HSCEI Index Rebalance Preview: Xinyi Solar Should Replace China Evergrande

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Equity Bottom-Up

<ul>
<li>The medium and long-term prospects of the solar glass market remain promising amid the global transition towards green energy, falling costs, supportive government policies, and technological advancement. </li>
<li>The short-term revenue growth outlook doesn't look optimistic given declining ASPs since 2Q21 which should result in slowing revenue growth, declining margins, and contracting earnings off a high base.</li>
<li>Xinyi Solar is also trading at premium valuation levels, leaving no margin-of-safety, especially considering its poor historical free cash flow generation track record and working capital concerns.</li>
</ul>


The medium and long-term prospects of the solar glass market remain promising amid the global transition towards green energy, falling costs, supportive government policies, and technological advancement. 
The short-term revenue growth outlook doesn't look optimistic given declining ASPs since 2Q21 which should result in slowing revenue growth, declining margins, and contracting earnings off a high base.
Xinyi Solar is also trading at premium valuation levels, leaving no margin-of-safety, especially considering its poor historical free cash flow generation track record and working capital concerns.


Xinyi Solar: Short-Term Headwinds, Cash Flow Concerns, and a Premium Valuation

Xinyi Solar Holdings

Xinyi Solar: Short-Term Headwinds, Cash Flow Concerns, and a Premium Valuation