We maintain the "Accumulate" rating and the TP of HK$23.00 for Xinte Energy. The TP corresponds to 2.1x/ 3.2x/ 6.0x 2022-2024 PER or 0.9x/ 0.7x/ 0.7x 2022-2024 PBR.
　　Although the polysilicon price down cycle is fast approaching, we estimate that Xinte will resume positive earnings growth in as early as 2025. The polysilicon price stood firm at RMB302/kg as at November 23 2022 (Xinte’s polysilicon ASP in 2020 was approximately RMB66/kg), we expect that the selling price of polysilicon may have solid support all the way through the end of 2022 before entering into a price down cycle in 2023. However, with the sharp increase in polysilicon shipments in the next few years, Xinte is set to resume positive earnings growth despite lower selling price. We estimate that strong earnings growth for Xinte is to take place in 2025 amid normal polysilicon price level and stronger polysilicon shipments.
　　3Q2022 net earnings jumped 104.4% YoY to RMB4,032 million, in line with expectation. Revenue of Xinte Energy in 1Q-3Q2022 jumped 99.1% YoY to RMB25,931 million, and its net profit surged 201.4% YoY to RMB9,650 million. Quarterly earnings in 3Q2022 surged YoY by 104.4% to RMB4,032 mn. The Company's net profit in the first 3 quarters of 2022 was largely in line with our expectation. Estimated polysilicon shipments in the 3rd quarter of 2022 rose to 29,625 tons, and 1Q-3Q2022 cumulative polysilicon shipments is estimated to be 77,325 tons, which is roughly 62% of our full-year shipments forecast for 2022. The revenue from polysilicon sales in 3Q2022 was approximately RMB7,865 mn. With estimated ASP of approximately RMB300/kg in 3Q2022, implied gross margin of polysilicon exceeded 70% in 3Q2022, up from 66% recorded in 1H2022. We estimate polysilicon shipments to be 125 kiloton/ 246 kiloton/ 354 kiloton from 2022-2024, respectively.
　　Key risks: The oversupply of polysilicon will cause its price to plunge; polysilicon raw materials and energy costs may rise; the production capacity located in Xinjiang region may be sanctioned by certain overseas markets.