Citigroup cut its price target on GCL Technology Holdings Ltd. (3800.HK) by 24% to HKD 1.30 but maintained a Buy rating, forecasting a 2026 loss.
The revision is mainly due to weak polysilicon demand since the first quarter, leading to declines in both selling prices and sales volume, Citi said in a report.
The bank lowered its target from HKD 1.72 and reversed its forecast from a net profit to a full-year loss. GCL Tech’s stock last traded at HK$0.90, implying 44% upside to Citi’s new target. The company’s shares have fallen 15.1% year-to-date, with revenue down 55.2% year-over-year, according to data from Meyka.
Citi kept its Buy rating because it believes polysilicon prices have bottomed out, falling below the average cash cost for most producers. The bank called GCL’s estimated 2026 price-to-book ratio of 0.6x “attractive at the trough of the cycle.”
The bank’s contrarian Buy rating hinges on GCL Tech’s position as a leading player with the lowest polysilicon production costs and minimal inventory pressure compared to peers. Citi expects prices could rebound in the second half of 2026 if regulators tighten energy consumption requirements and price supervision.
The bearish forecast aligns with GCL Tech’s recent performance. The company reported negative earnings per share of -HK$0.11 and negative free cash flow per share of -HK$0.047. Its net income fell 289.3% in the most recent period, reflecting severe operational headwinds from overcapacity and price competition in the solar materials sector.
The maintained Buy rating signals Citi sees deep value in the low-cost producer despite near-term losses. Investors will watch for any signs of price stabilization in the polysilicon market and the company's next earnings report for updates on cost controls.
This article is for informational purposes only and does not constitute investment advice.
