Sinolink reiterates its "buy" rating for XINYI ENERGY (03868), as financing costs continue to decrease.

Sinolink released a research report stating that it maintains a "buy" rating for XINYI ENERGY (03868). Based on the company's latest power station operation situation, the net profit forecast for 2026-2027 has been adjusted to 1.02/1.043 billion yuan, with an additional net profit forecast of 1.054 billion yuan for 2028. Calculated according to a 25-year dividend payout ratio, the dividend per share in 2026 is approximately 0.059 yuan. Currently, the stock price corresponds to a 2026 PE/PB/dividend yield of 9.76 times/0.7 times/5.0%. Sinolink's main points are as follows: Annual performance summary On February 27, the company released its 2025 annual report, with a revenue of 2.453 billion yuan in 2025, a year-on-year increase of 0.5%, and a net profit of 1.011 billion yuan, a year-on-year increase of 27.8%. The final dividend per share was 0.036 Hong Kong dollars. Proportion of parity projects increased to 62.6%, actively promoting overseas project development In 2025, the company acquired 230MW of photovoltaic power stations from its parent company XINYI ENERGY, 64MW of wind power stations from XINYI GLASS and XY ELEC STORAGE, and sold a 51% stake in a 174MW photovoltaic power station to an independent third party. By the end of 2025, the company owned and operated a total of 4.80GW of power stations, with a proportion of parity projects reaching 62.6%. In addition, the company actively promoted the development of overseas power stations. The 100MW photovoltaic power station project of the joint venture company in Malaysia started construction in the second half of 2025 and is expected to be completed and connected to the grid by the end of 2026. Previous acquisition projects boosted electricity generation growth The electricity generation increased by 10% due to the production boost from previous acquisition projects. The limited grid connection and the impact of electricity market liberalization affected the electricity price performance. The company actively improved its market trading capabilities. In 2025, the company's electricity generation increased by 10.1%, mainly due to contributions from acquisition projects in 2024 and 2025. However, grid connection constraints resulted in limited grid connection losses and the impact of electricity market liberalization on the company's electricity price. The company's sales revenue only increased slightly by 0.5%. The limited grid connection led to a slight increase in costs, and the gross profit margin decreased by 3.8 PCT to 61.8% year-on-year. To respond to changes in electricity market liberalization, the company has established a professional market trading team, built an electricity trading platform, continuously promoted the digital intelligence upgrade of the electricity trading mechanism, and further strengthened its market competitiveness. Debt structure optimization, reduced financing costs, and plans to issue REITs to further improve cash flow Since 2024, the company has increased long-term domestic bank loans and reduced offshore short-term loans. By the end of 2025, the proportion of short-term loans in the company's bank loans decreased by 4.6 PCT year-on-year to 30.1%. This effectively reduced the company's financing costs. In 2025, the company's interest expenses on bank loans decreased by 29.5% to 225 million yuan. On June 3, 2025, the company announced that it had submitted the application materials for the issuance of CECEP Solar Energy power plant infrastructure REIT in China for listing. The issuance of REITs is expected to further improve the company's cash flow and enhance its risk management capabilities. Risk warning Subsidies are paid less than expected; worsening grid connection situation; decrease in on-grid electricity prices.