Jinwu Financial News | Guoyuan International's Research Reports indicate that XINYI SOLAR (00968) has released a negative earnings forecast, expecting a year-on-year decrease of 70-80% in net income attributable to the parent company for 2024. Based on the company's net income attributable to the parent company of 4.187 billion HKD in 2023, it is estimated that the company's net income for 2024 will be between 0.837-1.256 billion HKD (with a median of 1.047 billion HKD). In the first half of 2024, earnings are projected to be 1.963 billion HKD, resulting in an estimated loss of 0.707-1.126 billion HKD in the second half of 2024 (with a median loss of 0.916 billion HKD).

The report states that the significant drop in the company's earnings is primarily due to: 1) the imbalance between supply and demand for Photovoltaic Glass leading to a substantial year-on-year drop in glass prices in the second half of 2024, resulting in corresponding declines in the company's revenue and gross profit; 2) the company made impairment provisions for Photovoltaic Glass production lines that are either paused or under maintenance; 3) due to the drop in Photovoltaic Glass prices, the company made provisions for inventory write-downs. The company's earnings decline significantly missed market expectations; however, overall, based on the company's economies of scale, the expected loss is notably smaller than that of second and third-tier enterprises.

The report continues to indicate that due to the previous significant reduction in industry maintenance efforts, inventory has begun to decline slightly since November-December. However, due to the factors related to the Spring Festival in Q1 2025 coupled with the industry off-season, demand is weak, leading to an expected adjustment in the overall operating rate of the Industry Chain, and the shipping pace will slow down. The increase in Photovoltaic Glass prices in Q1 2025 will still face pressure. However, based on the current loss situation in the industry, glass manufacturers are in a stage of price support, and short-term prices may remain stable. The overall judgment is that in 2025, as supply-side capacity is cleared and demand recovers in Q2 after the off-season in Q1, the supply-demand pattern in the industry is expected to improve. After entering the destocking phase, Photovoltaic Glass prices will rationally return, with the price and profit inflection points gradually approaching.

The report updates the target price to 4.33 HKD, equivalent to 15 times and 13 times PE for 2025 and 2026, respectively, with a target price having 38% upside potential compared to the current price, maintaining a Buy rating.