Goldman Sachs: Xinyi Solar (00968)'s performance in the first half of the year is expected to raise the target price to HK$3

The Zhitong Finance App learned that Goldman Sachs released a research report saying that Xinyi Solar Energy (00968) announced a year-on-year decline of 95% to 39 million yuan in the first half of the year, in line with the previous profit warning (net profit of less than 50 million yuan), and outperformed the industry Follett Glass (06865) (forecasted net loss of 300 million to 400 million yuan in the first half of the year), mainly benefiting from the solar farm business buffer and a higher share of overseas production capacity (about 20% in the first half of the year). The sharp year-on-year decline in net profit was mainly due to a 20% year-on-year drop in average sales price and a 6% year-on-year drop in shipment volume. Goldman Sachs raised its 2026 EBITDA forecast by 57% and raised its 2027-2030 forecast by an average of 3% to reflect higher shipments and lower costs. The target price was raised from HK$2.8 to HK$3. It is still based on the 2026 forecast market account ratio of 0.8 times, maintaining the “buy” rating.

At the results conference, management anticipated an improvement in domestic and overseas market prospects. On the domestic side, industry supply cuts will push China's pricing back above cost levels; overseas, India's ALMM exemption for solar photovoltaic cells will be extended until the end of 2026, which will drive a recovery in overseas shipments in the second half of the year. The management lowered the 2026 effective melting capacity guideline by 3% to 8.13 million tons, and emphasized that since July, the industry's extensive supply cuts have been mainly driven by marginal manufacturers, which face liquidity pressure under low prices and high inventories.

According to Oilchem data, the price of solar glass in China has declined 27% to 8.8 yuan per square meter since the beginning of the year, and manufacturers' inventories have increased 70% to 57 days during the period. Management believes that the current low price level is unsustainable, and Xinyi Solar is willing to cooperate with peers to push the average selling price back above the cost level through supply discipline. Goldman Sachs expects producer inventories to fall from 51 days (or 70 GW) in July to 35 days (or 49 GW) in September, supporting a potential 22% increase in glass prices from the second half of 2026 to the first half of 2027.

In terms of overseas business, management said that overseas glass prices remained stable in the first half of the year, but overseas shipments declined quarterly in the second quarter. As India's ALMM exemption for solar photovoltaic cells expired on May 31, the shortage of local solar cells affected module assembly and glass demand. With the ALMM exemption extended until the end of 2026, management expects overseas shipments to recover in the second half of the year and reiterated that the overseas capacity expansion plan remains unchanged. Indonesia's 1,200-ton daily production line will be put into operation in the second half of the year, and the share of overseas production capacity will increase from 20% in the first half of the year to 25% by the end of the year.