Zhi Tong Cai Jing·2025-08-04 01:45Core Viewpoint - CICC has downgraded Xinyi Glass's (00868) 2025 EPS forecast by 21% to HKD 0.52, while maintaining the 2026 EPS at HKD 0.68, reflecting a challenging float glass business in the current year but potential marginal improvement in the industry landscape [1] Group 1: Financial Performance - The company's 1H25 revenue decreased by 9.7% year-on-year to HKD 9.8 billion, and net profit attributable to shareholders fell by 59.6% to HKD 1 billion, slightly below CICC's expectations due to weak demand in the float and architectural glass sectors [2] - Automotive glass revenue increased by 10.6% year-on-year to HKD 3.3 billion, with a gross margin improvement of 5.0 percentage points to 54.5%, slightly exceeding CICC's expectations [3] - Float glass revenue dropped by 16.4% year-on-year to HKD 5.4 billion, with the industry average price falling by 28% to HKD 1,329 per ton, and the gross margin decreased by 10.6 percentage points to 17.8%, nearing historical lows [4] Group 2: Cost and Capital Expenditure - The company's selling expense ratio increased by 2.4 percentage points to 18.6%, primarily due to additional import tariffs from the U.S., with the effective tax rate rising by 5-6 percentage points due to reduced profits from joint ventures [5] - Capital expenditure decreased by 81% year-on-year to HKD 1 billion, mainly for investments in new industrial parks in China and Indonesia, while the interim dividend per share was maintained at HKD 0.125, with a payout ratio of approximately 49% [6] Group 3: Industry Outlook - The float glass industry is expected to continue adjusting supply through cold repairs, with potential for improved profitability due to rising production costs from environmental regulations [7] - The company's focus on automotive glass, particularly in the aftermarket and proactive market expansion, is anticipated to provide a safety net for overall profitability [7]