China Glass Holding Ltd expects energy-efficient glass products to make up more than half of total sales by 2012, up from less than 10 percent now, as the country’s renewable energy market grows rapidly.
The company, which is 30 percent invested by Legend Holdings’ private equity arm Hony Capital, makes everything from plain glass used in construction and cars to the glass used to manufacture thin film solar cells.
It is in the process of upgrading some production lines to manufacture more sophisticated products for the green energy sector.
China Glass, whose daily capacity will likely remain steady at 6,670 tonnes this year, invested about 300 million yuan ($45 million) in a new production plant in the eastern Chinese province of Shandong to make products for the green energy sector.
“We are transforming ourselves from a manufacturer of plain glass to one that makes energy-saving products,” Vice-President Cheng Xin told Reuters in a telephone interview from Beijing.
Profit margins for energy-saving glass products are typically higher at 50-70 percent, versus 10-20 percent for plain glass.
China Glass shares, which more than doubled in 2010, were up 3.14 percent on Tuesday, outperforming the Hang Seng Index’s 0.38 percent gain as investors banked on construction-related stocks amid China’s infrastructure boom.
Cheng said he expected the domestic glass market to grow in tandem with economic expansion, which has been 8-10 percent in recent years.
However, analysts caution against looming market oversupply.
“I’m a little worried about new supply in the glass market in 2011. Glass prices will be under pressure this year, although perhaps demand will help keep the falls capped,” said Haitong International Securities analyst Zheng Zhihao.