Glass demand: From January to August, the sales area of commercial properties was 527 million square meters, up 6.7% year-on-year, with the growth rate slipping 36.2 percentage points year-on-year. The negative impact of commercial property sales began to be transmitted to the construction field, since May 2010, housing construction area, construction area and the completion of the area growth rate of a consistent decline. If the growth rate of new housing construction area decline and gradually to the completion of the area will further affect the demand for flat glass.

Glass supply: in the demand growth rate decline at the same time, flat glass production capacity growth rate has maintained a rising momentum. As of the end of August 2010, the total flat glass production capacity of about 770 million weight box, an increase of 19.56%; in production capacity increased by 29.4% to about 680 million weight box. In the context of high growth in actual capacity, the 2010 glass enterprise elimination list of the combined elimination capacity target is only 9.935 million weight box, accounting for 1.5% of the total, the role is insignificant. Overall, the glass industry supply and demand contradictions still exist.

Glass prices, costs: Since 2010, the main float glass prices began to fall back from a high level, of which 5mm float glass prices fell 15.9% from the high point at the beginning of the year to 78.9 yuan / weight box, coated and ultra-white glass prices to maintain a low level of shock. At the same time in the product prices are low, raw material prices have backed up sharply, heavy oil and soda ash prices at the beginning of the year rose 9.8% and 12.1%, while the low point of the previous period was up 40.0% and 41.1% respectively. Reflect the profitability of the glass industry, glass - soda ash, heavy oil price difference of 49.0% lower than the previous high point, profitability was significantly compressed.

Investment strategy: flat glass industry capacity and demand for the contradiction in 2010 facing further intensification of the possibility of weak prices can not be transferred to heavy oil, soda ash cost of upward pressure. We believe that the downturn in the industry will continue. Currently the glass plate PE valuation reflects more of the glass plate listed companies in the ultra-white glass, coated glass and other special glass proportion of the structural adjustment results, while the PB level is at a high level. In view of the pessimistic expectations of the industry fundamentals, maintain the glass industry “neutral” investment rating.