GCL TECH(HK:03800) HTSC·2025-09-05 07:44Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 2.22, up from a previous target of HKD 1.30 [7][5]. Core Views - The company, GCL-Poly Energy Holdings Limited, is recognized as a global leader in granular silicon with significant cost advantages. Despite facing short-term performance pressures due to supply-demand mismatches and declining silicon prices, the company is expected to see a recovery in profitability driven by its leading cash cost position and advancements in perovskite technology [1][2]. - The ongoing "anti-involution" efforts in the photovoltaic industry are anticipated to stabilize silicon prices, which are expected to align with production costs, thus supporting the company's recovery [2][4]. Summary by Sections Financial Performance - In the first half of 2025, the company reported revenues of RMB 5.73 billion, a year-on-year decline of 35.3%, and a net loss attributable to shareholders of RMB 1.78 billion, an increase in loss of 20% year-on-year [1][2]. - The cash cost of granular silicon in H1 2025 was RMB 26.22 per kg, maintaining an industry-leading position, with a market share of 24.3%, up 7.2 percentage points from the second half of 2024 [2][5]. Production and Technology - The company has successfully launched its GW-scale perovskite production line, achieving significant efficiency improvements in its solar cells, with single-junction module efficiency reaching 19.04% and tandem module efficiency at 26.36% [3]. - The perovskite technology is expected to contribute to revenue growth, with projected shipments of 100 MW, GW, and 3-5 GW in the years 2026 to 2028 [3]. Market Dynamics - The report highlights the government's initiatives to promote the photovoltaic sector, which are expected to enhance downstream demand and stabilize pricing across the industry [4]. - The company is responding to the "anti-involution" call by maintaining low inventory levels and adjusting its sales forecasts for silicon materials and wafers, leading to revised profit expectations for 2025-2027 [5][24]. Profitability Forecast - The revised profit forecasts for 2025-2027 indicate net losses of RMB 2.30 billion, a profit of RMB 1.28 billion, and RMB 2.14 billion, respectively, reflecting a significant downward adjustment due to anticipated lower sales volumes [5][24]. - The report projects a recovery in profitability as the industry stabilizes, with a shift to a 2026 valuation based on a price-to-earnings ratio of 45x, reflecting the company's cost advantages and market position [5][26].