Oct 29th by Gelonhui | GCL Tech (3800.HK) issued a profit warning recently, expecting a loss of approximately 2.971 billion yuan for the first nine months ending in September, compared to a profit of 2.51 billion yuan for the whole year ending last year. CICC released a report, stating that GCL's loss in the third quarter is within expectations, expecting a turnaround from loss to profit next year, raising the target price from the original 1.3 Hong Kong dollars to 1.9 Hong Kong dollars, maintaining an "outperform" rating. The report pointed out that the ultra-low prices from polysilicon to photovoltaic modules have led solar manufacturers to engage in cash consumption activities in 2024, triggering a period of market consolidation, with the lowest impact on low-end participants. CPIA requires that module bidding prices do not fall below the module production cost (i.e., 0.68 yuan/watt, including value-added tax, minus depreciation and shipping costs), helping to establish a recent bottom price for photovoltaic modules. At the same time, the market is anticipating the final draft of the "Photovoltaic Manufacturing Standard Management Measures 2024" policy, which will implement production standards for different solar energy submarkets. This may include stricter unit power and silicon consumption limits for polycrystalline silicon manufacturers. Therefore, older/inefficient polycrystalline capacity may be phased out, benefiting first-tier low-cost producers like GCL Tech. CICC stated that GCL Tech's low-cost and low-carbon FBR granular silicon is well-positioned in the industry downturn. The bank has lowered the company's profit forecast for 2024 to 2026, reflecting lower silicon sales and gross margins, as well as higher operating expenses and financial costs. The bank predicts that GCL Tech will return to profitability next year, earning 0.633 billion yuan, with the net profit expected to increase significantly to 3.4 billion yuan in 2026, lowering to around 10 times.Estimated P/E ratio.Reduced to around 10 times.