China Automotive Glass Listed Company Profit Analysis

Among the listed glass manufacturing enterprises in China, there are three major companies engaged in automobile glass manufacturing: Fuyao Glass, Xinyi Glass and Yaopi Glass. From the comparison of the net profit rates of these three manufacturers and other listed glass companies, it can be found that the net interest rate of automotive glass manufacturers is relatively high. In particular, the net interest rates of Xinyi Glass and Fuyao Glass in the first half of 2010 were as high as 24.23% and 22.54 respectively. %. (See Table 1, Table 2, Table 3)

The business of Fuyao Glass and Xinyi Glass covers automotive glass, float glass, and architectural glass. However, their auto glass business accounted for the proportion of total business, but it has been developing in different directions in the past five and a half years. (See Figure 1)

Fuyao Glass's proportion of automotive glass business is on the rise. The company also made it clear that it will focus on the development of automotive glass. Especially since 2008, the company has stopped production of four architectural float glass production lines, sold subsidiaries of Fuyao Hainan Float Glass Co., Ltd., increased auto glass R&D, increased cost management, and marketing efforts. By 2009, the income from its automotive glass business had reached 5,179,529,956 yuan, accounting for 85.2% of the total operating income. In the first half of this year, the income from the automotive glass business reached RMB 3,436,063,718, an increase of 162.6% from 2,112,917,037 in the first half of 2009.

The proportion of Xinyi Glass’s automotive glass business to its total operating revenue has declined year after year since 2005. However, this company, which occupies more than 18% of the global automotive glass replacement market, is actually increasing the development of automotive glass business, especially the domestic market supporting business. In 2007, the company purchased CSG’s auto glass business, Shenzhen CSG Auto Glass Co., wholly owned by CSG. In the same year, its subsidiary in Wuhu also became a core supplier of Chery Automobile. The company already has supporting customers such as Chery, Yutong and Futian in the country, and this year it has also entered the supporting system of BYD Auto.

Note:

1. Yaopi Glass (Shanghai Yaohua Pilkington Glass Co., Ltd.) announced on August 28, 2010 that the company’s board of directors had agreed to transfer its 50% equity agreement to Shanghai Yaopi Automotive Glass Co., Ltd. Shanghai Yaopi Kangqiao Automobile Glass Co., Ltd.

2. Zhejiang Glass (00739.HK) suspended trading from May 3 this year and delayed the release of the 2009 annual report and the 2010 semi-annual report.