"Leading photovoltaic company" Dico Co., Ltd., records a revenue record in 2025, but all the money was lost in silver trading?

Once upon a time, when the photovoltaic industry was nearly in decline, and even the two giants Tongwei Co. and LONGi Green Energy were facing significant losses, the leading domestic photovoltaic silver paste company, Diko Co., made a remarkable surge against the trend, making it a prime investment target for many investors in recent years.

However, recently, Diko Co. released a contrasting annual report: on one hand, its revenue for the entire year of 2025 exceeded 18 billion yuan for the first time, setting a new record since its listing; on the other hand, its net profit attributable to shareholders showed a loss of 276 million yuan, marking the highest loss since its listing.

What is even more surprising is that the company’s massive loss did not stem from production operations but rather from “speculating on silver.”

As a giant in silver paste, silver powder has always been the company’s main raw material. Since last year, silver prices have remained high. To hedge against the risks of silver price fluctuations, Diko Co. significantly increased its trading in silver futures and silver leasing business, resulting in huge losses instead of “hedging.”

A financial operation that deviated from its core business caused this key supplier in the upstream photovoltaic sector to ruin a good hand.

1

Speculating on silver to hedge risks,

The harder they try, the more “bitter” it becomes

Public information shows that Diko Co. was established in 2010 and listed on the Shenzhen Stock Exchange’s Growth Enterprise Market in 2020. The company’s main business is the manufacturing of new electronic pastes, with its primary product being photovoltaic conductive silver paste, making it a well-known leader in the domestic photovoltaic silver paste market.

In terms of revenue, over 80% of Diko Co.'s income comes from photovoltaic silver paste. In 2025, Diko Co. achieved a revenue of 14.866 billion yuan from photovoltaic materials, accounting for 82.38% of total revenue, representing a year-on-year increase of 15.67%, making it its most significant source of income.

Silver paste is an essential consumable in the production of photovoltaic cells. It consists of silver powder, organic solvents, and binders, applied to the surface of the cells to form electrode structures.

Thus, silver paste possesses both conductivity and adhesion, allowing for a uniform and reliable connection between the electrodes and the cells. Without photovoltaic silver paste, solar cells cannot function properly.

In the cost structure of photovoltaic cells, in addition to silicon wafers, which account for nearly 70%, the cost of auxiliary materials is the largest component. Among all auxiliary materials, the cost of photovoltaic silver paste is the most significant.

According to incomplete statistics, photovoltaic silver paste accounts for about 35% of the non-silicon auxiliary material costs of cells and 13% of the overall cost. The main raw materials for silver paste include high-purity silver powder, glass systems, and organic carriers, with silver powder being the most significant, accounting for about 90%.

This means that fluctuations in silver prices will directly impact the raw material costs of silver paste.

In 2025, silver prices surged dramatically, especially in the second half of the year. In mid-October, international silver prices reached a historic high of $54.468 per ounce. Data from the Futures Daily showed that from November 21, 2025, to January 21, 2026, silver prices on the Shanghai Futures Exchange skyrocketed from 11,697 yuan/kg to 23,228 yuan/kg, doubling in just two months.

Under normal circumstances, Diko Co.'s existing operating model could effectively mitigate the impact of silver price fluctuations. The company primarily adopts a production model based on sales and a procurement model based on production, allowing fluctuations in silver powder procurement prices to be passed on to downstream customers, meaning the company does not bear the risks of significant price fluctuations directly.

However, in an effort to further “hedge against silver price fluctuations and reduce silver powder procurement costs,” the company undertook two additional operations:

To address the risk of silver powder price fluctuations, the company engaged in hedging operations through silver futures contracts;

To lower silver powder procurement costs and respond to price fluctuations, the company initiated silver leasing business.

However, Diko Co. expanded its silver futures trading scale in the fourth quarter of 2025, when silver prices had already surged to historic highs.

According to the feasibility analysis report released by the company on October 28, 2025, “the company and its subsidiaries plan to use self-owned funds to engage in foreign exchange derivative product trading with a maximum balance of 2.5 billion yuan and a maximum margin amount of 200 million yuan for silver futures/options contracts.”

However, hedging operations themselves are highly specialized and complex. Significantly increasing positions when silver prices are already at historic highs, where market turning points could appear at any moment, not only completely lost the first-mover advantage of hedging risks but also led this operation to deviate entirely from the original intent of hedging, ultimately resulting in massive losses.

The final results were reflected in the 2025 annual report. In the 2025 annual report, Diko Co.'s non-operating income clearly stated that, aside from effective hedging activities related to the company’s normal business, the fair value changes and gains or losses from financial assets and liabilities held by non-financial enterprises amounted to as much as 641 million yuan.

