GCL issues profit warning

The board of Chinese solar giant GCL-Poly, in common with a lot of solar companies, is betting on a resurgence in the industry this year.

Having announced recently the polysilicon manufacturer-turned-project developer was targeting 1 GW of new solar projects worldwide in 2014, GCL-Poly Holdings issued a profit warning over its 2013 full-year figures on Tuesday.

Earlier the same day, the company had warned holders of 2018 notes in one of its Chinese poly manufacturing subsidiaries that their notes are at risk of being de-listed from the Shanghai Stock Exchange as a result of anticipated back-to-back full year losses.

Chinese institutional investors holding RMB1.5 billion (US$247 million) of notes issued by GCL subsidiary Jiangsu Zhongneng Polysilicon Technology Development Company in November 2011 – and listed in Shanghai from January 9, 2012 – have been told the notes are at risk of de-listing.

The rules of the Shanghai exchange stipulate notes issued in a company which suffers consecutive full year losses will be taken off the exchange and can only be re-listed once a company returns to profit.

With Jiangsu Zhongneng having posted a 2012 loss of RMB1.2 billion, the company has announced it expects to be hit with another loss for 2013, blaming the PV trade wars with the U.S. and EU, a delay in implementing anti dumping and countervailing duties on polysilicon imported by China and a downturn in the industry from January to September.

In an announcement to the Hong Kong Stock Exchange on Tuesday, parent company GCL said: "As the Chinese government has issued a number of supportive policies for the solar industry, both the demand and selling price of polysilicon are adjusting upward. The board expects the operating enviornment will continue to improve for the year 2014."

EU trade deal bolstered GCL

The GCL statement added an upturn in fortunes had already been seen in the final three months of last year and pointed to the resolution of the EU trade spat through an agreement over minimum module prices and an export volume cap in the summer as further reasons to be cheerful.

Curiously, GCL also cited the recent anti dumping and countervailing duty decision by the Chinese authorities with respect to polysilicon imports as helpful despite the fact EU imports will face no duties and South Korean poly will shoulder only a negligible bruden. The steepling duties applied to U.S. polysilicon will undoutedly benefit Chinese producers like GCL but that benefit is being shared by European and Korean polysilicon makers as well.

Jiangsu Zhongneng has to publish its full year figures by April 30 and, if a loss is posted, the de-listing process in Shanghai will start at that point.

GCL announced its own full-year results will be revealed next month with the expected loss put down to a harsh trading environment in the first three quarters and also to impairments and provisions against intangible assets, inventory, account receivables and production facilities, with the Hong Kong Stock Exchange announcement carrying no further details.

GCL was at least able to announce that the expected loss will be "a substantial less extent as compared to loss in 2012."

The company recently announced its intent to develop 1 GW of new solar projects – mostly in China – after acquiring developer China Merchants New Energy in June.