Fuyao Glass (600660) Company Review: Long-term layout leader grows-Fuyao Glass
Overview: On June 29, we released the interim strategy report “Second Bottom, Long-term Layout Leader Growth”, in which we believe that car demand will return to normal sooner or later, and the plate is at the bottom of proven history. Q3 leading companies are expected to improve margins one after another.Improved, low inventory overlap gold nine silver ten, suitable for long-term layout leader.Among them, we don’t think Fuyao is under short-term pressure, but in the long run, with the low-end industrial chain clearing up and leading expansion, its future competitiveness and profitability will continue to improve.Continue to recommend and maintain “Buy” rating. Event comment: Fuyao is under short-term pressure, long-term large space, and focuses on the growth characteristics of the leader.The company’s revenue in 19Q1 increased by 10 in ten years.9%, but the gross profit margin drops by 2.84 singles, resulting in a reduction in the expected net profit attributable to mothers after the impact of exchange gains and losses.8%.We believe that there are preliminary: 1) the downturn in the automotive industry, which leads to reduced production efficiency; 2) the German subsidiary SAM began to consolidate in March. Although it has revenue contributions, the company is in the bankruptcy liquidation period, affecting the overall profit margin.At present, the differentiation of the automotive industry continues to intensify, and traditional car companies are fiercely reducing production capacity.In the long run, we believe that the driving force for future expansion is far greater than the industry increase.The low-end industry chain is accelerating the clearing, and the future competitiveness and profitability of leading enterprises are expected to continue to increase. Volume, price and profit margin are expected to rise three times. Overseas markets continue to climb, and SAM is expected to open up new space.As a global automotive glass giant, Fuyao’s overseas market revenue accounted for about 41 in 18 years.8%, and the North American plant is ramping up production capacity.We estimate that if Fuyao Glass’s domestic revenue increases and decreases at the same time as the domestic 北京桑拿洗浴保健 automobile market, some overseas revenue in 19Q1 is expected to increase by about 25% (including SAM consolidation).For the North American plant, the North American plant contributed 2 in 2018.With a net profit of 46 ppm, we expect that as the production capacity climbs, the contribution profit is expected to continue to increase.In addition, although SAM is currently in the stage of bankruptcy and integration, in the long run, SAM tries to open up new growth space for Fuyao and is expected to become another “springboard” for Fuyao to enter Europe. The industry has great potential, and Fuyao is expected to realize export substitution.Against the background of the intensification of domestic industry differentiation and the accelerated expansion of leading production, Fuyao is expected to achieve both volume and price increases: 1) Volume: In the OEM market, as the US plant capacity climbs and the European region continues to penetrate, in the AM market, the marketRectification and the company’s continued layout, the market share improved steadily.2) Price: Multifunctional, integrated, etc. of portable car glass. We expect the company’s auto glass unit price CAGR will reach 3% in the next 3-5 years. Investment suggestion: The company is a leader in the global automotive glass industry, and its profitability is ultra-critical.The OEM market is expected to increase the share of global cities with the release of US plant capacity. The domestic AM market business is also expected to meet a period of rapid growth. Therefore, SAM is more likely to open up long-term growth space for the company.The company’s product volume and price rise logic continued to exist.Because developing countries are too optimistic about global car sales and exchange rates, the company’s net profit attributable to its mothers will be lowered from 41 to 19 years.3, 44.1 down to 34.0, 41.30,000 yuan, the corresponding EPS is 1.36, 1.65 yuan / share, maintain “Buy” rating. Risk reminder: North American factories’ capacity release is less than expected, and the global automotive boom is seriously down.