HK Stock Market Move | Xinyi Solar (00968) rose over 3%, impairment and exchange losses drag down performance, Citigroup expects its profit margin to improve starting from March.

XINYI SOLAR (00968) rose more than 3%, as of the time of writing, it has risen by 3.08% to HK$3.68, with a turnover of HK$175 million. On the news front, BOCOM INTL pointed out that the company's revenue/net profit attributable to owners in 2024 was RMB 21.9 billion/1.01 billion, slightly exceeding the median performance forecast, with a year-on-year decrease of 9%/74%, and an expected loss of approximately RMB 800 million in the second half of the year. Photovoltaic glass revenue decreased by 12% to RMB 18.8 billion, with a sales volume growth of 10% and an average selling price decrease of 20%. At the same time, a provision of RMB 160 million for inventory impairment at the end of the period and a provision of RMB 390 million for fixed asset impairment due to early cold repair of multiple kilns resulted in a decrease in gross profit margin by 14 percentage points to 7.6% for the whole year (2H24 -9.0%), excluding the impact of impairment, it was 10.5% (2H24 -2.6%). Photovoltaic power generation revenue increased by 12% to RMB 3 billion, with a full-year gross margin decreased by 1.2 percentage points to 67.3%, but a year-on-year increase of 2.3 percentage points to 68.9% in 2H24. Excluding impairment losses and a RMB 220 million exchange loss, it was estimated to only lose RMB 30 million in the second half of 2024. Citi pointed out that XINYI SOLAR's full-year performance was affected by the significant reduction in CECEP Solar Energy glass prices and impairment losses. However, as the company raised new order prices by RMB 2 per square meter, with the increase in CECEP Solar Energy glass selling prices, its profit margin is expected to improve starting from March, and it is expected that CECEP Solar Energy glass supply will be tight in the first half of this year. The company expects the demand growth rate for this year to be 0% to 10%. The bank raised the company's net profit forecast for this year by 24%. It maintains a "neutral" rating on XINYI SOLAR, with a target price raised from HK$3.6 to HK$3.65.