Benefit from the lower reaches of the second half of 2009, automobile, construction and solar energy industry demand has picked up on the glass, Xinyi Glass performance in 2009 actually gratifying. Excluding the litigation on the Saint-Gobain and its related tax provision made 8,500 million, the company’s basic earnings as 854 million yuan, the annual increase of 21%, is Xinyi Glass has the highest profit ever recorded for a year years. The suit was due to Xinyi Glass patent holders in June 2002 to June 2009 in the United States during the sale of automotive glass products market rise. Xinyi Glass on the basis of the second half of 2009, earnings growth momentum was particularly strong, profit contribution increased by 1.8-fold higher than in the first half.
Account the provision for Saint-Gobain, Xinyi Glass 2009 profits increased by 9% to 774 million yuan. However, immediately after the company announced results, the United States District Court, Northern Ohio, will Xinyi Glass compensation to be paid from the 8,500 million increased to 189 million yuan. Although it will appeal and seek to overthrow the increase, but if it ultimately paid the additional amount, its 2009 net profit may be down 9,800 million (after tax) to 676 million yuan, and profits caused by was down 5%.
Benefit from the recovery of the global economic environment, Xinyi Glass on the basis of outstanding performance in 2009. Annual turnover increased by 2% to 39.6 billion, while the second half of 2009 because the cost of raw materials and fuel stability, and the average selling prices, gross margin rose 5.8 percentage points a year to 36.9%. On revenue growth, the Lutheran glass four business segments: construction, automotive, float, and solar energy a mixed performance. Architectural and Solar Glass recorded 11% and 12% annual growth, while the income of automotive and float glass were a year fell slightly by 1% and 2%. Auto Glass highest gross margin, increased by 4.0 percentage points a year, up 42.2%; followed by construction glass, gross margin increased 10.6 percentage points, reaching 41.1%; float glass gross margin increased by 13 percentage points, reaching 27.0%, while solar glass, gross margin decreased 24.9 percentage points to 25.1%.
Revenue from automotive glass continue to account for nearly half of total turnover Xinyi Glass. Building glass float and the total turnover respectively 26% and 18%, accounted for the remaining proportion of solar glass. Xinyi Glass is the largest Greater China market, its share of income rose from 49% in 2008 to 56% in 2009. After the introduction of supportive policies, China’s low-E coating architectural glass, glass replacement market and original equipment manufacturers of strong demand for automotive glass, we expect the proportion of Greater China accounted for revenue to rise further.
Given the growth potential of Xinyi Glass clear, the company actively expanding production capacity and low valuation, the company’s current stock price is equivalent to earnings ratio of 12.6 times expected in 2010, well below the industry average PE of 16.6 times, we reiterate our stock Buy rating. We believe the company will be able to maintain gross margin in the first half of 2010, more than at the level of 36%, and the management has noted that the second and third from the company’s three major markets – the United States and Europe increase in the number of orders. The company’s automotive and architectural glass in the order reserve is also up to 4 weeks. We discounted cash flow model to calculate the target price maintained at 8.30 yuan, equivalent to 15.1 times 2010 estimated price-earnings ratio.
We are high quality suppliers, our products such as white stone texture Manufacturer , China tileable stone texture for oversee buyer. To know more, please visits wall stone texture.