[ET Net News Agency, 11 July 2018] Credit Suisse initiated coverage on Xinyi Glass
(00868) with a "neutral" rating and target price of HK$9, given near-term margin squeeze
due to falling float glass prices and rising raw material prices (soda ash); (2) strong
forecast mid-term earnings growth driven by float glass capacity expansion overseas; and
(3) reasonable valuation at current 9x 2018 P/E ratio.
The research house expects Xinyi Glass to face a margin squeeze in 2H. Float glass
prices are likely to decline further, because of (1) expanding sector capacity as glass
makers make good profits from current glass prices, and (2) falling glass demand from the
property market. Meanwhile, the soda ash price rally is likely to continue, due to
large-scale planned supply outages in July.
Looking into 2019-20, Xinyi Glass' growth should be supported by aggressive float glass
footprint expansion in Malaysia and Canada, with 21%/22% capacity growth in 2019/20. (KL)
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00868 XINYI GLASS
Nominal 
8.400 +0.200 (+2.439%) Others
11/07/2018 14:45
[I-bank focus]CS starts Xinyi Glass (00868) at HK$9
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