Xinyi Energy's 1H 2022 in Line With Our Forecast, but Shy of Street; Acquisition Target Unchanged

We keep our fair value estimate for no-moat Xinyi Energy at HKD 3.28 per share following its largely in line first-half 2022 results. However, we think the firm’s share price may face pressure in the near term as earnings fall short of market expectations, based on FactSet consensus estimates. We believe the miss may be due to a higher-than-expected tax rate given the expiry of tax holiday for some solar projects and slower capacity expansion on the back of COVID-19 disruptions. First-half revenue rose 13% year on year, driven by the acquisition of 660 megawatts, or MW, of solar projects in 2021. However, net profit was flat due to higher operating and income tax expenses. A decent dividend yield of more than 5% may provide share price support, in our view.