Goldman Sachs: Predicts Continued Decline in Demand for CECEP Solar Energy Glass, Maintains "Sell" Rating on XINYI SOLAR (00968) and FLAT GLASS (06865)

Goldman Sachs released a research report stating that based on forecasts of reduced effective production capacity, price decreases, and rising costs, the bank has lowered its EBITDA forecasts for FLAT GLASS (06865,601865.SH) and XINYI SOLAR (00968) for the years 2025 to 2026 by 58% and 73% respectively, and the EBITDA forecast for the years 2027 to 2030 has been lowered by an average of 2%. The target price for FLAT GLASS H shares has been slightly lowered from 6.7 Hong Kong dollars to 6.6 Hong Kong dollars, while the target price for Flat Glass Group A shares has been lowered from 10.3 Chinese yuan to 10.2 Chinese yuan, and the target price for XINYI SOLAR remains 1.9 Hong Kong dollars. The "sell" rating is maintained for all. Both XINYI SOLAR and FLAT GLASS have issued profit warnings significantly below expectations. Although the stock prices of CECEP Solar Energy Glass stocks covered by the company have risen since April, reflecting market expectations of supply tightening and price increases under the anti-"internal circulation" policy, the bank believes that downward pressure on industry profitability will deepen further in the second half of this year and next year. The bank has lowered its average selling price forecasts for the third quarter of this year to next year by 9% to 20%, to 10 to 11 Chinese yuan per square meter, to reflect worsening supply and demand in the second half of the year and continuous decline in raw material prices, and expects a deeper decline in glass demand in the fourth quarter. In addition, the bank expects the effective production capacity of the two companies to decrease by about 20% in the second half of the year compared to the first half, with unit production costs rising by 10%.