FAST NEWS: GCL Tech Posts Strong Quarterly Profit on High Polysilicon Prices

The latest: Polysilicon products maker GCL Technology Holdings Ltd. (3800.HK), formerly known as GCL Poly, announced late Wednesday that it expects to report a net profit of 3.03 billion yuan ($480 million) for this year’s first quarter, equal to 60% of its net profit for all of last year.

Looking up: The big gain came on strong performance for the company’s solar materials business, which recorded revenue of 6.68 billion yuan in the quarter and a consolidated gross margin of 46%. The solar materials business accounted for 95.6% of the company’s total revenue of 6.99 billion yuan for the quarter.

Take Note: High demand for the installation of solar power means that many polysilicon makers are operating at full capacity, which will limit their future growth potential using existing facilities.

Digging Deeper: GCL Technology experienced financial difficulties in recent years, but has managed to reemerge as a healthy company in part due to recently soaring polysilicon prices. After becoming embroiled in a debt crisis in 2020, it had a disagreement with its auditors last year and was unable to submit its 2020 annual report on time. As a result its shares were suspended from trading for seven months. The dispute was finally resolved last October, and its shares surged 82% in a single day when it resumed trading in November. It turned a loss into profit of 5.08 billion yuan last year as polysilicon prices surged, boosting its revenues and profits. To further lower its debt, the company announced in February that it was exploring the possibility of listing on one of the mainland’s A-share markets, with the Shanghai STAR Market as the most likely destination.

Market Reaction: The company’s shares rose nearly 3% in early Thursday trading, but they later lost momentum and closed down 5% to HK$2.49 at the midday break. The stock now trades at the low end of its range since the resumption of trading last November.

Translation by Jony Ho

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