Xinyi Glass meets the market expectation rating to maintain “extraordinary”

HSBC Global Securities noted that Xinyi Glass (00868.HK), trading at HKD 5.69 with a 2.52% rise, reported a 6.1% decline in net profit for the previous year, which aligned with the bank’s expectations. Management highlighted that the second half of 2012 showed signs of recovery in the industry, signaling a positive shift.

This year, the solar glass division will be separated and listed, with demand expected to rebound. A previously suspended production line in Wuhan has been restarted, indicating improved operational capacity. The company anticipates a 20% year-on-year increase in the total construction area of residential buildings on the mainland, which is likely to boost demand for float glass.

With stable costs and a recovery in the construction sector, along with controlled production levels, management remains optimistic about the performance of float glass this year. Additionally, the newly launched electronic glass business is expected to contribute positively to the company’s earnings. In response to these developments, HSBC raised its 2013-14 earnings per share forecasts by 3% and 5%, respectively. The target price was also increased from HKD 6.3 to HKD 6.6, while maintaining an "overweight" rating. (Both double)