In the non-core business section, it was further disclosed that investment income was -272 million yuan; fair value changes were -411 million yuan. This represents the direct losses from silver futures and leasing operations, with losses primarily concentrated in the fourth quarter.

At the same time, the company’s cash flow from operations was also under pressure. The net cash flow from operating activities decreased by 28.88% year-on-year, down to 667 million yuan.

Diko Co. responded that the decline in cash flow was primarily due to mismatched payment terms between upstream and downstream. The company provides a certain grace period for downstream customers, and repayment is mostly through bank acceptance bills. However, when procuring from upstream silver powder suppliers, full payment must be made in advance or within a very short period, meaning that cash inflows from sales always lag behind cash outflows for procurement.

Additionally, in 2025, the company’s sales scale increased, leading to a simultaneous rise in procurement costs for inventory, further exacerbating cash flow tightness.

While core business revenue maintained a growth of over 15%, operating cash flow declined by nearly 30% year-on-year. Apart from the common industry reason of mismatched payment terms, the margin occupied by silver futures operations and actual cash outflows from losses may have further increased financial pressure on the company.

This indicates that Diko Co.'s ability to generate cash flow from its core business has been significantly weakened by financial speculation. If the silver market continues to fluctuate, the company’s ability to withstand pressure on its capital chain and risk resistance will face even greater challenges.

2

Revenue hits a new high since listing,

The third-largest customer is actually its subsidiary

“Bullet Finance” noticed that in 2025, Diko Co. achieved revenue of 18.046 billion yuan, a year-on-year increase of 17.56%, setting a new high since its listing. Notably, 60% of this revenue came from the top five customers.

It is worth mentioning that the company’s third-largest customer is its controlling subsidiary, Zhejiang Suot, which was just acquired and consolidated in 2025.

On July 26, 2025, Diko Co. planned to acquire 60% of Zhejiang Suot for 696 million yuan, with an overall valuation of 1.16 billion yuan. However, this was not the company’s first attempt to target this entity.

As early as July 2021, Diko Co. initiated the acquisition of 100% of Jiangsu Suot for a transaction price of 1.247 billion yuan.

However, during the transaction process, due to adjustments in photovoltaic industry policies, fluctuations in silver prices, and the evaluation agency being investigated by the China Securities Regulatory Commission for other projects, the planned capital increase acquisition was terminated in September 2022. After a three-year hiatus, Diko Co. finally restarted the acquisition.

So, why is the company so persistent in acquiring Zhejiang Suot? The core goal is to acquire its Solamet photovoltaic silver paste business, which was originally under DuPont in the United States.

Public information shows that the Solamet business has been deeply involved in the electronic paste industry for over 40 years and is a pioneer and technology leader in the field of photovoltaic conductive pastes, forming a complete technology barrier in the three core areas of glass systems, silver powder, and organic carriers, holding 229 valid patents globally, establishing a highly competitive intellectual property moat in the photovoltaic conductive paste sector.

Its product matrix is comprehensive, including core products such as front silver paste and back silver paste, compatible with almost all mainstream and next-generation photovoltaic cell technology routes, such as P-BSF, P-PERC, N-PERT, N-TOPCon, N-IBC, HJT, and thin-film cells. Its downstream customers include global photovoltaic leaders such as Jinko Solar, LONGi Green Energy, and JA Solar Technology.

More critically, the Solamet business has always been at the forefront of industry technology: in 2023, it first achieved mass production of TOPCon laser carrier injection technology paste, directly promoting the industry’s innovation in TOPCon cell metallization technology, significantly enhancing the market competitiveness of cell products;

In the layout of next-generation battery technologies, it is globally leading in HJT/HBC cell silver-coated copper paste, ultra-low temperature curing silver paste for perovskite/silicon tandem cells, and has a solid research foundation in cost-reduction core tracks such as low-cost metal pastes.

However, despite holding top-notch technology, Zhejiang Suot has shown a stark contrast in performance, and the valuation and profitability match are also under market scrutiny.

Financial data shows that in 2023, Zhejiang Suot achieved revenue of 1.261 billion yuan with a net profit loss of 12.56 million yuan; in 2024, the company’s performance reversed, with revenue soaring to 3.553 billion yuan and a net profit of 50.91 million yuan.

However, corresponding to this is the valuation of 100% equity in this transaction, which amounts to 1.16 billion yuan, resulting in a PE (price-to-earnings ratio) of 23 times based on the 2024 net profit, significantly higher than the average valuation level in the photovoltaic auxiliary materials industry during the same period.

Yet despite the high valuation, the effects were immediate.

After the acquisition was completed in 2025, Zhejiang Suot contributed 2.285 billion yuan in revenue and 29.463 million yuan in net profit to Diko Co. within just four months from September to December.

