Xinyi's First Half Buoyant and in Line; Lifting FVE on More Positive Guidance

Xinyi Energy Holdings is the solar farm operation unit of its holding company Xinyi Solar, a leading solar glass manufacturer and solar farm developer in China. Unlike most solar power suppliers with integrated upstream solar project development, it only acquires utility-scale ground-mounted solar projects and focuses on downstream solar farm operation. This allows the company to enjoy an operating margin above 70%, compared with 45%-55% for major solar peers. The company's unique business model, along with its weighted average of 16 years of guaranteed subsidies, also shields it from regulatory risks in project approvals and tariff cuts, leading to a more stable outlook in returns. The company's target to distribute 90%-100% of distributable income to investors implies a sustained dividend that is yielding above 5% presently.