Company Profile
Xinyi Solar is a company produce solar glass panel. There are few plants in China and 1 plant in Malaysia and their melting capacity is 11,800 tonne/day. Beside produce solar glass, they also have their own solar farm business, they are total 42 solar farm and able to generate 3,322 MW.
Financial performance
As we can see from the table, revenue is increasing and EPS growth is 6.6% from 2017 to 2020. EPC is one time service, if we take out EPC it will be 17% CAGR from 2017 to 2020.
Income Statement
Due to high demand of the solar panel, revenue is doubled from the previous quarter. This is due 1H 2020 having lock down and affect the delivery and installation. Profit also doubled compared to 1H2020.
Balance Sheet
From the balance sheet, we can observed that receivable is tremendous high. Apparently, company is not doing a good job on getting the cash back or it may be is a "financial reporting skill". Company is in a net cash position. Receivable is 20percents of total assets or the whole year of 2020 revenue and this is alarming.
Cash Flow
Looking at the table above, we can clearly see that will the high CFFO, company is generating positive FCF. Company keep expanding the business, hence it will lower down the cost of production. Company also mentioned that they keep improving the production and process to have high efficient of production.
My thought
My only concern is the receivable, with the high receivable , company may default the payment and some of the receivable is > 2 years and is alarming!Let's calculate the IV.
Guestimation:
Price = 15.90
EPS = 0.60
P/E = 26.5
Ordinary shares = 8,810,127,000
Shareholder Equity = 33,814,601,000
ROE = 0.6 X 8,810,127,000 / 33,814,601,000 = 15%
Using EPS Discount flow to calculate IV:
PEG - 1.76
17% growth = IV - HKD14.28
8% growth = IV - HKD 9.00
CE scoring - 70%
