[ET Net News Agency, 2 March 2018] J.P. Morgan lifted its target price for Xinyi Glass
(XYG)(00868) to HK$15 from HK$13, and reiterated its "buy" rating.
Following the release of FY2017 results, the research house increased its long-term
margins assumptions and DCF valuation to reflect a tighter market in 2018 for float glass
and a longer period of time of high margins as expansion of new float glass lines seems to
have become more difficult than JPM previously expected.
Despite near record high margins, XYG does not have any new lines of traditional float
glass being built in China and is expanding in Malaysia and also possibly in Canada. JPM
is more comfortable lifting GPM in 2018 (mostly due to strong January to February prices
and falling cost of soda ash). JPM also kept margins higher for longer because of the lack
of new approvals in China, which should push out significant increase in supply well past
2019. (KL)