CICC has reiterated a Neutral rating on XINYI SOLAR (00968), maintaining a target price of HK$3.6. This corresponds to a price-to-earnings (P/E) ratio of 14.5x for 2026 and 12.3x for 2027, implying a potential upside of 1.4% from the current share price. The current share price reflects P/E ratios of 14.2x for 2026 and 12.1x for 2027. The firm has introduced new forecasts for 2027, projecting revenue of RMB 21.293 billion and net profit of RMB 2.355 billion.
Recent company developments indicate that a reduction in export tax rebates has temporarily boosted domestic demand for modules, leading to a slight increase in solar glass prices. This has contributed to some recovery in the sales margins of the company's photovoltaic rolled glass. It is believed that module demand was weak in the first half of the year, with solar glass inventory clearance being the primary focus during this period of demand, a trend expected to persist until mid-to-late February. Since the beginning of the year, inventory days in the glass industry have decreased from 40.17 days to 34.18 days, a reduction of approximately 6 days. As a leading supplier of glass compatible with exported modules, the company's strategy during this demand phase is to manage inventory levels and mitigate stock accumulation pressure during the Lunar New Year period.
The proportion of overseas shipments is expected to increase within the year, potentially shifting the profit margin focus upward. According to the company's official social media, one 1,200-ton production line in Indonesia commenced operations on January 15, with another line anticipated to start soon, achieving full production and sales within the year. Overseas capacity now accounts for 24.7% of the company's total operational capacity. Based on overseas module demand and glass supply conditions, it is estimated that an additional 10-15% of domestic production will need to be allocated for export. Combined with shipments from overseas capacity, the total overseas shipment proportion is projected to exceed 35%. Given that profit margins for solar glass are generally higher overseas than domestically over the long term, the overall profit margin focus is expected to rise compared to last year.
Regarding profit forecasts and valuation, considering that solar glass prices in October-November 2025 were temporarily higher than expected, the 2025 revenue forecast has been raised by 13.4% to RMB 18.914 billion. Due to better-than-expected average glass prices and profits in the fourth quarter, the 2025 net profit forecast has been increased by 2% to RMB 1.528 billion. For 2026, with the expected higher proportion of product exports and superior overseas pricing, the overall average selling price for glass is anticipated to trend higher. Consequently, the 2026 revenue forecast has been raised by 10.3% to RMB 20.324 billion. However, considering potential impairment charges related to silicon material capacity and risks of margin compression from weak domestic module demand, the 2026 net profit forecast has been adjusted downward by 1.2% to RMB 2.033 billion.
Key risks include photovoltaic demand falling short of expectations, cost fluctuations, and slower-than-expected capacity rationalization.