovoltaic materials.” By product, the revenue share for photovoltaic materials last year was 82.38%, and by industry, the revenue share for electronic specialty materials was 82.55%, indicating that the structure of its main business has not undergone substantial changes.

However, the sales volume of the company’s main products significantly declined last year. In 2025, Dike Co., Ltd. sold 1,829.16 tons of photovoltaic conductive paste, a year-on-year decrease of 10.23%; among these, the sales of the complete set of conductive paste products for N-type TOPCon batteries amounted to 1,750.93 tons, accounting for 95.72% of the total sales volume of the company’s photovoltaic conductive paste products.

Profitability is also under pressure. In 2025, the revenue from the company’s photovoltaic materials products grew by 15.56% year-on-year, but the gross margin decreased by 2.05% to 8.57%. Although the new storage chip products saw a revenue increase of 574.63% with a high gross margin rise to 47.46%, it was insufficient to offset the impact of declining profitability in the main business.

It is worth noting that Dike Co., Ltd. has exhibited an unusual combination of simultaneous declines in production and sales of core businesses, along with rising inventory. The annual report shows that the sales volume, production volume, and inventory volume of the company’s electronic specialty materials changed year-on-year by -10.18%, -10.86%, and 9.79%, respectively. This contradicts the operational model claimed by the company.

In the annual report, Dike Co., Ltd. emphasized that it primarily adopts a sales-based production model and a production-based purchasing model. This pricing model allows the impact of silver point fluctuations on silver powder procurement prices to be transmitted to downstream customers through sales pricing, so the company does not directly bear the risk of significant fluctuations in silver powder prices. Theoretically, under a sales-based production model, production should strictly follow orders, and inventory should remain low; even with strategic stockpiling, growth rates should not significantly exceed those of production and sales.

Current data divergence reflects the practical pressures on operations. Dike Co., Ltd. noted in its risk warnings that severe fluctuations in silver powder prices may lead to customer-initiated defaults, resulting in losses from futures hedging for the company; if customers delay payments, the time for payments to suppliers or for repaying foreign currency loans may be advanced, potentially leading to mismatches between cash flow and hedging duration and scale, resulting in company losses.

Furthermore, the ongoing push for grid parity and cost reduction in the photovoltaic industry is not only expanding the scale of the photovoltaic power generation market but also compelling all segments of the photovoltaic industry chain to reduce costs and improve efficiency, leading to reduced profit margins for products. Additionally, accelerated capacity expansion across various segments of the supply chain in 2023-2024 poses a risk of structural oversupply, particularly evident in the photovoltaic cell segment, where continuous downward pressure on product prices intensifies the demand from downstream cell manufacturers for reductions in procurement costs of other auxiliary materials.

Industry insiders point out that the divergence between production and sales and rising inventory may stem from a temporary decline in downstream demand, posing hidden risks of unsold inventory. If customers cancel orders or extend acceptance periods due to cost pressures, it will lead to passive production cuts and accumulation of semi-finished products for the company, reflecting weak product pricing power, inability to smoothly transmit costs downstream, and a mismatch between operational plans and actual market demand. (Text by Company Observer, Author: Ma Qiong, Editor: Cao Shengyuan)

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