GCL shares shine as solar panel demand drives profit turnaround
Shares of GCL-Poly Energy, the world’s largest producer of solar panel raw materials polysilicon and solar wafers, rose 4.5 per cent to HK$2.80 in morning trade no Friday after it reported an interim profit turnaround as industry overcapacity was largely eased by surging panel demand in China.
Net profit for the first six months of the year amounted to HK$900.4 million, compared with a loss of HK$917.3 million a year earlier, the Jiangsu-based firm, controlled by entrepreneur Zhu Gongshan, said in a filing to the Hong Kong stock exchange.
The profit amounts to 49 per cent of the HK$1.83 billion full-year profit estimate of analysts polled by Thomson Reuters.
First-half revenue surged 52.4 per cent year on year to HK$17.22 billion, driven mainly by a 53 per cent rise in its solar material business to HK$11.89 billion. Operating profit of this business amounted to HK$1.14 billion, compared with a loss of HK$1.43 billion in the same period last year.
Profits were also boosted by a 9.2 per cent reduction in average polysilicon production cost to US$17.30 per kg, while that of wafer was slashed by 16 per cent to 8.15 US cents per watt.
GCL is optimistic on the outlook for the second half of the year.
“We experienced high utilisation of our manufacturing facilities in the first half and we expect strong momentum to continue in 2014,” it said.
While anti-dumping and countervailing duties imposed by the United States against mainland Chinese and Taiwanese manufacturers have hurt their profits, it expects global solar panel demand to grow to between 40,000 and 45,000 megawatts this year from 39,000 MW last year, as rising demand from mainland China, the United States, Japan and India offsets slower European demand.
Analysts at BOC International said in a note that although completion of GCL’s captive power plant being built to serve its own needs and cut its power bills had been delayed to the end of the year, Beijing’s recent policy to limit polysilicon import would likely boost domestic polysilicon and wafer prices in the second half. Electricity is a major cost for polysilicon makers.