Note: The financial data of Zhejiang Suot Materials Technology Co., Ltd. in the above table is based on operational data for the period from September to December 2025.

What is even more noteworthy is that besides the performance increase brought by consolidation, Zhejiang Suot also made large-scale product purchases from its parent company Diko Co. in 2025, with procurement amounts reaching 2.347 billion yuan.

It is this substantial internal transaction, combined with the revenue increase from consolidation, that has directly pushed Diko Co.'s total revenue to a historical high since its listing.

However, problems have also arisen: having its controlling subsidiary as one of the top three customers raises ongoing risks of related-party transactions for Diko Co., and market concerns about the authenticity and sustainability of its revenue growth have emerged.

According to information disclosed in the company’s annual report, the estimated amount for related-party transactions with Zhejiang Suot at the beginning of the year was no more than 2.6 billion yuan, while the actual related-party transaction amount in 2025 was 2.347 billion yuan. Although it did not exceed the estimated total, it was very close to the upper limit, constituting a typical “borderline” case.

Such a significant related-party transaction that is precisely pegged to the estimated amount raises market questions about whether there is room for manipulating revenue or optimizing performance reports.

In response to these questions, “Bullet Finance” attempted to inquire further with Diko Co., but multiple calls to their contact number went unanswered.

3

Betting on storage chips,

Seeking new growth

Amid the backdrop of substantial losses from silver speculation, persistent profitability pressure, and growth heavily reliant on related-party transactions, Diko Co.'s 2025 financial report also showcased a new highlight: its cross-border storage chip business experienced explosive growth over the past year.

According to the annual report, in 2025, Diko Co.'s storage chip business achieved revenue of 503 million yuan, a year-on-year surge of 574.63%.

What is even more striking is the profitability metric, as this business boasts a gross margin of 47.46%, contrasting sharply with the single-digit low gross margins of photovoltaic silver paste. Although the current revenue from the storage chip business accounts for only 2.79% of total revenue, its gross profit contribution has reached 14.55%, becoming an important source of profit for the company.

“Bullet Finance” noted that after the photovoltaic industry entered a stable phase, Diko Co. has been seeking a second growth curve.

In 2024, Diko Co. completed the acquisition of 51% of Shenzhen Yindream Holdings Technology Co., marking its official entry into the storage chip sector.

It is worth mentioning that this target, which caught the attention of the listed company as a starting point for cross-border expansion, was established only a month prior to the acquisition, focusing on the application development, solution design, and sales of storage chips, with key products including DDR4, LPDDR4, and LPDDR5 DRAM storage chips.

Just a year later, the company made another push into the storage sector. In October 2025, Diko Co. announced it would acquire 62.5% of Jiangsu Jingkai Semiconductor Technology Co. for 300 million yuan in cash, attempting to extend the storage chip business’s industrial chain from downstream solution design and sales to upstream packaging testing and wafer sorting testing.

Public information indicates that this transaction is not an unrelated third-party acquisition but a typical related-party transaction, as Jiangsu Jingkai and the previously acquired Yindream Holdings are both controlled by Zhang Yaqin and his spouse, and the counterparty in this transaction is a minority shareholder of Yindream Holdings, Zhang Yaqin and his associates.

Moreover, the most controversial aspect in the market is its excessively high valuation premium; according to the acquisition announcement, the premium rate for the target acquisition is as high as 930.28%. However, from the fundamental perspective of the target, this high-premium acquisition has not demonstrated operational strength that matches its valuation.

As of the assessment benchmark date, Jiangsu Jingkai’s net assets were only 35.0389 million yuan, and in the first quarter of 2025, it achieved revenue of merely 16.5418 million yuan, with a net profit loss of 3.72 million yuan, lacking stable profitability.

In the 2025 annual report, Diko Co. did not disclose Jiangsu Jingkai’s financial data, only mentioning that it was included in the consolidated report scope in October last year and did not significantly impact performance, leaving significant uncertainty regarding its subsequent operational performance and ability to deliver on expected results.

Although both acquisitions have led to rapid growth in Diko Co.'s storage chip business, on the other hand, the series of high-premium mergers and acquisitions have also caused the company’s goodwill to soar, increasing the risk of impairment.

Data shows that in 2025, the company’s goodwill increased from 33 million yuan at the beginning of the period to 640 million yuan by the end of 2025, rising nearly 20 times. If the performance of the acquired targets falls short of expectations, the company will face substantial goodwill impairment.

Overall, whether in investing in silver business or cross-border acquisitions, Diko Co. is undergoing a transformation and self-rescue from the inside out. However, every seemingly reasonable step hides significant risks. For manufacturing enterprises, deeply cultivating the main business and maintaining the fundamental operations is fundamental to navigating industry cycles.

*The cover image in this article is from: Shutterstock, based on the VRF protocol.