Luoyang Glass Recommendation: Sell Brokerage: S G Warburg THE Chinese glass market is characterised by weak demand and soft prices.
This is because of the cooling of the property market in China, tight control over fixed asset investment and credit controls which restrict customers' buying power.
As the biggest glass company in China, Luoyang achieves economies of scale and can react quickly to changes in demand.
The brokerage is forecasting that the company's earnings per share will decline 2.7 per cent this year and by 12.4 per cent next year because of lower output, flat product prices and as a result of increases in production costs.
Tianjin Bohai Chemical Industry Recommendation: Buy Brokerage: S G Warburg PRICES for caustic soda and PVC, which account for half of sales, have risen by 17 per cent and 16 per cent, respectively, this year.
Costs have also risen, but with the completion last December of phase two of the power plant, margins have room for expansion.
