GCL TECH(HK:03800) Guotai Junan Securities·2024-05-21 10:02Investment Rating - The report maintains a "Buy" rating for the company [2][4]. Core Views - The company has a strong foundation in granular silicon technology and is rapidly expanding its production capacity while continuously improving product processes. The low-cost, high-quality granular silicon products are expected to help the company navigate through industry cycles, with a differentiated carbon footprint advantage likely to emerge [2]. - The projected net profits for the company from 2024 to 2026 are estimated to be 2.134 billion, 3.045 billion, and 4.104 billion RMB respectively. Based on the valuation levels in the A/H share photovoltaic industry, a target market value of 42.68 billion RMB is set for 2024, corresponding to a target price of 1.71 HKD [2]. - The company reported a revenue of 5.47 billion RMB and a net profit of 330 million RMB for the first quarter of 2024. By the end of 2023, the nominal production capacity of granular silicon reached 420,000 tons, with effective capacity at 340,000 tons, and is expected to increase to 500,000 tons by the end of 2024 [2][3]. Financial Summary - The financial summary indicates that the company's revenue for 2023 is projected to be 34.129 billion RMB, reflecting a 7% decrease from the previous year. The net profit for 2023 is expected to be 2.51 billion RMB, an 84% decrease compared to 2022 [3]. - The PE ratio for 2023 is noted at 12.31, with projections for 2024, 2025, and 2026 being 16.58, 11.62, and 8.62 respectively [3]. Production and Quality Improvements - The company’s granular silicon production utilizes the silane fluidized bed method, which significantly reduces electricity consumption compared to the mainstream Siemens method, providing a clear cost advantage. The product quality is continuously improving, with over 90% of granular silicon meeting the total metal impurity requirement of ≤0.5 ppbw [2]. - The company has achieved a turbidity level of granular silicon below 120 NTU, with 75% of the products below 100 NTU, and aims to further reduce this level [2]. Market Position and Future Outlook - The company is well-positioned to benefit from the increasing market demand for photovoltaic products with lower carbon footprints, as the production of granular silicon is associated with lower energy consumption, which is a significant contributor to carbon emissions in the photovoltaic supply chain [2]. - The report highlights that the company’s products have established a high barrier to entry, which is expected to help it navigate through industry cycles effectively [2].