Analysis of the Significance of Inventory Cycle Changes in Flat Glass (601865.SS)

Based on obtained financial report data, industry research, and market information, I conduct a systematic analysis of the inventory cycle changes and their signal significance of Flat Glass Group Co., Ltd.

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Flat Glass Group Co., Ltd. is one of the dual oligopolists in China’s photovoltaic glass industry, with its main business being the R&D, production, and sales of photovoltaic glass. As of January 18, 2026, the company’s market capitalization is approximately RMB 38.344 billion, and its current stock price is $16.41, up 1.61% from the previous trading day [0].

Indicator	Value	YoY/QoQ Change
Inventory Balance	RMB 1.207 billion	QoQ -38%, a four-year low
Inventory-to-Revenue Ratio	0.26	Dropped to a historical low
Quarterly Revenue	RMB 4.73 billion	YoY +21%, QoQ +29%
Gross Profit Margin	16.8%	QoQ increase of 0.1 percentage points

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1. Inventory Absolute Value Hits a New Low
   : The company’s inventory dropped from RMB 1.733 billion at the end of 2024 to RMB 1.207 billion in Q3 2025, a decrease of 38%, reaching the lowest level in four years [1].

2. Inventory-to-Revenue Ratio Improves Significantly
   : This indicator dropped from 0.37 in Q4 2024 to 0.26 in Q3 2025, indicating that inventory digestion speed is significantly faster than revenue growth, and supply-demand dynamics are improving.

3. Active Inventory Restocking by Downstream Customers
   : Due to strong expectations among module customers for a bottoming rebound in photovoltaic glass prices, they stocked up heavily in Q3, driving a sharp increase in the company’s sales [1].

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Positive Factors	Specific Performance
Sharp Increase in Sales	Production decreased QoQ but sales surged; strong willingness to stock up downstream
Earnings Exceed Expectations	Revenue of RMB 4.73 billion (+21% YoY), net profit of RMB 377 million (returned to profitability)
Inventory Impairment Reversal	Reversed RMB 82 million in inventory impairment, gross profit margin improved
Good Expense Control	Sales/administrative/R&D/financial expense ratios decreased YoY

The price of 2.0mm glass rebounded from RMB 11 per square meter in August to RMB 13 per square meter in September and remained stable, with downstream module factories stocking up in advance in response to price increase expectations [1].

Risk Factors	Specific Performance
Rapid Rebound in Industry Inventory	Rebounded rapidly from 15 days at the end of September to 21 days in October and 25 days in November
Decrease in Procurement Demand	Module factories consumed stocked inventory and reduced new procurement
Price Pressure Risk	Glass prices are expected to resume their decline starting from November
Module Production Cuts	Production cuts by module factories further weakened glass demand

The earlier stocked inventory of downstream customers requires time to be digested, coupled with the decline in module production scheduling, leading to a rapid rebound in industry inventory days and the re-breaking of supply-demand balance [1].

Positive Factors	Specific Performance
Limited Supply Growth	Under the aggressive resumption assumption, industry supply only grew by 3% in 2025
Stable Leading Enterprise Advantages	Maintains a gross profit margin gap of over 10% with second and third-tier enterprises
Steeper Cost Curve	Outdated capacity cleared, leading enterprises’ cost advantages expanded
Demand Still Growing	Monthly production scheduling peak for photovoltaic modules can reach 65-70GW

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Indicator	Value	Signal Interpretation
Current Price	RMB 16.41	In a range-bound consolidation
Trading Range	[$15.98, $16.62]	No clear breakout direction
Beta Coefficient	1.41	High sensitivity to the broader market
KDJ Indicator	K:64.7, D:65.7	Neutral to slightly bearish
MACD	No Crossover	Bullish-leaning signal

Periods of rapid inventory decline often correspond to phased stock price rebounds, but due to the rapid fluctuations in the inventory cycle, it is recommended to enter and exit quickly without overholding. Technically, the stock price is currently in a sideways consolidation phase, waiting for a clear inflection point in the inventory cycle [0].

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Cycle Stage	Strategy Recommendation	Specific Actions
Period of Rapid Inventory Decline	Focus on Phased Rebounds	Participate appropriately, but set stop-loss levels
Period of Inventory Rebound	Control Risks	Reduce positions, wait for better opportunities
Period After Capacity Clearance	Layout for Long-Term Opportunities	Accumulate leading enterprises on dips

1. Industry Inventory Days
   : Monitor whether it falls back to the 15-20 day range
2. Photovoltaic Glass Price
   : Whether 2.0mm glass can stabilize at RMB 13 per square meter
3. Company New Capacity Progress
   : Ignition time of the 7,200-ton capacity
4. Module Production Scheduling Data
   : Demand changes in the industrial chain

• Downstream installation demand is lower than expected
• Risk of excessive supply release in the industry
• Risk of raw material price fluctuations (soda ash, silica sand, natural gas)
• Phased oversupply caused by relaxed capacity policies

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Flat Glass is currently at an important turning point in its inventory cycle. The four-year low in inventory in Q3 sent a positive signal, indicating that industry supply-demand dynamics are improving. However, the rapid rebound in industry inventory in Q4 reminds us that the foundation of this improvement is not yet solid, and the risk of price wars still exists.

1. Short-Term
   : Rapid inventory decline is a positive signal, but its sustainability is questionable; need to pay attention to the sustainability of downstream restocking

2. Mid-Term
   : Inventory cycle fluctuations will intensify, prices may bottom out again, wait for a clearer industry inflection point

3. Long-Term
   : As one of the dual oligopolists in the photovoltaic glass industry, Flat Glass has cost and scale advantages, and is expected to see trend opportunities after capacity clearance is completed

It is recommended that investors closely monitor changes in industry inventory days and new capacity ignition progress, and gradually lay out long-term investment opportunities for leading enterprises in the bottom area of the inventory cycle.

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[0] Jinling AI - Real-Time Market and Technical Analysis Data (2026-01-18)

[1] BOCOM International - Flat Glass Company Update Report (October 28, 2025) (https://pdf.dfcfw.com/pdf/H3_AP202510281770825922_1.pdf)

[2] Guojin Securities - Photovoltaic Glass Industry Special Research Report (January 2025) (https://pdf.dfcfw.com/pdf/H301_AP202501141641912365_1.pdf)

[3] Flat Glass Group Co., Ltd. 2025 Semi-Annual Report (https://file.finance.qq.com/finance/hs/pdf/2025/08/28/1224594019.PDF)

[4] Flat Glass Group Co., Ltd. 2025 Third Quarter Report (https://stockmc.xueqiu.com/202510/601865_20251028_E3ML.pdf)