Main points of investment
China Glass is China's leading manufacturer of flat glass and coated glass, focusing on float glass and covering many market segments, such as colored glass, energy-saving coated glass, photovoltaic glass, automotive glass, electronic glass, medical glass and so on. China National Building Material Group and Lenovo are the first two major shareholders, China National Building Material Group is the industrial investor, with technology, engineering, equipment and other advantages, Lenovo Holdings is the financial investor.
China Glass takes "natural growth, M & A growth and going out" as the three strategic goals.
[natural growth], due to cold repair, technical renovation, capacity relocation and other reasons, the company's capacity utilization rate has been about 70% for a long time, and the company has actively promoted the release of capacity. Since June, the capacity utilization rate of 13 production lines has been brought into full play. Another 3 production lines are under construction, and subsequent production is expected to increase significantly. It is estimated that the effective production capacity of the company's on-hand production line will increase by 15%, 27% and 9% respectively from 2021 to 2023.
[M & A growth], Kaisheng Group has another 12 float glass production lines, accounting for 70% of the company's total production capacity at the end of 2021. Kaisheng Group has established a "3% 1" strategic layout, and China Glass has been built into a float glass platform. Relying on the support of shareholders, China Glass carries out industrial layout work around new glass, new energy, new materials and other fields.
[reducing costs and increasing efficiency], the company has more room to reduce costs and increase efficiency, and the new leadership has put forward the goal of "deepening the implementation of the three major strategies, focusing on improving performance, focusing on the main business of flotation, and reducing non-profit companies." to achieve the goal of optimizing and upgrading management functions and giving full play to the role of performance incentives ", under all kinds of measures to make up for deficiencies, its profit level is expected to be on a par with the leading companies in the industry.
Industry point of view: there is no worry in the short term. The four-year new construction year corresponds to the four-year completion year, and the completion end from the end of 2018 is expected to continue to the end of 2022. At the same time, the "three red lines" also strengthen the logic of real estate developers to speed up completion and carry-over. The current extremely low inventory and the traditional peak season of gold, silver and silver will support the late trend of glass.
There was a continuous negative growth in commercial housing sales in August, and there was obvious pressure on the completion of construction in 2023. Therefore, in the context of short-term and worry-free, the Ministry of Industry and Information Technology shouted glass prices, as well as the downward fluctuations of the real estate front-end investment chain may affect market sentiment.
Profit forecast and investment advice: it is estimated that the revenue of China Glass from 2021 to 2023 is 50 yuan, 66 yuan and 6.9 billion yuan respectively, up 60%, 31% and 4% year-on-year, and the net profit is 8.1 yuan, 12.5% and 1.2 billion yuan respectively, with year-on-year growth rates of + 858%, + 54% and-3.7%, respectively. China Glass performance reversal is imminent, the current stock price corresponding to 2021 expected PE around 7.2x, PB around 2.1x, there is room for undervaluation, coverage for the first time, given a "prudent overweight" rating, the target price of HK $4.81, corresponding to the 2021 forecast PE is 9 times.
Risk hints: rising raw material prices, recurrent epidemic, real estate investment chain risk, project schedule not as expected, exchange rate risk