1. The cost and product advantages of granular silicon are obvious. It is expected to be the first to achieve a resonance between profit and market share, and the cost advantage of granular silicon is obvious, and product parameters will continue to improve. The conversion efficiency of granular silicon is high and the degree of automation is high, and the process side brings natural cost advantages. The electricity consumption of the silane fluidized bed method is significantly lower than that of the improved Siemens method. By mid-2024, the company's technology optimization project has entered the final stage. It is expected that after completion, the company's cash costs (including R&D expenses) will be reduced to less than 0.03 million yuan/metric ton. As industry prices rise steadily, the company is expected to take the lead in returning to a trajectory of rapid volume and profit growth.

2. Promote all-round carbon reduction in photovoltaic manufacturing, and lead the “low carbon” new cycle of granular silicon to effectively reduce carbon emissions in the photovoltaic industry. With the improvement of carbon emission mechanisms and benefit-related policies at home and abroad, low carbon value continues to be realized. Currently, the advantages of low-carbon products are mainly in some market access and brand image, but with the implementation of the CBAM policy and possible future expansion, the domestic restart of CCER, the demand for carbon reduction in various industries continues to increase, and the value of low carbon is expected to continue to be reflected.

3. Through the cycle of Kyexin Technology, CCZ and perovskite create a “new growth pole” for the company, the company is rich in new technology reserves, and technology has opened up medium- to long-term space. In addition to the technological advantages of upstream photovoltaic materials, the company has stocked technologies such as CCZ and perovskite, and is leading the industry in related technology production and research. As new technology matures and the scale of industrialization increases, the company's growth rate is expected to accelerate.

3. Investment advice and profit forecast

We expect GCL's photovoltaic material shipment scale to continue to grow in 2024/2025/2026, costs are expected to continue to be optimized, and revenue is expected to pick up as industry prices recover.

We expect the company's revenue in 2024/2025/2026 to be 18.462/26.291/33.716 billion yuan, respectively; net profit to mother is -2.06 billion yuan, 1.282 billion yuan, and 3.657 billion yuan, respectively, -182%/162%/185%, corresponding EPS is -0.08/0.05/0.14 yuan, respectively. The PE corresponding to the current stock price is -19.06/30.63 /10.73 First rating, giving a “buy” rating.

4. Risk warning

1) Risk of industry demand falling short of expectations; 2) Risk of fluctuations in raw materials and electricity prices exceeding expectations; 3) Risk of falling short of expectations in granular silicon market share; 4) Risk caused by market valuation.