Goldman Sachs has issued a research report maintaining a "Buy" rating on the H-shares of FUYAO GLASS (03606). The 12-month target price is set at HK$73, based on a 2026 forecast price-to-earnings ratio of 16.7 times. For the A-shares, the target price remains at RMB 73, based on an 18.5 times 2026 forecast P/E ratio. The bank adjusted its earnings per share forecasts for 2026 to 2028, ranging from a 1% decrease to a 2% increase, reflecting slower shipment growth and a larger increase in average selling prices.
In the first quarter of this year, FUYAO GLASS reported a 5% year-on-year increase in revenue. This was primarily influenced by a 5.2% decline in global automotive industry production. However, the company's shipment volume decreased by only 3.7%, indicating continued market share gains. Management anticipates that the overall impact of cost inflation, such as from natural gas and freight, will be limited amid geopolitical tensions. For the full year, prices for soda ash and freight are expected to decline. The company forecasts that capitalisation of construction in progress will remain stable in 2026.
Goldman Sachs expects the first quarter to represent a seasonal low for automotive production. It anticipates an acceleration in full-year revenue growth, driven by improvements in gross and operating profit margins. For the full year 2026, the bank forecasts the company's revenue to reach RMB 50.5 billion, a 10% year-on-year increase. This growth is mainly attributed to an 8.4% rise in average selling prices and a stable 1.5% increase in sales volume. The gross profit margin is projected to be 37.8%. Earnings before interest and taxes are expected to grow by 13% year-on-year, with an EBIT margin of 22.5%, representing a 0.5 percentage point improvement compared to the previous year.
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