Core Viewpoint - The transformation of the glass industry in Shahe, Hebei Province, showcases the evolution from a small workshop to a modern industrial cluster, highlighting China's manufacturing upgrade and the development of new productive forces [1][4]. Industry Development - The Shahe glass industry has evolved from producing low-end building glass using recycled materials to adopting advanced technologies like float glass production, significantly enhancing efficiency and reducing energy consumption [3][4]. - Currently, Shahe produces 20% of the national glass output, with over 600 deep processing enterprises and more than 1,000 product varieties, establishing itself as one of the largest glass industry hubs in China [4]. Technological Innovation - The industry has embraced automation and intelligent production, with companies like Dejin Glass implementing unmanned operations and real-time monitoring systems to enhance production efficiency [2][3]. - The focus on high-end, intelligent, and green production has led to the establishment of advanced production lines for automotive glass and other high-tech applications, breaking foreign technology monopolies [3][4]. Futures Market Impact - The introduction of glass futures has enabled local enterprises to manage risks associated with seasonal price fluctuations and inventory challenges, transitioning from passive to proactive risk management strategies [5][6][7]. - The futures market has become an essential tool for over 80% of glass production capacity in Shahe, facilitating better resource allocation and production planning [8]. Collaborative Efforts - The glass industry in Shahe has developed a collaborative ecosystem where production, trade, and processing enterprises work together to utilize futures for risk management, enhancing overall industry resilience [8][9]. - Future initiatives will focus on integrating price management, financial circulation, and technological upgrades to further advance the industry's transformation towards high-end, intelligent, and green production [8][9].

Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of 17.72 RMB [8][9]. Core Views - The company reported a revenue of 289 million RMB and a net profit attributable to shareholders of -13 million RMB for 2024, reflecting a year-on-year decline of 20.3% and 2.1 million RMB respectively, which aligns with the midpoint of the earnings forecast [1]. - In Q1 2025, the company achieved a revenue of 56 million RMB and a net profit of 0.5 million RMB, showing a year-on-year decline of 36.8% and 58.3% respectively, although the gross margin improved compared to the previous quarter [1]. - The company is focusing on overseas capacity expansion, particularly in the photovoltaic glass sector, with a planned investment of 240 million USD in a production line in the UAE, which is expected to enhance its international competitiveness [4]. - The company has a differentiated competitive advantage in ultra-thin glass products, with sales of 1.6mm ultra-thin photovoltaic glass accounting for over 50% of its total sales in 2024 [4]. Summary by Sections Financial Performance - The company’s revenue from solar glass, solar modules, electricity sales, and electronic glass products for 2024 was 262 million RMB, 4 million RMB, 5 million RMB, and 16 million RMB respectively, with year-on-year changes of -20.2%, -76.8%, -6.1%, and +68.7% [2]. - The overall gross margin for the company improved from 2.3% in Q4 2024 to 7.2% in Q1 2025, with expectations for continued improvement in Q2 as photovoltaic glass prices stabilize [2]. Cost and Cash Flow - The company’s expense ratio for 2024 was 7.2%, an increase of 1.7 percentage points year-on-year, driven by a decline in revenue [3]. - Operating cash flow improved significantly, reaching 340 million RMB in 2024, a year-on-year increase of 187.7%, primarily due to reduced cash payments for goods and services [3]. Profitability Forecast - The company’s EPS is projected to be 0.18 RMB, 0.80 RMB, and 0.90 RMB for 2025-2027, with upward adjustments of 18% and 9% for 2025 and 2026 respectively [5]. - The target price of 17.72 RMB corresponds to a PB ratio of 1.2x for 2025, reflecting the unique characteristics and first-mover advantages of the ultra-thin glass segment [5]. Market Position - The company is leveraging its early technology experience in TCO glass and mature electronic display panel technology to develop ITO conductive glass, which meets the market demand for high-strength, low-thickness cover glass for large-size perovskite products [4].

Investment Rating - The investment rating for the company is "Accumulate" with a target price of 17.72 RMB [8][9]. Core Views - The company reported a revenue of 289 million RMB and a net profit attributable to the parent company of -13 million RMB for 2024, reflecting a year-on-year decline of 20.3% and 2.1 million RMB respectively. The performance aligns with the midpoint of the earnings forecast [1]. - In Q1 2025, the company achieved a revenue of 56 million RMB and a net profit of 0.5 million RMB, showing a year-on-year decline of 36.8% and 58.3% respectively. Despite the decline in revenue and profit, the gross margin improved compared to the previous quarter [1]. - The company is focusing on overseas capacity expansion, with a planned investment of 240 million USD in the UAE to build a production line for 500,000 tons of photovoltaic glass annually, enhancing its international competitiveness [4]. - The company maintains a differentiated competitive strategy, with over 50% of its sales in ultra-thin photovoltaic glass in 2024, and is developing innovative technologies for ITO conductive glass to meet future market demands [4]. Summary by Sections Financial Performance - In 2024, the company’s revenue from solar glass, solar modules, electricity sales, and electronic glass was 262 million RMB, 4 million RMB, 5 million RMB, and 16 million RMB respectively, with year-on-year changes of -20.2%, -76.8%, -6.1%, and +68.7%. The gross margins were 2.8%, -2.0%, 28.7%, and 11.7% respectively [2]. - The overall gross margin improved from 2.3% in Q4 2024 to 7.2% in Q1 2025, with expectations for continued improvement in Q2 as photovoltaic glass prices stabilize [2]. Cost and Cash Flow - The company’s expense ratio for 2024 was 7.2%, an increase of 1.7 percentage points year-on-year, driven by a decline in revenue. The operating cash flow improved significantly to 340 million RMB, a year-on-year increase of 187.7% [3]. Market Position and Strategy - The company is enhancing its competitive edge through overseas capacity expansion and a focus on differentiated products, particularly in the ultra-thin glass segment [4]. - The company’s unique technology and early experience in TCO glass production position it well for future market demands in high-strength, low-thickness glass for perovskite products [4]. Earnings Forecast and Valuation - The earnings per share (EPS) forecast for 2025-2027 is adjusted to 0.18 RMB, 0.80 RMB, and 0.90 RMB respectively, reflecting an 18% and 9% increase from previous estimates. The target price is set at 17.72 RMB, based on a price-to-book ratio of 1.2x for 2025 [5].