UBS Global Research lifted its target price for Xinyi Solar (00968) to HK$17 from HK$12.8 and maintained its "buy" rating.
The research house said Xinyi Solar is in a sweet spot of continuous valuation multiple expansions, driven by both macro and micro catalysts. UBS believes significant, new macro catalysts include, China's recently announced net-carbon-zero target, the upcoming 14th Five-Year Plan on renewables, and the EU's hydrogen/carbon emission targets; while tight solar glass supply in 4Q 2020 is the positive micro catalyst, driving better ASP and margins.
Trading at 20.2x 2021 PE, UBS believes the market has yet to price in these catalysts as its 2021 and 2022 earnings estimates are 18% and 33% above consensus. Its upside scenario shows a further 32% upside to its 2021 EPS if current solar glass prices were to persist from now till end-2021.
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