Citigroup has issued a research report reiterating a 'Neutral' rating on XINYI SOLAR (HKEX: 00968). The bank has reduced its target price for the stock by 35.1% from HK$3.7 to HK$2.4, citing significant downward revisions to its earnings forecasts.

However, the report suggests that the decline in photovoltaic glass prices has likely already been factored into the market. It also notes that the current valuation, trading at approximately 0.7 times the projected 2026 price-to-book ratio, is not considered expensive.

Revised Earnings Outlook and Market Challenges

The report indicates that due to weak demand for solar installations in China, the price of 2.0mm photovoltaic glass products has fallen sharply by 18.2% year-to-date to RMB 9 per square meter. Consequently, the bank anticipates that XINYI SOLAR could shift to a loss in the 2026 fiscal year.

Industry Inventory and Supply Dynamics

Data from SCI99 shows that as of June 18, the average inventory days for photovoltaic glass in China were as high as 51.4 days. The report further points out that China's daily photovoltaic glass melting capacity stood at 81,350 tonnes as of that date, representing a year-on-year decrease of 17.8%. This capacity is estimated to support a monthly module output of approximately 45 GW.

In contrast, data from SMM suggests that China's module production in June is projected to fall by 18.4% year-on-year to 37.8 GW. This disparity between production capacity and actual output highlights a market that remains in a state of oversupply.