GCL NEWENERGY (00451) issues profit warning, expecting net loss to increase to about 1.1 billion yuan in 2025 compared to the previous year.

GCL NEWENERGY (00451) announced that the group is expected to incur a net loss of approximately RMB 1.1 billion in the 2025 fiscal year (ending December 31, 2025), compared to a net loss of RMB 223 million in the fiscal year ending December 31, 2024. The group anticipates a total provision for compensation of approximately RMB 900 million in the 2025 fiscal year, with an additional provision of RMB 605 million to be recognized in the second half of the 2025 fiscal year. The main reasons are as follows: (i) The provision for tax compensation has increased by approximately RMB 278 million in the second half of 2025, as buyers or buyers who have already sold photovoltaic power plants informed the group that they have received tax payment notices from local tax authorities. Due to the unclear policies on farmland occupation tax and land use tax related to photovoltaic power plants, and differences in tax collection methods, the group needs to negotiate with relevant local tax authorities to determine the scope of tax payment and the basis for taxation. The Board of Directors will further evaluate the provision for compensation based on the latest tax policies related to farmland occupation tax and land use tax for photovoltaic power plants. (ii) The provision includes approximately RMB 326 million to compensate the buyer of a photovoltaic power plant in Inner Mongolia for the loss of electricity sales income, as stipulated in the contract. Due to compliance issues with the photovoltaic power plant, the local regulatory authorities have requested the buyer to return the above-mentioned amount. Although the management of the buyer believes that the regulatory authorities' claims lack legal basis and reasonable grounds, in order to maintain its business operations in Inner Mongolia, the buyer has agreed to temporarily return the relevant amount to the local regulatory authorities. The potential compensation that the group paid to the buyer is subject to further review of the terms of the sale agreement and the progress of the buyer's claims with the local regulatory authorities. The group will continue to monitor the developments and assist the buyer in vigorously defending against the claims to safeguard the group's interests.