[ET Net News Agency, 10 April 2018] Citi Research lowered its target price for Fuyao
Glass Industry (03606) to HK$33.2 from HK$39.7, and reiterated its "buy" rating.
The research house expects Fuyao to enjoy 2.3/0.5/1.1ppts GPM improvement in 2018-20,
riding on float-glass self-sufficiency rate returns back to 85% in 2018-20 versus 76% in
2017, after Fuyao completed the six-month major overhaul of two float-glass product lines.
Citi said this helps enhance GPM by more than 1ppt in 2018, assuming internally-produced
float glass to be 15% cheaper than external procurement. It also noted cheaper soda ash
price with a likely 20% YoY decrease in 2018, which lifts GPM by around 0.5ppt; and lower
energy cost, which offsets the increasing staff cost; and 3.2/2.5/1.8% YoY blended auto
glass ASP increase. (KL)