On May 9, 2011, the Ministry of Industry and Information Technology issued the Notice on Suppressing the Rapid Growth of Flat Glass Production and Leading the Healthy Development of Industries, requiring all localities to thoroughly clean up the projects under construction. New projects must be approved by the competent national authorities and resolutely complete 2011. The year eliminated the goal of flat glass production capacity of 26 million heavy boxes.

We believe that the strength of the policy does not show a significant increase in the approval of construction of the newly-built line at the core of supply-side control and control of projects under construction. About 32 ordinary float lines were put into operation in 2011, with a production capacity of about 100 million weight boxes, most of which were issued on September 30, 2009 in the “Circular on Suppressing Overcapacity in Some Industries and Duplicate Construction and Guiding Industrial Healthy Development”. The white paper, ultra-thin glass and other nominal approvals. According to the construction progress, the production will be concentrated in the second half of the year. If this cleanup leads to a large number of projects under construction delay or shutdown, it will help to improve the short-term supply and demand relationship, but the implementation remains to be seen (from a historical point of view, the effect of the clean-up of projects under construction is generally not Too ideal).

Even if the phase-out task of 26 million heavy cases is completed in full this year, if the projects under construction are successfully put into production, the actual effective production increment of float glass still has 91.95 million heavy cases in 2011, corresponding to an annual effective production capacity of approximately 720 million heavy boxes, which represents a year-on-year increase of 14.6. %.

What is gratifying is that the issuance of the "Notice" shows that the management is alert to the continued blind expansion of the flat glass industry. The follow-up policy may be issued again. It will increase the approval rate for new production capacity and continue to increase the elimination of backwardness. Therefore, in the short term, we continue to maintain cautious views on the flat glass industry, and are more optimistic in the medium to long term.

In a recent survey, glass manufacturers and distributors in Guangdong believe that ordinary float glass is still in the downtrend channel and prices may continue to decline. Off-line LOW-E is also faced with the problem of concentration release, but there are brand differences. In comparison, online LOW-E, ultra-white glass, special color glass prices are firm. This verifies our judgment at the beginning of this year about the decline in the normal floatation outlook this year.

With regard to the demand for affordable housing, the production companies and distributors believe that the start of the construction of affordable housing will be concentrated in the second half of the year, and usually after 4-5 months of construction, builders will start ordering glass. Therefore, this year, the protection of the housing against ordinary float glass The improvement of the degree of prosperity will not be obvious.

We believe that non-traditional float business such as photovoltaics, LOW-E glass, and touch screens will become a decisive factor in affecting stock prices in 2011. It is recommended to focus on listed companies with technological advantages, and it is highly recommended that there be more room for development outside the traditional float glass business. CSG A (000012).