Csg Holding Co.Ltd(000012) (000012)
Core view
The revenue and net profit continued to improve and the product structure was complete. As a leading glass manufacturing enterprise, in 2020, the company made full efforts in three pieces of glass (float glass, photovoltaic glass and electronic glass) and one brand (engineering glass), realized an operating revenue of 10.671 billion yuan, a year-on-year increase of 1.90%, and a net profit attributable to the parent company of 779 million yuan, a year-on-year increase of 45.28%. In the first three quarters of 2021, benefiting from the rise in glass prices and the expansion of electronic glass production capacity, the revenue and net profit increased by 37% and 108% year-on-year respectively.
Float glass: high-end route opens up growth space. The new production capacity of float glass is limited, and the demand in downstream real estate, automobile, green building and other fields is still supported. The company’s float glass production base is multi-point layout, actively follows the route of high-end differentiated products, creates CSG ultra white “blue diamond” series high-end brands, and improves the proportion of differentiated products.
Electronic glass: the domestic substitution trend is obvious and the growth space is broad. The overall growth of smartphone shipments in China is stable, the market share of domestic manufacturers is improved, and the domestic substitution logic of electronic glass is clear. The company increased investment in independent research and development, realized batch sales of high aluminum second-generation products with high gross profit, and improved the overall profitability of the company.
Photovoltaic glass: under the dual carbon policy, the photovoltaic landscape is determined, and the capacity expansion enhances the scale effect. In order to achieve the goal of reaching the carbon peak in 2030, the average annual new installed capacity of photovoltaic in China is expected to be 70-90gw during the 14th Five Year Plan period, of which 55-65gw will be installed in 2021. The company has newly added photovoltaic glass production lines in Anhui, Xianning, Wujiang and Dongguan. After the production capacity is released, the scale effect will be further released.
Engineering glass: green and energy-saving building policies are favorable, and the demand for Low-E glass is boosted. The policy supports the development of energy-saving buildings, which will drive the increase of Low-E glass demand. In 2020, the company will invest in the construction of engineering glass production lines in Zhaoqing and other places, which will increase the company’s operating profit after the release of production capacity.
Profit forecast and investment suggestions
The company has rich product matrix and outstanding growth of electronic and photovoltaic glass. Later, with the further mass production and sales of electronic glass products with high gross profit and the expansion of photovoltaic glass production capacity, the profit level of the company will be further improved. We predict that the company’s EPS in 2021, 2022 and 2023 will be 0.67/0.72/0.79 yuan / share respectively, and the corresponding PE will be 14 / 13 / 12x. It will be covered for the first time and given the rating of “overweight”.
Risk statement
The expansion of photovoltaic power station is less than expected; The domestic replacement of electronic glass is less than expected; The company’s capacity expansion was less than expected.
