2025-07-04 01:35Investment Rating - The investment rating for Xinyi Solar is Neutral, with a target price of HK$2.30, indicating an expected share price return of -7.6% and an expected total return of -5.7% [4]. Core Insights - The solar glass industry is experiencing a significant supply cut of approximately 30% by PRC solar glass makers in July due to weak demand, high inventory levels, and low prices [1][2]. - Xinyi Solar's current solar glass capacity is fully utilized, and the company has no concrete plans for output cuts, depending instead on market demand [1][7]. - The average market prices for solar glass have dropped significantly, with 2.0mm and 3.2mm solar glass prices decreasing by 21.4% and 17.6% respectively in May-June [3]. - Xinyi Solar's net profit is forecasted to decline by 70% year-on-year to Rmb550 million in 1H25E, primarily due to price cuts, although a recovery is expected in the second half of the year [1][9]. Summary by Sections Industry Overview - The solar glass production cut began in June, with a total daily capacity reduction of 6,870 tons, representing 7.0% of China's total operational capacity [2]. - The average inventory period for solar glass has increased from 27.0 days to 32.4 days as of June 26 [6]. Company Performance - Xinyi Solar's operational daily capacity remains at 23,200 tons, accounting for 22% of global solar glass capacity, and it may consider output reductions in 2H25E if demand weakens further [7]. - The company has seen improved demand for its solar glass produced in Malaysia, with prices approximately 30% higher than domestic sales [8]. Financial Forecast - The financial forecast for Xinyi Solar indicates a net profit of Rmb866 million for 2025E, with a projected P/E ratio of 23.8x and a P/B ratio of 0.7x [4][9]. - The expected diluted EPS for 2025E is Rmb0.095, reflecting a decline of 15.3% year-on-year [9].