Core conclusion
Leading enterprises of float glass. Founded in 1958, the company focuses on R & D, production and sales of a series of glass products, and occupies a high-end technical position in the domestic glass industry in the field of energy saving, environmental protection and new energy glass. According to the report in 2021, the company actually operates 12 float production lines, with a total production capacity of 6200 tons per day. In the case of high prosperity in the industry this year, the company's two cold repair production lines have been put into production, capacity flexibility may lead to high performance.
The tight balance between supply and demand in the industry may continue. On the demand side, the demand caused by the 20-year epidemic is delayed and superimposed by real estate developers due to three items to speed up the completion of the carry-over to optimize the assessment indicators, the acceleration of completion growth may bring a high boom in the industry. On the supply side, in the long run, the replacement of production capacity under the new regulations becomes stricter, and the supply of new capacity is limited; in the short term, according to Longzhong information, new production capacity 6050t/d for the whole of 21 years, net increase of 6000t/d in the first half of the year, only 50t/d in the second half, and limited increment, the tight balance between supply and demand in the second half of the year is still expected to be maintained.
Capacity flexibility to grasp the high prosperity of the industry, profit improvement to promote the expense rate down. According to the report in 2021, the company has 12 production lines, and the production capacity of the float production line has reached 6200 tons per day, an increase of about 20% compared with the end of 2020. The company's production capacity is put into operation during the boom period of the industry, and it is expected to enjoy the price advantage and support the company's performance flexibility. The company's financial expenses are higher than the industry, considering the current high prosperity of the industry, the company's profitability has greatly improved, the scale of interest-bearing liabilities will continue to decline, and the subsequent company's financial expense rate has more room for decline.
Investment suggestion: the industry continues to be booming, the company's cold repair production line is put into production, the rise in volume and price leads to high income growth, and after the profit improvement, the company's financial expenses are expected to decline, further thickening profits, we expect the company to achieve a net profit of 9.01gamma 13.13 / 1.407 billion yuan in 2021-2023, corresponding to EPS0.49/0.72/0.77 yuan per share. Give the company 9.5 times the target PE for 2021, corresponding to the target price of HK $5.60 for 2021. Cover for the first time, giving a "buy" rating.
Risk tips: a sharp decline in real estate investment, rapid increase in raw material prices, and the progress of new production lines is not up to expectations.