Xinyi Solar Holdings Ltd. shares slumped after the new-energy company reported disappointing full-year earnings.
The stock lost as much as 8.7% on Tuesday and was recently 6.7% lower at 8.61 Hong Kong dollars (US$1.10).
Xinyi Solar on Monday said its net profit dropped 22% in 2022, missing market expectations.
Analysts cited weaker profitability as the main drag on Xinyi’s bottom line.
“We attribute its 2022 earnings miss to solar glass gross profit margin cut,” Citi analysts said in a note, pointing to margin pressure from lower selling prices and higher raw-materials cost.
However, Citi said such profitability pressure should gradually ease from 2023, and the analysts reiterated their confidence in the company’s longer-term potential.
“We expect limited margin downside for its solar glass business given the prevailing low industry average profitability,” Citi said.
“We like it for its largest solar glass market share with [expected] strong sales volume growth in 2023-24 from capacity additions and demand growth,” the analysts said, keeping a buy call on the stock.