Citi Anticipates GCL TECH (03800.HK) Will Gain from Rising Polysilicon Prices During Industry Output Consolidation

The analyst rating from JPMorgan is based on the view that the proposal by the China Photovoltaic Industry Association (CPIA) is a setback to the industry's 'anti-involution' initiative but is seen as an adjustment rather than a reversal of the overall development in the sector. Despite the potential for negative share price reactions, JPMorgan believes that DAQO New Energy and GCL TECH are likely to emerge as winners in this situation due to their strong financial positions and low production costs. Consequently, the broker maintained an Overweight rating for these two stocks, with target prices set at US$38 for DAQO New Energy and $1.7 for GCL TECH.

The analyst rating for GCL TECH is based on the expectation that successful consolidation of polysilicon production capacity will lead to rising polysilicon prices. This, in turn, is anticipated to benefit GCL TECH through margin expansion and potential earnings growth, even at a 50% capacity utilization rate. Consequently, Citi Research rated GCL TECH as a Buy/High Risk, with a target price of $1.72.

The analyst rating of "Buy" for GCL TECH (03800.HK) by Northeast Securities is based on several key factors: 1. Turnaround in Profitability: The company reported a significant turnaround in its photovoltaic materials business, achieving an unaudited profit of approximately RMB960 million in 3Q25, which includes sale proceeds from an associated company. This marks a shift from previous losses to profitability. 2. Strong Adjusted EBITDA: The unaudited adjusted EBITDA for the photovoltaic materials business was about RMB1.41 billion in 3Q25, also indicating a recovery from losses and aligning with market expectations. 3. Positive Future Projections: The report anticipates that GCL TECH will continue to improve its financial performance, projecting net profits of -RMB992 million, +RMB1.085 billion, and RMB1.864 billion for the years 2025 to 2027, respectively. 4. Market Positioning: The company is expected to accelerate towards a results inflection point, suggesting that it is well-positioned to capitalize on market opportunities despite challenges in the industry. 5. Target Price: The target price set at $1.5 indicates a positive outlook for the stock's future performance. Overall, the combination of improved financial results, positive future projections, and strategic positioning in the market supports the "Buy" rating.