Update | Shares in Chinese solar materials firm GCL Poly fall after profit comes in below expectations
Strong performance in its solar farms business is not enough to offset declines in materials due to stiff price competition
Shares of GCL-Poly Energy, the world’s largest producer of materials for solar panels, fell on Thursday after it posted a 13 per cent decline in interim profit, with a strong performance in its solar farms business unable to offset the impact of price competition in materials.
The Jiangsu province-based firm, controlled by tycoon Zhu Gongshan, reported a net profit of 1.2 billion yuan (US$182 million), down from 1.38 billion yuan in the same period a year earlier, it said in a filing to the Hong Kong stock exchange late on Wednesday.
The figure was 5.8 per cent short of the 1.27 billion yuan average estimate of two analysts polled by Bloomberg, and amounted to 61.6 per cent of the 1.94 billion yuan full-year estimate of 19 analysts.
GCL-Poly shares fell 3.3 per cent to 87 HK cents and its solar farms subsidiary GCL New Energy slid 1.8 per cent to 42 HK cents by 2.53pm, underperforming the Hang Seng Index’s 0.6 per cent decline.
GCL attributed a fall in the net profit margin of its solar materials business to 8.5 per cent from 15.6 per cent to a “significant decrease in the average selling price of wafers”, without giving figures.
“Excluding one-off items, the recurring net profit declined even more by 37 per cent year on year ... this set of weak results missed our expectations,” Daiwa Capital Market’s head of utilities and renewables research Dennis Ip wrote in a note.