Riding on an up cycle


■ Supply and demand in the float glass industry is expected to remain favourable in 2021 and 2022, and Xinyi Glass should outperform, given its capacity expansion.
■ We raised our core profit forecasts by 24.8%, 25.0% and 19.9% for 2021, 2022 and 2023, respectively, after factoring in a higher contribution from the float glass segment.
■ Xinyi Glass has outperformed since 2H20, but its valuation is still reasonable, with a decent yield.
■ We maintain our ADD rating, with a higher target price of HK$36.16, based on 16x 2021 P/E (higher than the historical mean of 14x).
■ Given its low base in 1H20, Xinyi Glass might issue positive profit alert, which might be a catalyst.