GCL NEWENERGY Issues Profit Warning, Anticipates Widened Net Loss for 2025

GCL NEWENERGY (00451) has announced an expected net loss of approximately RMB 1.1 billion for the 2025 fiscal year ending December 31, 2025. This compares to a net loss of RMB 223 million recorded in the previous fiscal year ended December 31, 2024.

The group anticipates recognizing total compensation provisions of about RMB 900 million for the 2025 fiscal year. An additional provision of RMB 605 million was recorded in the second half of 2025, primarily due to the following reasons:

(i) The tax compensation provision increased by approximately RMB 278 million compared to the first half of 2025. This increase occurred because relevant buyers or purchasers of sold photovoltaic power stations informed the group that they had received tax payment notices from local tax authorities during the second half of 2025. Given the unclear policies regarding farmland occupation tax and land use tax for photovoltaic power stations, along with variations in tax collection methods, the group requires time to negotiate with relevant local tax authorities to determine the scope of tax payments and tax calculation basis. The board of directors has conducted further assessment of the compensation provision based on the latest tax policies related to farmland occupation tax and land use tax for photovoltaic power stations.

(ii) The provision includes approximately RMB 326 million intended to compensate a buyer for electricity sales revenue losses related to a photovoltaic power station sold by the group in Inner Mongolia. Local authorities required the buyer to return the funds due to compliance issues with the power station. Although the buyer's management believes the authorities' claims lack legal basis and reasonable justification, the buyer agreed to temporarily return the relevant funds to maintain its business operations in the Inner Mongolia region. The group's potential compensation payment to the buyer is pending further review of the sales agreement terms and developments in the claims between the buyer and local authorities. The group will continue monitoring the situation and assist the buyer in vigorously defending against these claims to protect the group's interests.