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<Research>Daiwa Downgrades XINYI SOLAR (00968.HK) to Underperform, Axes TP to $3.7
Recommend 5 Positive 13 Negative 11 |
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Daiwa commented in a report that XINYI SOLAR (00968.HK)'s positive profit alert announcement last week was expected by the market. The company expected its 1H24 net profit to hike 35% to 45% YoY, but it was actually weaker than expected. XINYI attributed the net profit rise to the low base of last year, the YoY rise of sales volume during the period, and elevating gross profit margins during the period due to the decline in certain raw materials and energy costs, as well as the group's continuous efforts to improve capacity and production efficiency. The increase was partially offset by lower average selling prices for certain solar glass products. According to the report, the weak average selling price of photovoltaic glass in June may signify a weaker revenue trend in 2H24. The broker estimated that XINYI's net profit growth for 2H may be less than 5%. Daiwa said the potential drag by XINYI's loss-making polysilicon capacity could cause further reductions in 2H24 earnings forecasts by the market. The broker lowered its earnings forecast to between 8% and 16% for 2024-26. Although the dividend yield of 7% is attractive, Daiwa downgraded XINYI's rating from Hold to Underperform. The target price is axed from $5.2 to $3.7, which is equivalent to about 8.5x the projected EV/EBITDA this year, down from the original 10x. AAStocks Financial News |
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