Main points of investment:

For the first time, coverage gives an "overweight" rating. We are optimistic that the supply and demand of the glass industry will continue to maintain a tight balance, the sustained new high prices are expected to drive the company's obvious performance elasticity, while the automotive glass business is expected to gradually recover with the relief of core shortage. We expect EPS to be 0.29 in 2021-2023. 0.33.

0.37 yuan, with reference to comparable companies with an average of 30 times PE in 2021, giving the target price 8.70 yuan, giving the "overweight" rating for the first time.

Benefit from the tight balance between supply and demand in the float glass industry, and the performance is expected to show flexibility. As one of the cradles of domestic float technology, the company is rooted in high-end architectural glass and automotive glass; benefiting from the tight balance between supply and demand since 2020H2, the price has exceeded expectations, leading to a substantial increase in the company's performance. We believe that the glass industry has already entered a tight balance and even the initial opening of the supply gap; after the policy end jammed the new capacity, the glass industry transitioned to a non-expansion cycle of production capacity, while the transmission from the peak of new construction on the demand side to completion in 2021-2022 is still expected to maintain strong and resilient demand, the high profit state of the glass industry under the tight balance between supply and demand is expected to continue, and the company is expected to continue to show performance elasticity.

The automotive glass business is affected by the lack of core, which is expected to be alleviated in the next half year. We estimate that the company's automotive business increased slightly in the first half of the year, and the core reason for suppressing the company's auto glass sales in the first half of the year is the shortage of chips in the automotive industry. We expect that as domestic automobile brands begin to develop chips independently and global chip production gradually increases to fill the current gap, the lack of core in the automotive industry is expected to be alleviated in the second half of the year, and with the gradual increase in market penetration of new energy vehicles, production and sales in the automotive industry are expected to pick up, which is good for the company's automotive glass business.

Risk hint: downstream real estate demand is lower than expected, and the automobile industry continues to lack core.