GCL Technology (3800) H1 2024 earnings summary

Executive summary

• Revenue for the six months ended 30 June 2024 was RMB8,863 million, down 57.7% year-over-year due to a sharp decline in polysilicon prices, despite higher sales volumes from expanded granular silicon production.

• The period saw a net loss attributable to owners of RMB1,480 million, compared to a profit of RMB5,518 million in the prior year, with gross profit 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 R&D ratio rising to over 8% of revenue.

• 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

• Revenue: RMB8,863 million (down 57.7% year-over-year).

• Gross loss: RMB553 million (vs. gross profit of RMB8,778 million last year).

• Net loss attributable to owners: RMB1,480 million (vs. profit of RMB5,518 million last year).

• Basic and diluted loss per share: RMB(5.60) cents (vs. earnings per share of RMB20.79 cents last year).

• Administrative expenses: RMB683 million (down 40% year-over-year).

• Finance costs: RMB305 million (up 41.9% year-over-year).

• R&D expenses: RMB718 million (R&D investment ratio >8%, up 3.8 ppt year-over-year).

Outlook and guidance

• The company expects continued quality and efficiency improvements in FBR granular silicon, with the commissioning of a new 60,000-ton modular project and cash cost expected to fall below RMB30/kg in the second half of 2024.

• Long-term procurement contracts for granular silicon extend to 2027, with new production capacity coming online.

• International expansion, especially in the Middle East, is a strategic priority for 2024, and the silane gas business is expected to be a new profit driver.

• The company aims to lead the industry out of the current downturn through technological innovation and cost leadership, leveraging advancements in granular silicon and perovskite.