CitiGroup today staged an about-turn on its rating of GCL Poly shares, from ‘sell’ to ‘buy’ and more than doubled its target price for the company’s stock from US$1 to $2.68, although within eight hours the company issued a profit warning on the Hong Kong stock exchange.
The stock market forecaster explained the change by pointing to the expected beneficial effects on GCL Poly’s solar raw material as a result of China’s impending anti-dumping trade case against U.S. imports itself a response to the U.S. Congress’ investigation into imported Chinese-manufactured modules.
CitiGroup also points to an anticipated rise in domestic demand as Chinese manufacturers increasingly look inward as a result of the government’s solar policies.
But in the subsequent profit warning, based on preliminary FY accounts for 2012, GCL Poly warned of a substantial loss for the 12 months, with particular emphasis on the fourth quarter.
Unsurprisingly, U.S. anti dumping duties and the European debt crisis were cited as the main factors along with ‘overseas enterprises’ who ‘began dumping viciously low priced polysilicon to China’, according to the announcement.
On a more positive note, the company statement said the closure of ‘less efficient enterprises’ in 2012 was an indicator that the price of polysilicon had hit rock bottom and stabilized in December.