The rise in flat glass prices is out of touch with industry fundamentals: many listed companies are overjoyed

Recently, according to the author's observation, the stock prices of glass manufacturers led by Qibin Group, CSG Group, Triumph Technology, and Fuyao Glass have soared. Among them, Qibin Group and Fuyao Glass have hit the daily limit three times in five trading days, Triumph Technology has also risen by more than 26% in three trading days, and CSG Group has risen by more than 22% in three trading days.

The reason why the stock prices of the above-mentioned glass manufacturers have risen sharply in the short term is that although the production capacity of flat glass is in oversupply, the price continues to rise and has deviated from the fundamentals of the industry.

It is understood that the Raw Materials Industry Department of the Ministry of Industry and Information Technology recently held a video conference on flat glass prices to analyze the operation of the glass industry, changes in production capacity, output and prices, determine changes in glass supply and demand, and develop policies, measures and suggestions to promote the high-quality development of the flat glass industry.

Lu Guixin, a first-level inspector of the Raw Materials Department of the Ministry of Industry and Information Technology, believes that the current price increase of flat glass while production capacity is still in excess is out of line with the fundamentals of the industry and is not allowed by policy.

According to Lv Guixin's analysis, the supply-side structural reform of the glass industry has achieved good results in recent years. The output of flat glass has grown steadily without any increase in production capacity, and the price has remained high. However, since the beginning of this year, the price of flat glass has risen too high and too fast, causing a big reaction from downstream companies and some users in the industry chain!

"If it is allowed to develop, it will not only have a great impact on the glass processing industry, but also threaten the achievements made in the supply-side reform of the flat glass industry in recent years. We must fully realize the harm caused by the excessive and rapid increase in the price of raw glass."

According to analysis, the main reason for the excessive and rapid rise in flat glass prices is insufficient market supply and rapid short-term growth in demand. Of course, factors such as human manipulation and capital market speculation are not ruled out.

It is understood that the net profit of CSG Group in the first half of this year was between 1.3 billion and 1.43 billion yuan, a year-on-year increase of 233% to 265%; the net profit of Kibing Group in the first half of the year was between 2.1 billion and 2.3 billion yuan, a year-on-year increase of 316% to 360%.

According to CSG A, the demand for glass continued to improve in the first half of the year, and product prices rose significantly year-on-year; at the same time, the profits of electronic glass and display devices business increased rapidly year-on-year. In addition, as the COVID-19 pandemic has been effectively controlled, the business has returned to normal in the first half of 2021 compared with the same period last year, and the performance has increased year-on-year.

According to Qibin Group, in the first half of 2021, the results of the ongoing supply-side reforms quickly emerged. The tight balance between glass supply and demand and changes in the structure of glass demand have promoted further improvement in the prosperity of the glass industry, with both volume and price rising, and the overall profitability of the industry improving.

At the same time, the company insists on high-quality development as the main line, continuously improves lean production, adheres to integrated operation of the industrial chain and differentiated marketing strategies, promotes marketing capability building, promotes brand culture upgrading, strengthens the group's strategic procurement, and continues to promote various measures to increase revenue and reduce expenditure. It has effectively controlled the growth rate of production costs, continuously improved product gross profit margins, and significantly increased profitability. The company's 2021 semi-annual performance is expected to increase significantly compared with the same period last year.