Xinyi Solar's capacity upgrade to 1GW is too ambitious: analyst

850MW is more attainable.

According to CCB International Securities, Xinyi Solar has set an ambitious target of 1GW of new solar power capacity in FY15. Their forecast for 850MW of additional capacity for the year is lower than Xinyi Solar’s target yet it is still a significant jump on 250MW of additional capacity achieved in 2014.

By the end of September 2015, 70MW had been added with less than 800MW under construction. The company is in negotiations with prospective investors in Xinyi Energy, a financing platform for solar farms currently wholly-owned by Xinyi Solar. 

Here's more from CCB International Securities:

Xinyi Solar announced that it has completed modifications to one of its PV raw glass production lines that had suspended operations since February 2015. 

Once the line undergoes trial operations it should have 20% more capacity, from 500 tonnes per day before the upgrade to 600 tonnes per day. Xinyi Solar has two other 500 tonnes per day raw glass lines in Wuhu, which we expect to be modified over the next two-to-three years.

Including the company’s Malaysia plant, we expect total raw glass melting capacity to rise from 3,900 tonnes currently to 5,000 tonnes by 2017F.

Higher demand for solar glass since September is in keeping with typical seasonality for solar PV project construction. We expect 2H15F prices for processed solar glass to remain roughly at 1H15 levels (+/-5%).

There is potential for profit margin expansion as energy costs come down following lower natural gas prices.