There is plenty of room for import substitution of high-end glassware, and the cost advantage is the core factor: driven by consumption upgrades, domestic demand for high-grade daily-use glassware has grown at an average annual compound rate of more than 15% in recent years. Due to the late start of the industry and relatively poor production processes and equipment, this field has yet to be localized. The market is dominated by European and American companies such as France's Bow and Arrow, American Libby, and their joint ventures in China. Brand recognition of high-end glassware is relatively weak. Price is an important factor for consumers to consider, and it is feasible for domestic enterprises to achieve import substitution with a cost advantage. The company has a strong comparative advantage in cost and is expected to take the lead in replacing imports of high-end products. Starting in '13, we entered a harvest period of structural upgrading: High-grade vessels are still in the stage of introducing foreign technology and equipment, and the investment scale is high. As the only listed company in the industry, the company took the lead in starting the process of structural upgrading with financial support. According to cautious expectations, by 2015, the company's revenue will increase nearly 1.3 times compared to 2012, the share of premium product revenue will increase to 55%, and the overall gross margin will increase by 7 percentage points. Deep channel exploration to ensure production capacity investment: Glassware production is highly continuous, and it is expensive to stop production after the kiln is ignited. Under this characteristic of production, channel construction is of great significance to business operations. The company is digging deeper into channels to ensure the smooth launch of new production capacity. Specific measures include: developing dealer channels in depth; evaluating additional channels in line with credit incentive policies as the main strategy; restructuring KA channels; and restructuring the KA channel, which is expected to initially cover 1,500 national supermarket chains within the year. Upstream extension and increased space: In April '13, the company announced a framework agreement on cooperative mining with the Fengyang Municipal Government. As the price of quartz sand continues to rise, the company's layout of quartz ore resources has strategic significance in two aspects, namely maintaining the competitive advantage of low cost and enjoying the premium brought about by the increasing scarcity of high-quality quartz ore. According to the calculation of 1 times PB and 50% equity, the integration of the Fengyang quartz mine will increase the company's market value by 1.7 billion yuan. At the same time, the possibility of the company acquiring quartz mines in other provinces is not ruled out. Profit forecast and valuation: Maintaining prudent expectations, the EPS performance forecast for 13-15 was 0.42, 0.65, and 0.86 yuan, respectively, corresponding to the closing price of 14.79 yuan on June 4, 2013. PE was 35.0, 22.7, and 17.1 times, respectively. If the potential value of quartz ore of 1.7 billion dollars is deducted, the corresponding PE for the glass business is 23.1, 15.0, and 11.3 times, respectively. The company will take the lead in achieving import substitution, share the high yield of the high-end product market and the growth space brought about by consumption upgrades, give a target price of 21 yuan, corresponding to the 2014 glassware business 25 times PE, and maintain the “recommended” rating. Risk warning: The progress of structural upgrades is below expectations, fluctuations in raw materials and fuel prices, and changes in market style.