27 February 2020

Are the dark days finally over for GCL-Poly?

China’s solar industry has experienced rough weather in the past couple of years amid overproduction and external trade disputes. While the problems are not over, things do seem to be looking up now for some players, notably GCL-Poly Energy (03800.HK).

The company has issued an earnings warning again, but said the 2013 loss will be substantially lower than that recorded in the previous year. Low selling prices of photovoltaic products in the first three quarters will weigh on the results, but demand and price began picking up in the final quarter, pointing to brighter days ahead.

The spot price of polysilicon has risen about 10 percent since end-September last year.

The price of the solar cell material tumbled to a record low to US$15.83 per kilogram in December 2012 from a historical peak of US$78.93 in March 2011, according to data compiled by Bloomberg. As the polysilicon price went into a freefall, it’s not hard to imagine the huge adverse impact it had on polysilicon and wafer makers.

GCL-Poly, for instance, recorded a stunning loss of HK$3.5 billion (US$450 million) in 2012.

But if the recent trend of improving demand, price recovery and effective cost control continues, GCL-Poly could be on the way to regaining some lost ground. That said, there are a few things that could prevent that from happening, or at least interrupt the recovery.

Earlier this month, China’s National Energy Administration set a lower-than-expected target for solar capacity installation this year, at 10-gigawatt. The target capacity is 28 percent less than what had been projected by state media previously.

More importantly, the US Commerce department initiated last month fresh antidumping and anti-subsidy investigations on photovoltaic products from China and Taiwan. If authorities decide to raise tariffs on Chinese and Taiwanese manufacturers mid-February, it will hurt players real hard as most of their products are shipped overseas. 

Insiders, meanwhile, appear to know something that other investors don’t, and their moves are sending out a negative signal.

Chengdong Investment, an investment arm of China’s sovereign wealth fund, was once the second largest shareholder of GCL-Poly. But the fund cut its stake to 4.57 percent from 12.3 percent earlier this month, the second disposal since last June.

– Contact the writer at [email protected]


EJ Insight writer