I. Overview of the incident: We recently conducted a survey on CSG A (15.45, -0.27, -1.72%) and conducted in-depth exchanges with the company on the production and operation of the company in the first half of the year.
II. Analysis and judgment: New industries have driven performance, glass business has differentiated competition, and traditional glass companies have successfully transformed (1) PV business and fine glass have ushered in the release of production capacity, which has greatly boosted the company's performance. With the release of polysilicon production capacity, sales of the solar energy sector increased by 67.84% year-on-year in the first half of the year. At the same time, driven by the increase in the output of touch screen products, sales of the fine glass segment increased by 81.09% year-on-year. Both the production and sales are booming and the gross margin of the two departments has reached more than 40%, and the performance contribution has increased by about 40% from last year, becoming the main driving force for the company's performance during the reporting period.
(2) The engineering glass business maintained steady growth. In the first half of the year, the company actively explored the civilian energy-saving glass market, which saw its sales increase by 26.52% year-on-year. At the same time, due to the fall in the price of original float film, the gross profit margin also rose to 34%. At present, the market share in the high-end market has reached more than 55%, and the leading position is undisputed. It is expected that the construction of commercial real estate will maintain its growth momentum in the second half of the year, and engineering glass will still maintain a growth rate of more than 20% year-on-year. (3) The flat glass business is affected by the industry's gross profit margin, and differentiated competition to maintain a reasonable profit. At the end of last year, the domestic overcapacity of flat glass began to become more serious. At the same time, the prices of raw materials such as soda ash and heavy oil all rose sharply. The flat glass business of the company faced the dual pressures of rising costs and falling prices. The gross profit margin fell from 37.56% in the same period of last year to 21.79%. Through differentiated competition, the company has significantly increased the shipment of high-end products that are ultra-white float, and the price drop of products is lower than the industry level, and can still guarantee a reasonable profit.
Technical transformation of solar energy business and downstream expansion at the same time, there is still room for significant growth Yichang CSG is actively carrying out cold-hydrogen hydride polysilicon technology, is expected to be completed in 13 years, when the company's polysilicon production costs will drop another 5 US dollars / kg, to 28 US dollars / Kg, maintaining cost advantage. At the same time, the company plans to increase its efforts to expand downstream. The capacity of modules will reach 300MW by the end of the year, achieving a 1:1 docking of material supply within the industry chain. It will increase to 1GW by 13 years, and the stable high gross profit brought by the release of production capacity and the entire industry chain will increase. Make the company's solar energy business profit contribution further.
The fine glass business is advancing upstream and opens up new battlefields to strive for higher growth. The fine glass business actively expands to the upstream. The newly developed ultra-thin glass substrate project is expected to ignite in November this year. It will be expected to break the international giants such as Corning and Asahi Glass after production. In the monopoly of this field, the opening of the industrial chain of fine glass business will bring about a huge increase in the performance of the company.
III. Earnings Forecast and Investment Suggestion: The company has a relatively complete industrial chain layout in the engineering glass, solar energy, and fine glass industries. It is affected little by market fluctuations, and the product gross margin is higher in the industry. At the same time, there is still much room for growth in the solar and fine glass business. As the photovoltaic industry continues to improve in the second half of the year and the ever-increasing demand for fine glass from the consumer electronics industry, the performance of the company will maintain its momentum of rapid growth. For the first time, a "carefully recommended" rating was given. It is expected that the EPS for 2011 to 2013 will be 0.90 yuan, 1.23 yuan, and 1.71 yuan, corresponding to the current stock price PE of 18, 13, and 10 times, and the target price will be 22 yuan.
Fourth, risk tips:
Excessive capacity of flat glass industry is not optimistic about short-term industry Overcapacity of flat glass industry The industry is not optimistic about the short-term, ultra-thin glass technology maturity of ultra-thin glass technology maturity ultra-thin glass technology maturity ultra-thin glass technology maturity there is a certain degree of uncertainty Uncertainty.
II. Analysis and judgment: New industries have driven performance, glass business has differentiated competition, and traditional glass companies have successfully transformed (1) PV business and fine glass have ushered in the release of production capacity, which has greatly boosted the company's performance. With the release of polysilicon production capacity, sales of the solar energy sector increased by 67.84% year-on-year in the first half of the year. At the same time, driven by the increase in the output of touch screen products, sales of the fine glass segment increased by 81.09% year-on-year. Both the production and sales are booming and the gross margin of the two departments has reached more than 40%, and the performance contribution has increased by about 40% from last year, becoming the main driving force for the company's performance during the reporting period.
(2) The engineering glass business maintained steady growth. In the first half of the year, the company actively explored the civilian energy-saving glass market, which saw its sales increase by 26.52% year-on-year. At the same time, due to the fall in the price of original float film, the gross profit margin also rose to 34%. At present, the market share in the high-end market has reached more than 55%, and the leading position is undisputed. It is expected that the construction of commercial real estate will maintain its growth momentum in the second half of the year, and engineering glass will still maintain a growth rate of more than 20% year-on-year. (3) The flat glass business is affected by the industry's gross profit margin, and differentiated competition to maintain a reasonable profit. At the end of last year, the domestic overcapacity of flat glass began to become more serious. At the same time, the prices of raw materials such as soda ash and heavy oil all rose sharply. The flat glass business of the company faced the dual pressures of rising costs and falling prices. The gross profit margin fell from 37.56% in the same period of last year to 21.79%. Through differentiated competition, the company has significantly increased the shipment of high-end products that are ultra-white float, and the price drop of products is lower than the industry level, and can still guarantee a reasonable profit.
Technical transformation of solar energy business and downstream expansion at the same time, there is still room for significant growth Yichang CSG is actively carrying out cold-hydrogen hydride polysilicon technology, is expected to be completed in 13 years, when the company's polysilicon production costs will drop another 5 US dollars / kg, to 28 US dollars / Kg, maintaining cost advantage. At the same time, the company plans to increase its efforts to expand downstream. The capacity of modules will reach 300MW by the end of the year, achieving a 1:1 docking of material supply within the industry chain. It will increase to 1GW by 13 years, and the stable high gross profit brought by the release of production capacity and the entire industry chain will increase. Make the company's solar energy business profit contribution further.
The fine glass business is advancing upstream and opens up new battlefields to strive for higher growth. The fine glass business actively expands to the upstream. The newly developed ultra-thin glass substrate project is expected to ignite in November this year. It will be expected to break the international giants such as Corning and Asahi Glass after production. In the monopoly of this field, the opening of the industrial chain of fine glass business will bring about a huge increase in the performance of the company.
III. Earnings Forecast and Investment Suggestion: The company has a relatively complete industrial chain layout in the engineering glass, solar energy, and fine glass industries. It is affected little by market fluctuations, and the product gross margin is higher in the industry. At the same time, there is still much room for growth in the solar and fine glass business. As the photovoltaic industry continues to improve in the second half of the year and the ever-increasing demand for fine glass from the consumer electronics industry, the performance of the company will maintain its momentum of rapid growth. For the first time, a "carefully recommended" rating was given. It is expected that the EPS for 2011 to 2013 will be 0.90 yuan, 1.23 yuan, and 1.71 yuan, corresponding to the current stock price PE of 18, 13, and 10 times, and the target price will be 22 yuan.
Fourth, risk tips:
Excessive capacity of flat glass industry is not optimistic about short-term industry Overcapacity of flat glass industry The industry is not optimistic about the short-term, ultra-thin glass technology maturity of ultra-thin glass technology maturity ultra-thin glass technology maturity ultra-thin glass technology maturity there is a certain degree of uncertainty Uncertainty.
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