According to a research report released by Tianfeng Securities, the first “buy” rating was given to GCL Technology (03800). The estimated revenue for 2024-2026 is 287, 32.4, and 34 billion yuan, respectively, and net profit attributable to mother is 2.5, 3, and 3.8 billion yuan. Considering that the company's subsequent granular silicon market share is expected to continue to increase due to its cost advantage, the target price is HK$1.53-2.03 per share by superimposing perovskite options.

Tianfeng Securities's main views are as follows:

Ten years of sharpening the sword, focusing on the granular silicon business

The company was founded in 2006 and listed in Hong Kong in November 2007. It is one of the world's largest polysilicon manufacturers. The company mainly has two major businesses: photovoltaic materials and photovoltaic power plants. In '22, the shareholding ratio of GCL New Energy Corp., which corresponds to the power plant business, was reduced to 7.44% in order to focus on strengthening resources to develop the core business of polysilicon materials; in '23, the company completely withdrew from the rod-shaped silicon sector to focus on granular silicon.

There is a clear trend of increasing the market share of granular silicon based on low cost & high quality with excess silicon, which is expected to reach 30% in 25 years

On the demand side - in the context of carbon neutrality, the number of new PV installations worldwide is growing rapidly. According to the estimated 823 GW of PV installed capacity in 2026, assuming a capacity ratio of 1.3, silicon consumption is expected to drop to 1.8 g/w, corresponding to the demand for 1.93 million tons of silicon. The supply-side photovoltaic manufacturing process is rapidly expanding. CAPIA expects production capacity to exceed 2.1 million tons of silicon in 24 years. As a result, the bank expects a relative oversupply of silicon in the next 2-3 years.

In the cycle of falling silicon prices, low cost & high quality products are the way to break the game

Granular silicon is based on its cost advantage - lower electricity consumption corresponds to a cost reduction of 14 yuan/kg (rod-shaped silicon vs. granular silicon electricity consumption is 57, 13.8 kWh/kg-Si); on the quality side - the “hydrogen jump” problem has basically been solved. The metal impurity content is close to rod-shaped silicon, and the company accounts for more than 20% of the supply share of N-type silicon from domestic suppliers. The subsequent penetration rate is expected to increase significantly (4% in '21 → 17% in '23 → 30% in '25).

Orders for granular silicon faucets continue to be signed, and CCZ is superimposed to improve crystal drawing efficiency

The difficulty of granular silicon is its purity control, and the current solution has been patented by REC (Tianhong Recco has been authorized) and the company, so the patent barrier makes it difficult for the granular silicon industry to have new competitors in the short term. The company had a nominal production capacity of 500,000 tons at the end of '24. The technology stemmed from independent research and development+acquisition of SunEdison. The bank believes that the company is a well-deserved granular silicon faucet. Recently, a three-year procurement contract of 425,000 tons was signed with silicon chip leader Longji, which is conducive to a rapid increase in market share.

At the same time, for downstream customers, the CCZ process can achieve continuous production, but requires raw materials with smaller particle sizes and better fluidity, and granular silicon is more suitable for them. The resistivity of silicon rods produced by CCZ+ granular silicon is more uniform (the advantage is more obvious under the N-type trend), and the output of a single furnace is 20% + higher than RCZ.

The efficiency of perovskite components improved significantly in '23, and the foundation for the GW-class production line was laid

As a new third-generation solar cell, perovskite batteries can further improve photoelectric conversion efficiency and have broad prospects. Through the acquisition of 45% of GCL Optoelectronics's shares in Xiamen Weihua, the company has continued to improve the efficiency of perovskite modules over the past 23 years. The efficiency of the latest single-junction modules achieved 19.04%, and the efficiency of laminated modules reached 26.36%. At the end of '23, the company officially entered the GW-level commercial operation era.