Matters: according to the semi-annual performance report released by Yaopi Glass, the operating income during the reporting period was 1.107 billion yuan, down 0.18% from the same period last year; the net profit belonging to the owner of the parent company was 65.2635 million yuan, a year-on-year reversal of losses, and a loss of 18.7207 million yuan in the same period last year; basic earnings per share is 0.09 yuan. At the same time, the company expects the cumulative net profit in the third quarter to turn into profit compared with the same period last year.

Main points:

Float glass gross profit margin increased significantly compared with the same period last year. In terms of revenue, the processing glass business contributed 723 million yuan in revenue, an increase of 22.84% over the same period last year, while the float glass business contributed 360 million yuan in revenue, down 25.74% from the same period last year. In terms of gross profit margin, the processing glass business achieved a gross profit margin of 24.52%, an increase of 2.92% over the same period last year, while the float glass business achieved a gross profit margin of 22.19%, an increase of 20.13% over the same period last year. The rebound in the profitability of the glass business is the main reason for the company's performance to reverse losses.

Demand guarantees profitability in the second half of the year. As the glass industry has entered the peak demand season since August, glass prices have continued to rise. China's glass price index closed at 1098.16 points on August 26th, a new high for the year, while the average price of float glass also reached 1492 yuan / ton. We expect that glass prices will continue to rise driven by downstream demand, and the profit space will be further improved compared with the first half of the year.

Adjust the structure and reduce costs in a two-pronged manner. On the one hand, the company takes the market as the orientation, adjusts the product structure, optimizes the business layout, vigorously develops high-tech and high value-added products, and establishes a performance appraisal system and related incentive system with EVA as the core index; on the other hand, it sets up the consciousness of cost control and scientifically arranges production capacity to promote fine management. Under the effect of the two aspects, the company's sales cost rate and period expense rate are lower than that in the first quarter, which enhances the competitiveness of the company.

The market of building energy-saving glass is broad. The company is one of the few enterprises in the world to master high-end online LOW-E and offline LOW-E technology at the same time. We believe that with the gradual promotion and implementation of the national energy-saving and environmental protection policy, the market of new energy-saving building materials will develop rapidly.

Profit forecast. We believe that under the effect of cost and demand, the profitability of the glass business will significantly affect the company's performance. It is estimated that the EPS of the company from 2013 to 15 is 0.21,0.24 and 0.29 yuan respectively, and the dynamic price-to-earnings ratio is 29 times, 25 times and 21 times respectively based on the closing price on August 26th. Investors are advised to pay attention to the investment opportunities brought about by the improvement of profitability.