[ET Net News Agency, 2 September 2019] HSBC Global Research lowered its target price
for Fuyao Glass Industry (03606) to HK$30 from HK$32.1 and maintained its "buy" rating.
The research house said Fuyao's 1H net profit down 19%, which implies 2Q profit decline
of 31%. This was primarily driven by the consolidation of the loss-making aluminium
business, a slowdown in Chinese auto production and lower float glass margin from external
sales.
Fuyao's newly acquired asset (SAM Auto) in Europe recorded a loss of EUR8.1m, which
dragged down the overall gross profit margin by 3ppt. Management holds a cautious view of
China's auto market in 2H as it believes the industry is undergoing consolidation now,
which may take a long time to finish.
HSBC cut its 2019-12 earnings forecasts by 7%, 16%, and 23% to reflect first-half
interim results and factor in the loss from SAM Auto's consolidation. Its new earnings
estimates imply negative growth of 13% in 2019. (KL)
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03606 FUYAO GLASS
Nominal 
42.350 +0.350 (+0.833%) Research Report
02/09/2019 17:28
{I-bank focus}HSBC trims Fuyao Glass (03606) to HK$30
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