[ET Net News Agency, 25 January 2018] CLSA lifted its target price for Fuyao Glass
(03606) to HK$39 from HK$36.3, and maintained its "buy" rating.
The research house adjusted its 2018/19 core profit by -0.9%/+1.4% mainly on more FX
losses in 2018, offset by a lower soda ash cost.
CLSA said float glass prices remained high despite a slack season, and a rebound in
solar glass prices has been reflected in new sales orders, thanks to supply distortion. It
sees further upside potential for float glass given the possibility of further supply
cuts, while the risk of new solar glass capacity is partly offset by better industry
concentration. Besides, falling soda ash prices will help all glass makers'margins.
It noted that the soda ash price (about 25% of cost of float glass/solar glass)
retreated about 27% from the peak in November, and the spot price is about 10% lower than
the average 2017 level already. (KL)