GCL Technology (3800) H1 2024 earnings summary

Executive summary

• Revenue for 1H2024 was RMB8,863 million, a 57.7% decrease year-over-year due to a sharp decline in polysilicon prices, despite higher sales volumes from expanded granular silicon production.

• Net profit attributable to owners was a loss of RMB1,480 million, compared to a profit of RMB5,518 million in 1H2023, with gross margin turning negative at -6.2%.

• The company focused on cost control, reducing administrative expenses by 40%, and continued to invest in R&D, with the investment ratio exceeding 8%.

• Technological advances in FBR granular silicon led to improved product quality, lower costs, and increased market acceptance, with inventory levels kept below two weeks and long-term contracts secured through 2027.

• No interim dividend was declared for the period.

Financial highlights

• Gross loss for 1H2024 was RMB553 million, compared to a gross profit of RMB8,778 million in 1H2023.

• Basic and diluted loss per share was RMB(5.60) cents, down from RMB20.79 cents last year.

• Administrative expenses dropped to RMB683 million, down 40% year-over-year.

• Finance costs rose to RMB305 million, up 41.9% year-over-year.

• R&D expenses were RMB718 million, representing over 8% of sales.

Outlook and guidance

• The company expects continued quality and efficiency improvements in granular silicon, with new production capacity coming online in the second half of 2024.

• International expansion, especially in the Middle East, is a strategic priority for 2024.

• The company aims to lead the industry out of the downturn through technological innovation and cost leadership.

• Long-term procurement contracts for granular silicon extend to 2027.

• The silane gas business is expected to be a new profit driver.