The persistent downturn in real estate and auto industry drags down the upstream raw material suppliers. Building float glass and automobile glass are also facing the dilemma of survival. According to public information, 40 of the 186 float glass production lines in China are currently out of production. Among the listed companies, the impact of the domestic glass industry leader Fuyao Glass (600660.SH) was very significant. In November 2008, the company stopped two production lines; in December, Fuyao Glass closed two production lines in Hainan. Up to now, Fuyao Glass, a total of nine production lines, has been forced to suspend production. “The depressed economic conditions will continue for some time. The demand for the real estate industry is often later than the recovery of the economic cycle. For Fuyao Glass, it may also be facing a two-year to three-year dilemma.†Associate Securities Analyst Yao Hongguang accepts The financial weekly reporter made this judgment in an interview. Fuyao Glass has been admitting that production is stopped for "safeguarding life." Continued production On December 31 last year, Fuyao Glass issued a notice of discontinued production. Two production lines in Hainan, which had just been put into production for more than a year, will stop production. The suspension of production will bring losses of RMB 100 million to RMB 120 million to the company. Explaining the reasons for the suspension of production, the announcement stated: “After carefully considering the actual situation and future development of the construction glass production line this year, the board of directors of the company agreed to two float glass production lines with melting capacity of 600 tons in Chengmai County, Hainan Province. Discharge water and stop production." On November 11 last year, Fuyao Glass just built a construction-grade float glass production line with a melting capacity of 600 tons in Fuqing City, Fujian Province, and a construction with a melting capacity of 460 tons in Shuangliao City, Jilin Province. The production of float glass production line will stop production. After two consecutive shutdowns, the relevant book loss of Fuyao Glass has reached 350 million yuan - 4.2 billion yuan, while the company's 2007 annual profit was only 910 million yuan. "The losses caused by the suspension of production will have a significant impact on the 2008 report's net profit, and it is likely to result in a negative net profit in the fourth quarter and a negative impact on the annual profit of more than 30%." Changjiang Securities [9.32 1.86 %] Analyst Xu Minfeng predicts. Abandoned "Although the suspension of production will have a great impact on the company's profits, it is only the value of the book loss. If it is sustained, it will not only be a problem of loss in the production of architectural glass, but it may be a drag on the entire company. It is now cash. As Wang, it is necessary to strictly control capital expenditures.†Yao Hongguang told reporters that under the current market environment, “one ton of building glass production will lose a ton.†Regarding the stop-production activities that companies had to take, Cao Dewang, Chairman of Fuyao Glass, publicly stated that the suspension of production was a measure taken by the company to “protect lifeâ€. Data shows that the price of Hainan's float glass has reached around 1800 yuan per ton, and the price of the architectural glass market in South China and East China has dropped to 850 yuan/ton. According to the current price, the market price of Hainan's float glass is 300-400 yuan lower than that of building glass. According to Yao Hongguang's estimation, the monthly loss of Fuyao Glass's two production lines in Hainan exceeded 10 million yuan before the production stopped. However, some analysts are optimistic about this move. Luo Wei, an analyst at China National Gold Corporation, analyzed in the research report that “The continuous shutdown of the production line at the end of last year, and the significant provision for impairment, will have an impact on the 2008 results, but will reduce the operating pressure this year.†Demand plummeted In recent years, under the stimulation of the development of the real estate market, the nation’s building glass production capacity has expanded rapidly, and production has also increased year by year. The data shows that from January to September 2008, the cumulative production of flat glass by major companies was 256,108,800 weight boxes, a year-on-year increase of 5.71%. At the same time as the output growth, the sales situation is not optimistic, and the cumulative sales rate fell to 93.44% over the same period. "The reason for the decline in glass sales is that the macro economy has turned cold, the real estate market has been sluggish, and the demand for architectural glass is not optimistic enough," said Xu Minfeng in his research report. Fuyao Glass also admitted in the announcement that “under the impact of the US subprime mortgage crisis on global financial markets and the real economy, the demand for ordinary architectural float glass is expected to continue to decline, and the contradiction between supply and demand will further increase.†In addition, automotive float glass products, which account for 70% of the main revenue of Fuyao Glass, are also facing the challenge of declining demand. Since the second half of 2008, the growth rate of the domestic automobile market has plummeted. In November, the sales of automobiles dropped by 14.6%. It is expected that the annual growth rate may be lower than 10%, which is a significant decrease from the increase of 24% in 2007 and will become the last 7 years. The minimum growth rate. Xu Minfeng said that in addition to the real estate and automobile markets, the third largest engine that drives Fuyao Glass in recent years is the export. “Fuyao Glass Export Automobile Glass once accounted for one-third of the company’s sales of automotive glass, but was affected by the global economic situation. The prospects for export business this year will not be very good." Xu Minfeng believes that in the domestic automotive glass market, Fuyao Glass has accounted for about 50% of the market share, and it is not too realistic to want to further expand the market. As far as the production of automotive float glass is concerned, this product will not stop production at present. “Although the overseas auto market has experienced a major recession, the company’s OEM export business has maintained a relatively rapid growth since the second half of 2008. Domestic auto glass sales revenue will decline with the decline in domestic auto sales growth, but it can still maintain around 10%. The growth, in addition, the price of raw materials such as heavy oil, soda ash, etc., has decreased, and the cost has eased. Auto glass can still maintain a certain growth,†Luo Wei said in the research report. Do not resume work temporarily Cao Dewang once said that Fuyao Glass currently has 9 float glass production lines and 6 production lines are building glass. Among them, 4 production lines in the three northeastern provinces have a daily production capacity of more than 2,000 tons. However, the downturn of the real estate industry this year has affected glass companies. great influence. The impact of the financial crisis is still the first wave. It is expected that the impact of the financial crisis on China will be fully implemented in 2009. By then, the development of the company will be more difficult. Therefore, the company made strategic adjustments in order to allow the company to develop healthily. In fact, based on the pessimistic expectation of the real estate market, since September of last year, key glass companies have already begun to restrict production or stop production. According to the statistics of the China Construction Glass and Industrial Glass Association, in the second half of 2008, there were 40 float glass production lines for “draining†(ie stopping kiln) in domestic glass companies, affecting nearly 100 million weight boxes. Recently, CSG (000012.SZ), another leading company in the domestic glass industry, also decided to make a provision for impairment of its two float glass production lines, with a total amount of up to 196 million yuan. What concerns investors is that Fuyao Glass has announced the shutdown of the construction of a float glass production line. Is there any possibility of resumption of production and when will it be resumed? It now appears that this is still an unknown number. The “Wealth Weekly Reporter†contacted Chen Yaodan, the director of Fuyao Glass. She said: “On the news that the company’s production line will be shut down, all issues will be based on company announcements. Future earnings forecasts and when to resume production will be disclosed in the annual report.†rubber hydraulic press machines Hydraulic Rubber Moulding Machine,Rubber Processing Equipment,Rubber hydraulic Processing Equipment,Rubber Moulding Hydraulic Press Ningbo Huacheng Rubber And Plastic Machinery Co., Ltd , https://www.hacenmachinery.com