20210805-新华汇富金融-Morning_Snapshot_Hong_Kong___China_Market_Daily_7页_570kb

Xinyi Glass Holdings LTD (0868 HK) Summary

Core Content

Xinyi Glass Holdings LTD (0868 HK) is a company that has shown strong performance and is currently recommended as a long-term investment. The stock price is HK$30.5, with a target price (TP) of HK$38. The company is expected to maintain its long position due to strong demand and limited supply, leading to continued promising results.

Main Points

• Revenue Growth:

  • Revenue increased by 90.3% YoY to HK$13,576 million.
  • Float Glass revenue reached HK$9,629 million, up 139% YoY, contributing 70.9% of total revenue.
  • Automobile Glass revenue was HK$2,585 million, up 20% YoY, representing 19.0% of total revenue.
  • Architectural Glass revenue was HK$1,363 million, up 45% YoY, contributing 10.1% of total revenue.

• Gross Profit Margin (GPM):

  • GPM was 53%, significantly higher than the 5-year average of 38%.
  • The improvement in GPM is attributed to higher selling prices and economies of scale.

• Net Profit:

  • Net profit rose by 289.0% YoY to HK$5,377 million, driven by increased ASP and volume, and higher profit contribution from subsidiaries Xinyi Solar (0968 HK) and Xinyi Energy (3868 HK).
  • The company declared an interim dividend of 66.0 HK cents per share, maintaining a pay-out ratio of around 50%.

• Financial Position:

  • The net gearing ratio dropped to 13.9% as of 30 Jun 2021, from 22.4% as of y/e Dec 2020.
  • The company has a strong cash position with HK$7,475 million in cash and HK$2,515 million in net cash inflow from operating activities.
  • Expected CAPEX for 2021 is HK$2,500 million.

• Future Outlook:

  • The company is expected to complete the acquisition of 4 float glass production lines in Chengmai during 2H21, increasing its production capacity.
  • Production capacity for float glass, automobile glass, and architectural glass is projected to increase by 29.1%, 7.5%, and 43.1% YoY for FY2021(E), respectively.
  • With limited capacity expansion in the industry and low inventory levels, ASP is expected to increase further, covering the price surge in COGS.

• Valuation:

  • The company is currently trading at 10.4x FY21E P/E.
  • The target price of HK$38 is based on a 13x P/E multiple.

Key Information

• Earnings Performance:

  • Earnings topped profit alert forecasts, increasing 289% YoY.

• Market Sentiment:

  • The VIX is at 18, indicating moderate market volatility.

• Commodities and Currencies:

  • Gold: HK$1,810, down 0.2% in 1D, down 4.6% YTD.
  • Steel: HK$1,864, up 1.0% in 1D, up 44.3% YTD.
  • Crude Oil: HK$70, down 21.5% in 1D, up 44.8% YTD.
  • Copper: HK$9,541, down 1.9% in 1D, up 22.9% YTD.

• Economic Calendars:

  • US, China, and Hong Kong economic indicators are listed for the upcoming period, including Durable Goods Orders, Trade Balance, CPI, PPI, GDP, and others.

Financial Summary

Market Sentiment and Indices

Key International Indices

Recent Research Reports

Disclaimer

This document is not an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report is for private circulation only and may not be copied, photocopied, duplicated, or redistributed without prior written consent from Kingsway Financial Services Group Limited and its affiliated companies. The report is not to be construed as an offer, invitation, or solicitation to buy or sell any securities of the company or companies covered herein. Any recommendation contained in this report does not take into account the specific investment objectives, financial situation, or particular needs of any specific addressee. All opinions and estimates reflect the judgment of the report on the date of issue and are subject to change without notice.