Rising Prices of Oil Prices Reduce Dual Pressures to Accelerate Glass Transformation

In recent months, domestic heavy oil prices have continued to rise, and the overall cost of float glass products that use heavy oil as the main raw material has also risen rapidly.

“Rising fuel prices and falling product prices, coupled with inflationary pressures in the first half of this year, have had a greater impact on small and medium-sized enterprises.” Zhang Tao, an analyst at Guotai Junan Securities, told the “First Financial Daily” yesterday that inflationary pressures will continue in the second half of the year. SMEs will face big exams.

Double pressure

Due to the increase in raw material costs, Jin Jing Technology (16.05,0.00,0.00%) (600586.SH) had a significant decline in its mid-2010 earnings.

Jinjing Technology 2010 mid-year report shows that the operating margin of ultra-white glass was 39.3%, a decrease of 9.44% year-on-year. The deep processing glass realized operating revenue of 23.3310 million yuan, a year-on-year decrease of 57.15%; operating profit margin decreased by 8.21% year-on-year.

Shanxi Securities (10.46, 0.00, 0.00%) research report analyzed that among the glass costs of Jinjing Technology, heavy oil accounted for more than 40%. Due to the higher proportion of fuel cost, the current fuel used was changed to natural gas and urban coal coke gas, which accounted for the cost of glass. 30%.

“The rise in crude oil will also push up the price of natural gas and urban coal-based coke gas.” Mr. Lin from Donggang Office of Mr. Jinggang Glass (33.750, 0.00, 0.00%) (300093.SZ) told reporters that heavy oil accounted for about 25% of the company’s total cost of raw materials. Due to rising oil prices, the combined gross profit margin of 40% last year will decline this year.

Not only does the rise in raw materials bring about a drop in operating income, but the vicious competition that companies get together in low-end products also keeps prices from going up. The data for February showed that the average price of float glass was 78.22 yuan per heavy box, down 8.1% year-on-year, and the average price of ordinary flat glass was 77.21 yuan per heavy box, down 4.07% year-on-year.

Zhang Hao said that there are more than 1,000 glass companies in China, of which 200 to 300 key large enterprises account for about 1/4, and about 3/4 SMEs have low technological content and a relatively simple structure.

“Now it is not the worst period, but every time the oil price is high, it is accelerating the reshuffle of the glass industry.” Bai Xiaolan, an analyst with Guotai Junan Securities, told the reporter.

Turn crisis into opportunity

After a few years of layout, CSG A (21.67, 0.00, 0.00%) (000012.SZ) solar photovoltaic industry began to enter the harvest period.

CSG A annual report shows that in 2010 operating income of 7.744 billion yuan, an increase of 46.69%. From the perspective of income distribution, flat glass is still the company's most important source of income and profits, which were 3.19 billion yuan and 610 million yuan respectively; solar photovoltaic industry realized 2.26 billion yuan, a substantial increase of 228% year-on-year, almost with engineering glass. Equally divided, but the net profit is as high as 500 million yuan, which is much higher than the 308 million yuan of engineering glass.

CSG A plans that the 3.8 billion yuan budget for 2011 will be mainly used for R&D investment, reconstruction and expansion of energy-saving glass, TCO glass, and other projects, and the expansion of the solar photovoltaic industry chain. As a result, CSG A has formally established the "three major industries simultaneously" strategic pattern.

Fuyao Glass (12.50, 0.00, 0.00%) (600660.SH) is an early leader in the export market. At present, the company exports about 75% of the total exports of automotive glass in the country, ranking third in the world's automotive glass market. In 2010, Fuyao Glass’s auto glass revenue increased by 46.1% year-on-year, and float glass revenue increased by 12.4% year-on-year.

In addition, Zhang Hao also believes that some companies increase the investment in photovoltaic glass, because this piece of fuel is not heavy oil, affected by the oil price is small, and the product competitiveness is stronger than ordinary flat glass, gross margin is above 40%, high For engineering glass and flat glass.