• Buy Entry – 30.5 Target – 35 Stop Loss – 28.5
  • Xinyi Glass Holdings Ltd engages in the manufacturing and sales of automobile, architectural, float, and other glass products for commercial and industrial applications. The company is also involved in the manufacture and sales of rubber and plastic products and the provision of logistics services.
  • Float glass prices in China continue to break new highs. As of 10th June, the average price of 4.8/5mm float flat glass reached a new high of RMB2,847.2/tonne (up 89.1% YoY). Photovoltaic sector is expected to remain one of the key investments in the next couple of years. Therefore, the demand for float flat glass will support prices. 
  • On 16th June, the company announced a positive profit alert where unaudited consolidated net profit attributable to the equity holders of the company in 1H21 is expected to increase by 260% YoY to 290% YoY to the range between HK$4.98bn and HK$5.39bn. The jump in net profit was due mainly to the increase in sales volumes and ASP and the profit contributions from Xinyi Solar (968 HK).
  • Updated market consensus of the estimated growth of EPS in FY21 and FY22 are 45.6% and 10.8% respectively, which translates to 13.6x and 12.2x forward PE. The current PE is 19.7x. Bloomberg consensus average 12-month target price is HK$34.6.

Xinyi Glass equity price is highly correlated to float flat glass price in China

Xinyi Glass equity price is highly correlated to float flat glass price in China
868 HK Xinyi Glass 21 June Bloomberg
868 HK (Source: Bloomberg)