Analysis of TCL Zhonghuan's Assets, Liabilities, and Solvency: Warning of Financial Risks Under High Leverage

Based on the data I collected, below is a detailed analysis of TCL Zhonghuan’s (Stock Code: 002129.SZ) assets, liabilities, and solvency.

---

According to the latest financial data, TCL Zhonghuan’s asset-liability ratio shows a

and is at a relatively high level:

Period	Asset-Liability Ratio	Industry Comparison
2024	67.49%	Above industry average
2023	66.54%	Above industry average
2022	64.32%	Above industry average
2021	63.00%	Above industry average
2020	52.00%	Relatively reasonable

Rising from 52% in 2020 to 67.49% in 2024, the asset-liability ratio has increased by approximately 15.5 percentage points over five years [1][3].

---

• Total Liabilities as of the end of 2024
  : Approximately RMB 79.127 billion [1]
• Total Assets
  : Approximately RMB 125.6 billion
• Shareholder Equity
  : Approximately RMB 46.47 billion

Liability Type	Amount (RMB 100 million)	Proportion
Current Liabilities	275.24	34.8%
Non-Current Liabilities	516.03	65.2%
Including Long-term Borrowings	433.03	54.7%
Lease Liabilities	61.19	7.7%

:

• Dominated by
  non-current liabilities
  (accounting for 65.2%), short-term debt repayment pressure is relatively controllable
• Long-term borrowings of RMB 43.4 billion are mainly used for capacity expansion and project construction [1]

---

Indicator	2024	2023	2022	Industry Healthy Threshold
Current Ratio	0.68	0.73	0.83	>1.5
Quick Ratio	0.41	0.45	0.52	>1.0
Operating Cash Flow Ratio	2.07%	1.80%	1.86%	>20%

• The current ratio and quick ratio have
  declined continuously
  and are far below the safety thresholds
• The coverage capacity of operating cash flow for liabilities is extremely weak (only 0.76%) [1][3]

Indicator	Value	Assessment
Debt-to-Equity Ratio	186.90%	Liabilities exceed shareholder equity, relatively high
Capitalization Ratio	52.47%	Capital structure is relatively aggressive
Interest Coverage Ratio	0.66 (2022)	EBIT cannot cover interest expenses

Year	Financial Expenses (RMB 100 million)
2024	14.73
2023	14.27
2022	12.69
2021	11.59
2020	9.04

Financial expenses have continued to grow, with an average annual growth rate of approximately 12.7%, reflecting increasing pressure from financing costs [1].

---

Risk Dimension	Assessment	Risk Level
Asset-Liability Ratio	67.49%, continuous upward trend	🔴 High
Current Ratio	0.68, below 1.0	🔴 High
Quick Ratio	0.41, extremely low	🔴 High
Interest Coverage	EBIT < Interest Expenses	🔴 High
Operating Cash Flow	Cannot cover liabilities	🔴 High

1. Overall debt repayment pressure is heavy
   : The asset-liability ratio exceeds 67%, and total liabilities are 1.87 times shareholder equity

2. Severe shortage of short-term solvency
   : The current ratio and quick ratio continue to deteriorate, with a relatively high proportion of inventory and weak liquidity

3. Risk exists in interest payment
   : Historical data shows that the EBIT interest coverage ratio is below 1, and the company’s profits cannot cover interest expenses

4. Significant impact of industry cycles
   : Overcapacity in the photovoltaic industry has led to falling product prices, and the company recorded a loss of RMB 10.8 billion in 2024, further weakening its solvency [1]

---

:

• The photovoltaic industry remains in a downturn, with product prices under pressure
• The high-leverage operation model amplifies the impact of cyclical fluctuations
• The transformation of overseas subsidiary Maxeon faces uncertainties

:

• Whether the current ratio improves in subsequent quarters
• Whether operating cash flow turns positive
• Whether the asset-liability ratio shows a turning point

---

[1] Dongxing Securities - “TCL Zhonghuan (002129.SZ): Losses Caused by Price Competition, Strengthen Shortcomings to Enhance Competitiveness” (https://pdf.dfcfw.com/pdf/H3_AP202504301665044073_1.pdf)

[2] Sina Finance - TCL Zhonghuan Financial Indicator Data (https://vip.stock.finance.sina.com.cn/corp/go.php/vFD_FinancialGuideLine/stockid/002129/displaytype/4.phtml)

[3] China Chengxin International - “2024 Credit Rating Report of TCL Technology Group Co., Ltd.” (https://disc.static.szse.cn/disc/disk03/finalpage/2024-07-03/8a85d377-065e-4ffd-afee-db1e6df41b0c.PDF)

[4] TCL Zhonghuan 2024 Annual Report (http://file.finance.sina.com.cn/211.154.219.97:9494/MRGG/CNSESZ_STOCK/2025/2025-4/2025-04-26/11011386.PDF)