If the publication of a ‘positive profit alert’ by Chinese PV glass company Xinyi Solar today may have surprised some investors, its emergence was explained within three minutes, as parent company Xinyi Glass issued a first-half profit warning.
The first update to appear on the Hong Kong exchange this afternoon trumpeted the fact the solar glass division of Xinyi expects its first-half consolidated net profits attributable to shareholders to come in 35-50% higher than the HK$953 million (US$123 million) banked in the first six months of last year, with that prediction based on trading during the first five months of this year.
Xinyi Solar said the bumper profits would be driven by raised demand for solar glass for use in bifacial and double-glass modules; by solar glass prices which remain higher than those recorded in the first half of last year, despite a dip during the current quarter; by reduced raw material, energy and other production costs; and by raised production capacity devoted by the company to high-value products.
All of which is good news for Xinyi Solar. Parent company Xinyi Glass, however, predicted its solar fortunes would not be enough to prevent a 25-40% retreat in shareholder net profits after the HK$2.12 billion banked by the business in the first half of last year.
The fact the main reason for the poor comparison is that Xinyi Glass banked a one-off HK$633 million windfall from the sale of shares in an enlarged Xinyi Solar business in the first half of 2019 is hardly likely to placate investors in the parent, given the earlier update.
Xinyi Glass added, depreciation of the Chinese renminbi currency and much-reduced sales of auto and float glass thanks to the Covid-19 crisis would be expected to further dampen its first-half results, again based on trading in the first five months of this year.
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