CLSA has released a research report lowering its net profit forecasts for Fuyao Glass (03606) for 2026 to 2028 by 4% to 9%, and reducing its price target from HK$74 to HK$67, while maintaining an "Outperform" rating.
The brokerage expects that Fuyao Glass's earnings in 2026 will be primarily dragged down by weak passenger vehicle sales and foreign exchange impacts, but profit margins are expected to improve sequentially in the fourth quarter, benefiting from lower freight costs and insurance claim settlements.
Management anticipates a mild recovery in mainland China passenger vehicle sales in 2027, and coupled with the gradual withdrawal of European overseas peers driving continued market share gains, the brokerage expects the company to regain growth momentum.
The report noted that the company's third-quarter results were lackluster, and this reduction in net profit forecasts for 2026 to 2028 mainly reflects weak passenger vehicle sales in 2026 followed by a mild recovery, foreign exchange losses, and rising research and development expenses for new products.
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