China Glass Bulletin 21 semi-annual report, 21h1 company income 2.03 billion yuan, yoy + 73% 21h1 + 2%; net profit 302 million (the previous forecast is not less than 300 million), year-on-year turnaround, hoh+ 69%; return to the mother net profit of 270 million, year-on-year turnaround, hoh+68%. The performance is basically in line with the previous forecast.

21h1 float average price significantly improved to contribute to core performance increment, H2 glass sales compared to the previous or significantly improved sub-business, 21h1 glass products (mainly float original glass, including colorless glass, colored glass, coated glass, energy saving and new energy glass), design / supply installation services business income of 19.6% and 70 million, yoy of + 73%, + 61% respectively, + 4% and-28% respectively. The gross profit margin is 35.8% and 19.1% respectively, and the change of yoy is + 19.6 and + 10.4, respectively, and the change of Hoh is + 8.1 and-11.6pct, respectively. The volume of the design / supply and installation service industry is relatively small, with large fluctuations in income and profit margins.

Glass products business production and marketing and efficiency changes are the main reasons for the significant improvement in the company's performance compared with the previous month. The sales volume of 21h1 glass products is 1706 million cases, hoh-22% (there is no obvious change in the production line, it is speculated that the sales base of 20h2 is higher). We estimate that the average sales price of the company's 21h1 glass products per box is 115yuan, yoy+51%/+39 yuan, hoh+32%/+28 yuan; soda ash fuel and other prices rise to 74 yuan, yoy+15%/+10 yuan, hoh+17%/+11 yuan; the unit cost does not change much, it is estimated that the net profit per case of 21h1 company glass is about 17 yuan, yoy+36 yuan, hoh+10 yuan.

At the end of 21h1, there are 12 production lines in the production and floating method (10 at the end of vs20 year, and one line for 400t/d and one line for 600t/d respectively in Shaanxi and Suqian bases in June 21). And the company recently completed the acquisition of Fujian Longtai Industrial (a construction glass production line has been ignited in May 21, another automotive glass production line is under construction, and a quartz placer expected to be put into production in 22 years), now has 13 floating normals, corresponding to the production capacity of 6900t/d. We expect that the production and sales of the company's 21h2 glass products may be greatly improved compared with the previous month.

Attach importance to the medium-and long-term growth potential brought by the company's larger capacity improvement space and cost optimization space with the resumption of production of the company's production line and the gradual landing of acquisitions (in addition to Fujian Longtai Industries, the company is also promoting a 70% stake in a target company in Nigeria, which owns a 500t/d float production line, and the acquisition is expected to be landed before the end of the 21st). In addition, the company's subsequent participation in the float glass asset integration of major shareholders may also be expected to bring greater capacity upward flexibility. Under the background of gradual resource attribution of float glass production capacity, float glass production capacity elasticity may bring considerable growth elasticity for the company and significantly enhance its competitiveness in the industry. On the other hand, as the company gradually promotes the renewal and upgrading of kilns and makes full use of the resources / platform advantages of major shareholders to give full play to its procurement advantages, the company's production costs may have more room for optimization; at the same time, under the background of high float boom, the company's balance sheet is gradually repaired or led to a gradual decline in financial expenses, and the company's profitability may have room for upward repair.

21h2 float boom upward trend may have continuity, raise profit forecast, maintain "buy" rating 21h1 float industry upbeat rhythm and persistence exceed our expectations, industry inventory is low at this stage, new supply is subject to strict policy control under the background of potential supply release space is small, at the same time, the industry is facing greater cold repair pressure, industry inventory is at the bottom of history, construction / completion season gradually opened. Demand may continue to improve on a month-on-month basis, and the float boom will continue to rise in the short term, while the cyclical fluctuations in the medium-and long-term industry may be significantly weakened. Based on the more optimistic average sales price and stronger confidence in the company's cost control ability, we raise the company's revenue forecast for 21-23 to 47.6,50.4 and 5.65 billion yuan (the previous value is 46.4,49.8 and 5.58 billion yuan), and the yoy is + 51%, 6% and 12%, respectively. The company's 21-23 year return net profit is forecast to 7.1,7.8 and 940 million yuan (the previous value is 6.5,6.9 and 830 million yuan), the yoy for 22 and 23 years is + 16% and 17% respectively, and the corresponding EPS for 21-23 years is 0.39,0.43,0.52 yuan (the previous value is 0.36,0.38,0.46 yuan). Combined with the company's potential growth prospects, we approve the company's 21-year 12x target PE, raise the company's target price to HK $5.62, and maintain a "buy" rating.

Risk tips: lower-than-expected demand for float glass, weakening supply regulation, sharp fluctuations in raw material prices, lower-than-expected pace of capacity improvement and profitability repair, and valuation uncertainty risks brought about by different market valuation systems.