JPMorgan on GCL Technology: 1H26 Results Takeaways Centered on Policy Intervention Progress

JPMorgan maintains Overweight on GCL Technology (3800.HK) with a June 2027 target price of HK$1.10 versus HK$0.70 at the August 31 close. The 1H26 attributable net loss widened to RMB2.1 billion from RMB1.8 billion a year earlier on revenue up 0.7% at RMB5.8 billion, as higher expenses, FX losses and impairments of PP&E and a former associate offset a narrower gross loss—RMB434 million versus RMB700 million, with gross margin improving from -12.2% to -7.5% on firmer granular-silicon ASPs. The report's focus is policy: after the July 31 SAMR industry meeting, Price Law enforcement is advancing, with mandatory energy-consumption and cost-accounting standards introduced in July and GCL among eight major producers pledging not to sell polysilicon below full cost. Quotes have recovered to RMB40-43/kg, though roughly 500kt—about five months—of industry inventory constrains transaction volumes. Management guides mid-term polysilicon prices around RMB45/kg including VAT, modestly below JPMorgan's RMB50-55/kg expectation on differing full-cost definitions. GCL's 2Q26 cash cost of RMB25.1/kg makes it the industry's lowest-cost producer, with 50-60% utilization, only 1-2 weeks of inventory and positive EBITDA. Second-half volume and price recovery is seen as the key share-price catalyst; JPMorgan is Overweight across cost leaders including Daqo, Xinyi Solar and Flat Glass.