[ET Net News Agency, 17 July 2019] Nomura lowered its target price for Fuyao Glass
(03606) to HK$22.1 from HK$22.6 and maintained its "reduce" rating.
Although China's 1H auto production declined by 16%, the research house believes Fuyao
Glass will still be able to deliver 2-4% revenue growth over the same period as a 15%
overseas sales increase neutralized the impact of an 8% domestic revenue decline.
A better product mix continues to yield 1-2% auto glass ASP increase but was not
sufficient to fully mitigate the margin risks from float-glass destocking, when the
consolidation of SAM Automotive Group was also margin-dilutive.
Nomura believes the above headwinds will lead to a 15% decline in 1H net profit,
underperforming its major peer Minth (00425), for which Nomura only expects a 10% decline.
Hence, it trimmed its FY2019/20 revenue forecasts by 5% each and net profit estimates by
19%/23% along with a lower GPM of 38.3% (versus 40% earlier). (KL)
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03606 FUYAO GLASS
Nominal 
42.350 +0.350 (+0.833%) Research Report
17/07/2019 09:52
[I-bank focus]Nomura lowers Fuyao Glass (03606) to HK$22.1
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