The glass substrate industry is the core raw material device upstream of liquid crystal display panels. It has the characteristics of high technical barriers, high profit margins, and high industry monopoly (currently the vast majority of the market is occupied by US and Japanese companies), and it is also a strategic emerging industry supported by the country for a long time. Mainland China is expected to become the world's largest producer of LCD panels by 2018, and independent glass substrate companies represented by Rainbow Co., Ltd. have huge room for import substitution. Since all of Rainbow Co., Ltd. has withdrawn from the traditional CRT business, it has continued to follow the path of developing and producing glass substrates. Currently, the company's main production lines are G5 and G6 generation, but overall profitability is poor. The company is now focusing on developing the G8.5 generation line. The 8.5 generation line of Rainbow Co., Ltd. is the first local enterprise with a completely independent production line, and has mastered all technology from the front end to the back end. The company's glass substrate production line will focus on serving Xianyang 8.6 generation wire panels and CLP Electric Panda 8.5 generation lines, and will continue to develop new customers in the future. The company's overall yield of the 8.5-generation line has increased steadily compared to previous years. Currently, the yield rate of front-end kilns remains around 85%, which is close to Corning's yield level. It is estimated that 6 8.5 generation lines will be built by 2018, and the annual production capacity is expected to reach 3.4 million pieces. The first 8.5 generation line will be put into production in 2017-Q4 (including front and rear ends), and Xianyang's TFT-LCD will be put into operation in February 2018. If progress goes smoothly, the glass substrate production line can fully match the production schedule of the upper panel line. The cover glass business is another strategic focus of Rainbow, and the Group plans to focus on cultivating this business, making it an excellent asset under the Group. Cover glass has extremely high profit margins. Currently, Corning alone has. After years of technical reserves, Rainbow has obtained a complete set of techniques for preparing cover glass by liquid flow pressurization, including raw material formulations, furnace processes, etc., and the yield is currently close to 90%; since using the same technology as Corning, the product performance is superior to that of Japan's Asahi Glass and Electric Glass, and it is possible to make products that are on a par with Corning's level. Rainbow Group's strategy in the field of glass covers is to be able to enter the field of major manufacturers of cover glass in the next few years and share the market with first-tier manufacturers. Currently, the company has a reformed cover production line in Xianyang, with a planned production capacity of 1 million square meters per year. The company also plans to build 8 cover lines (4 in Xianyang and 4 in Changsha) mainly to support local mobile phone cover glass suppliers. Considering that the glass substrate industry, like the panel industry, is a high-end manufacturing industry supported by the state, Rainbow has leading high-generation glass substrate production capacity in China and has very strong expectations of import substitution, we are optimistic about the company's future development prospects. The company's 2016-2018 EPS is expected to be -0.25/0.08/0.12 yuan, giving it a “buy” rating.