Company Profile

CSG Holding Co., Ltd. is a China-based company principally engaged in the research, development, manufacture and distribution of energy-saving glass, solar photovoltaic (PV) products and display devices.

The Company's main products include float glass, flat glass, architectural glass, solar glass, silicon materials, PV batteries and modules, ultra-thin electronic glass and display devices, among others.

The Company distributes its products under the brand name of CSG. The Company also provides one-stop services, including project development, construction, operation and maintenance of solar PV power plants. The Company distributes its products in domestic markets and to overseas markets, including Asia, North America, Hong Kong, Europe and Australia.(Source: Reuters)

Comments

CSG Holding Co., Ltd. (the company) in the first half of 2023, made revenue of CNY 8.389 billion, up 28.69% from a year ago.

By quarters, the company turned in CNY 4.071 billion and CNY 4.319 billion in Q1 and Q2, respectively, up 46.13% and 15.67% from a year ago.

By products, its glass products, electrical glass and display products, and energy and other products made CNY 6.335 billion, CNY 720 million, and CNY 1.585 billion, up 43.05%, down 11.05%, and up 10.59% from a year ago, respectively.

In 1H23, the company achieved gross margin at CNY 22.58%, down 6.29pps compared with the same period of last year.

By quarters, Q1 and Q2 witnessed 22.24% AND 22.9%, respectively, down 6.11pps and 6.35pps from a year earlier.

By products, that of its glass products, and energy and other products was 20.04% and 32.28%, down 10.85pps and 1.42pps from a year ago.

In 1H23, the company achieved net margin of sales of 10.51%, down 4.96 percentage points from a year ago; the expense rate in the reporting period was 10.80%, down 1.18pps from the same period last year.

The selling expense rate was 1.75%, down 0.30pps, and the selling expenses increased by 9.67% from a year ago; the administrative expense rate declined by 0.83pps to 4.06% and the administrative expenses climbed by 6.78%; the R&D expense rate inched up 0.05pps to 4.13% and the R&D expenses firmed up by 30.23% from a year ago; its financial expenses jumped by 15.87%, and its financial expense rate was 0.87%, down 0.10 pps from a year ago.

The company registered credit losses at CNY 8 million.

In the reporting period, the company reported its net operating cash flow at CNY 518 million, CNY 384 million less than it was a year ago; and the net operating cash flow per share was CNY 0.17, CNY 0.13 less than that a year earlier.

Earnings forecast and investment recommendation

We revised our earnings forecasts and estimated its net income attributable to shareholders at CNY 2.008 billion in 2023, CNY 2.411 billion, and CNY 2.893 billion in 2025, implying a P/E ratio to 8.8x, 7.3x, and 6.1x, based on the closing price on August 28. Maintain “Outperform”.

Potential risks

price hikes of raw materials; macroeconomic downturns; intensified competition; price fluctuations