Jinwu Financial News | According to BOC International Development Research Report, GCL Technology (03800) achieved net profit of 2.51 billion yuan (same below) last year, slightly higher than the median performance forecast of 2.45 billion yuan. After excluding the impact of confirmed losses of 3.9 billion yuan from the sale of rod-shaped silicon assets, net profit for the second half of the year was about 900 million yuan, down 84% from the previous month, mainly due to the sharp drop in polysilicon and silicon wafer prices.
The bank believes that the cost of the company's granular silicon is the lowest in the industry. Since last year, electricity prices in the country's main polysilicon production areas have risen markedly, and the cost advantage of granular silicon with lower electricity consumption has expanded. As quality improves, sales discounts on granular silicon compared to N-type rod-shaped silicon are also expected to narrow. At the same time, businesses such as perovskite are expected to become a new growth point.
The company announced the 2024-26 repurchase/dividend plan, which is beneficial to the valuation increase. Currently, GCL's price-earnings ratio in 2024 is 43% compared to Daquan Energy (688303 CH), which is listed on A-shares. Based on (1) GCL's cost per ton is significantly lower (2) and that GCL's 2024/25 ROE should be 1-2 percentage points higher than that of Daquan Energy, the bank believes that the discount should be narrower. The bank raised the target price to HK$1.67 (previously HK$1.56) based on 13 times the 2024 price-earnings ratio (compared to the 32% discount of Dazuan Energy) to maintain the purchase.