Xinyi Energy, a leading solar farm operator in China, tumbled as much as nearly 26% in Hong Kong to hit HK$1.77 at one point, marking the lowest level since May 2020.
The company said on Monday that its first-half revenue rose slightly by 2.4% year over year to HK$1.289 billion, while net profit slid by 9% to HK$567 million. It declared an interim dividend of 3.4 cents per share, slumping 55.8% from a year earlier.
JPMorgan slashed the target price for the company by 20.8% to HK$2.1 and downgrading the rating to Neutral from Overweight. While the 9% drop in its interim net profit is in line with expectation, the dividend payout ratio droppting to about 45% is surprise, the broker said.
Daiwa Securities said that, due to its high financing cost, low visibility of the recovery of subsidy receivables and low module prices, Xinyi Energy is expected to limit its dividend payment ratio between 45% and 50% in order to reserve funds for future acquisition of solar power generators.
Daiwa lowered the forecast of Xinyi Energy’s dividend payout ratio in 2023 – 2024 to 50% from 100% and in 2025 to 75% from 100%. It cut the target price of the stock to HK$1.75 from HK$2.4, downgrading it to Sell from Hold.
