We assign a "Buy" rating for Flat Glass with a TP of HK$25.70. The TP corresponds to 24.6x/ 20.0x/ 16.5x 2022-2024 PER or 3.8x/ 3.2x/ 2.8x 2022-2024 PBR.
　　Global demand for solar materials is set to rise. Newly installed solar capacity globally in 2030 is projected to reach between 1,500 GW-2,000 GW, which is to expand by at least 10-fold from the 168 GW installed in 2021.
　　Assuming double-glass module penetration to be 75% in 2030, approximately 0.317 million tpd to 0.423 million tpd of solar glass capacity will be needed, thus the long-term demand for solar glass remains quite strong. Only around 0.134 million tpd of solar glass production capacity will be in place in China at the end of 2024. Room for solar glass market growth will be huge over the next few years, despite the short-term risk of solar glass overcapacity.
　　Significant growth of solar glass sales volume to be brought by aggressive capacity expansion. Based on current expansion plans of Flat Glass, its production capacity is to increase from a mere 12,200 tpd in 2021 to 19,400 tpd/ 25,400 tpd/ 30,200 tpd in 2022-2024, respectively, further solidifying its industry leading position in the solar glass industry. As such, the sales volume of solar glass is estimated to jump from 264.8 million sq.m in 2021 to 943.9 million sq.m in 2024, growing at CAGR of 52.8%. Under stable gross margin and a sharp increase in solar glass sales volume, net profit is estimated to grow at CAGR of 12.8% from 2021 to 2024, reaching RMB3,042 mn in 2024.
　　Catalysts: Stronger-than-expected growth in global investment in solar energy; slower-than-expected commissioning of new solar glass capacity in the industry.
　　Key risks: Oversupply of solar glass will cause the price to fall; rise in energy and raw material price.