Xinyi Glass & Xinyi Solar both post slightly better than expected 1H26: Earnings Review

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Glass - China

Xinyi Glass & Xinyi Solar both post slightly

better than expected 1H26

Earnings Review

XYG: 1H26 NPAT +17% w/o one-off losses

Xinyi Glass (XYG) reported 1H26 NPAT at RMB1.18bn or EPS RMB0.268/sh, +15% yoy.

Xinyi declared an interim DSP of HKD0.15/sh, implying payout ratio of 48%, similar to

the <50% range in the past. We see the results as slightly better than expected and 12%

higher than our estimates. For 1H26, the year-on-year earnings improvement is mostly

driven by 1) the absence of sizable one-off disposal & impairment losses booked in

1H25 amounting to RMB353mn, 2) FX gains of RMB124mn, and 3) tighter cost control

leading to SG&A dropping by 10% yoy or RMB180mn. On the other hand, the core

business profitability as shown in GP declined by 8% or RMB238mn and share of P/L of

associates (i.e. Xinyi Solar) plunged by 87% or RMB177mn partially offset the cost

savings. Effective tax rate (excluding associate income) returned to normal levels at

18.1% while net interest rate also hovers at low level of 1.9% (1H25: 1.8%). The end-1H

inventory days further climbed to 111 days likely due to accumulating float glass

inventory. See Exhibit 1.

Auto glass grew but float & architectural glass dragged

In terms of segment earnings, auto glass continued to shine with 4% revenue growth

and largely stable GPM at 52.6%, while float glass revenue went lower by 5% on lower

ASP and GPM contracted by 1% to 16.7%, whereas architectural glass revenue

decreased by 13% yoy with GPM reducing to 20.1%, on commercial & governmental

properties construction demand weakness. Overall, auto glass now contributes 63% of

GP or 62% of the bottom-line in 1H per our estimation, and Xinyi is now becoming an

auto glass company with potential upsides if the float glass margin recovers. Reiterate

Buy with inexpensive valuation.

XYS: 1H26 breakeven with solar glass GPM at 3.3%

Xinyi Solar (XYS) reported 1H26 NPAT at RMB39mn or EPS at RMB0.004/sh, down 95%

yoy. The result is also slightly better than our forecasts of mildly loss-making. XYS

declared a trivial amount of interim DPS of HKD0.0023/sh, implying 1H26 payout ratio

at 47.3%, similar to shy of 50% in the past.…