XINYI GLASS(00868) 国元国际控股·2024-08-07 10:01Investment Rating - The report maintains a "Buy" rating for Xinyi Glass (0868.HK) with a target price of HKD 10.8, indicating a potential upside of 40% from the current price [2][9][14]. Core Insights - In the first half of 2024, the company reported a 27.1% year-on-year increase in net profit, with a mid-term dividend payout ratio of 48%. Revenue was HKD 11,807.2 million, a slight decline of 6.4% year-on-year, while gross profit increased by 10.6% to HKD 4,046.7 million, leading to a gross margin improvement of 5.3 percentage points to 34.3% [6][11]. - The glass industry is currently facing pressure from high inventory levels and weak demand, leading to a downward trend in prices. As of August 1, 2024, the average price of float glass was RMB 1,439 per ton, down by RMB 26.73 week-on-week, with total inventory reaching 69.09 million weight boxes, a year-on-year increase of 51.13% [7][12]. - The company is implementing a differentiated strategy to navigate the industry's cyclical downturn, focusing on optimizing procurement channels, increasing the proportion of high-value-added products, and expanding overseas operations. Currently, overseas business accounts for approximately 28.8% of total sales, with differentiated product sales making up about 47% of float glass products [8][13]. Financial Summary - For the first half of 2024, the company achieved a net profit of HKD 2,729.9 million, with a net profit margin of 23.1%, up from 17% in the first half of 2023. Basic earnings per share were HKD 0.646, and the interim dividend was HKD 0.31 per share [6][11]. - The financial outlook for the coming years shows a projected revenue of HKD 25,767 million in 2024, with a slight decline of 3.8% year-on-year, followed by a recovery with expected growth of 6.7% in 2025 [10].