Xinyi Solar Shares on Winning Streak After Strong Earnings, Sector Recovery
By Sherry Qin
Xinyi Solar's shares rose sharply, extending gains to a seventh straight session as investors continued to cheer the company's earnings beat and signs the solar-glass industry may have bottomed out.
Shares of the solar-glass manufacturer advanced 9.1% to 5.89 Hong Kong dollars (75 U.S. cents) at midday Friday, on track to gain more than 50% since its Feb. 28 earnings release.
Xinyi Solar's net profit climbed 9.6% in 2023, beating market consensus, while its gross profit margin for the solar-glass segment rose to 26.4% in the second half from 15.2% in the first half.
It forecast global solar-module demand to rise 20%-30% and solar-glass supply to increase 20% in 2024, including a 35% rise from the company, according to Citi Research.
Citi analysts also noted that the company expects its gross profit margin from solar-glass sales to improve substantially in the first quarter from low-teens growth a year earlier, thanks to lower raw-material and energy costs.
Shares of other major solar-glass makers were also higher Friday. Flat Glass Group climbed 9.2% and Irico Group New Energy rose 7.3%.
Jefferies said the solar-glass sector may be "approaching an inflection point" amid resilient global demand and signs of destocking in the European Union. Analysts led by Melody Chan in a research note said the continued recovery in solar-glass margins is another sign the sector is finally out of the trough.
Jefferies upgraded its ratings on Xinyi Solar and Flat Glass to buy from hold and boosted their target prices by 47% and 40%, respectively, to HK$6.25 and HK$19.83.
Deutsche Bank analyst Gary Zhou said in a note after Xinyi's earnings that although analysts remain cautious about the solar industry in 2024, partly due to weak near-term demand, "Xinyi Solar is one of our preferred picks in the space, as we see better supply discipline in [the] solar-glass industry compared to other solar subsectors."
Write to Sherry Qin at sherry.qin@wsj.com
(END) Dow Jones Newswires
March 08, 2024 00:13 ET (05:13 GMT)
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