Bank of America Securities: Potential oversupply hinders profitability rate, downgrades XINYI SOLAR (00968) and FLAT GLASS (06865) to "underperform" rating.

Bank of America Securities released a research report stating that the current measures to support the photovoltaic industry are limited, and the catalyst to reverse the current situation is still out of reach. Glass manufacturers such as CECEP Solar Energy may continue to incur losses until mid-2026. Considering the high valuation, the bank has lowered the price target of XINYI SOLAR (00968) by 12% to 2.3 Hong Kong dollars, and FLAT GLASS (06865) by 42% to 7 Hong Kong dollars. The stock ratings have been downgraded to underperform the market. Affected by production cuts and anti-"996" policy, CECEP Solar Energy's glass stocks have risen by about 30% since the end of June. However, the price of 2mm CECEP Solar Energy glass has continued to decline in the past two weeks to 10.5 to 10.8 yuan per square meter, a level where the entire industry will incur losses. The bank believes that even if demand returns to normal in 2026, potential oversupply will still hinder profit margins. Unless forced production cuts similar to those during the supply reform period in 2016-17 are implemented, it will be difficult to change the current oversupply situation.