The Zhitong Finance App learned that Daiwa released a research report saying that Fuyao Glass (03606)'s gross profit performance in the third quarter was stable but shipments were weak. Higher operating expenses and large exchange losses dragged down profits. The bank lowered its net profit forecast for 2026 to 2028 by 8% to 9%, and the target price was lowered from HK$73 to HK$68, and the rating remained “buy.”
According to the bank, Fuyao Glass's revenue for the third quarter increased 2.5% year on year to RMB 12.2 billion. Demand for glass shipments was weak but the average selling price rose; gross margin increased slightly by 0.1 percentage points to 38% year over year, benefiting from the resilience of the product portfolio and cost control. Net profit fell 9.9% year on year to 2 billion yuan; excluding the after-tax impact of exchange gains and losses, the bank estimates that the year-on-year decline in net profit narrowed to 4.4% to 2.3 billion yuan. Additional expenses such as after-sales compensation and higher freight costs of approximately $78 million were also recorded during the quarter.
According to the report, management remains positive about average price resilience and emphasizes the three major growth engines. In the first nine months of this year, the average sales price of automotive glass increased 6.4% year on year, and high value-added glass accounted for nearly 60% of revenue, up 7 percentage points year on year. Overseas, European competitors continue to cut production capacity, and the company said it is gradually switching from a secondary supplier to a major supplier; the operating profit margin for the first nine months of the US business reached 17.4%, up from 13.3% in 2025. Management expects the profit margin to improve by 1 to 2 percentage points for the full year of 2026 and 1 percentage point in 2027.
The bank made the above profit forecast adjustments due to glass shipments falling short of expectations and the continued weakness of new car sales in China since entering the fourth quarter. The bank believes that increased overseas market share, increased penetration of high-value-added glass, and improved US profits will help offset short-term sales and exchange headwinds.