Solar glass is in short supply

With the development of science and technology, people's tastes and living requirements are also getting higher and higher, so the prospects for the development of engineering glass is also growing.

1. Profitability of engineering glass is improved, and energy-saving products adhere to the road of differentiation. In the second half of the year, the company strengthened the sales and planning of the market and rotated the management personnel of the four regions. At present, the profitability of the engineering glass began to improve, and the production capacity was at full capacity. It is expected that the gross profit margin will recover to the level of about 34% in the second half of the year. In respect of energy-saving products, the use of energy-saving glass as a “commodity item” is proposed for sale in the civilian market, and the publicity and promotion of the civilian market will be increased in the second half of the year. In the public construction market, the company mainly sells second-generation coating products, and plans to stop selling first-generation coating products next year, and resolutely take the path of product differentiation. We believe that the road to differentiation will enable the company to maintain its leading position in the industry.

2. Solar glass is in short supply, and its profitability is higher than that of its peers. The company's ultra-white rolling glass is in short supply, with a capacity utilization rate of 120%. Driven by the demand of the downstream polysilicon market, solar glass has been raised three times in the first half of the year. The product's finished product rate reached more than 70%, which is ahead of the general domestic enterprises' level of about 60%. At present, the company has become a supplier of Sharp silicon solar energy companies such as Sharp, Sanyo and Kyocera. Due to the high product yield and cost control ability, the profitability of the company's ultra-white glass is the best in the country.

3. The company plans to have a revenue scale of 20 billion yuan in three years. Solar energy, fine glass and engineering glass are the future growth points. The company plans to have a revenue of more than 20 billion yuan in the next three years, which is 4 times the 2009 revenue. From a product point of view, the solar energy industry needs to achieve a scale of 10 billion in revenue (140 million in 2009, 870 million in mid-10 years); the scale of fine glass exceeds 3.5 billion yuan (450 million in 2009, 250 million in mid-10 years); Glass 3 billion (1.9 billion in 2009, 950 million in mid-decade); about 4 billion flat glass (3.1 billion in 2009, 1.6 billion in mid-decade). From a growth point of view, solar energy, fine glass and engineering glass will become the main growth points in the next three years.

4, optimistic about the long-term investment value of CSG. We are optimistic about the long-term investment value of CSG mainly based on two points: 1) The company has a brand advantage and a good reputation in the engineering glass market, which currently accounts for more than 50% of the high-end market and poses certain barriers for new entrants. 2) CSG is an advocate and practitioner of domestic independent technology R&D. It has independent intellectual property rights in the field of solar glass and fine glass, and the company will continue to increase investment in R&D, which will reach 2% of its revenue next year. The advantages of technology research and development will ensure the long-term competitiveness of the company.

5. Earnings forecast and investment rating. According to the research information, we fine-tuned the profit forecast for the company. It is expected that the EPS for 2010-2012 will be 0.59 yuan, 0.82 yuan, and 1.10 yuan, and the PE corresponding to the current stock price will be 26 times, 19 times, and 14 times respectively. We believe that the company's long-term valuation remains attractive and maintains a "Recommended _A" rating.