Fuyao Glass (600660): Short-term gross margin pressure, expecting new breakthrough in product extension

Fuyao Glass (600660): Short-term gross margin pressure, expecting new breakthrough in product extension
Event: The company released its 2019 interim report, and the company achieved revenue of 102 in the first half of 2019.900 million, previously + 2%; net profit attributable to mothers reached 15.1 ‰, at least -19.4%; net profit deducted from non-return to mother 13.400 million, a year -26.7%.Among them, 19Q2 company achieved revenue of 53.500 million, ten years +0.31%; net profit attributable to mother 9.0 billion, ten years -31.1%.Deduct non-attributed net profit 8.2 trillion a year -33.3%. 19Q2 revenue growth is expected, performance is slightly higher than expected.In the first 杭州桑拿养生会所 half of 2019, the company achieved revenue of 102.9 ppm, one year + 2%; 19Q1 / 19Q2 revenues are 49.300 million / 53.500 million, each year +3.9% / + 0.3%, revenue is growing against the market, mainly due to overseas auto glass business and new overseas auto parts industry brought new volume.In 19H1, the net profit attributable to the mother reached 15.1 ‰, at least -19.4%; 19Q1 / 19Q2 respectively achieved net profit attributable to mother 6.100 million / 9.0 billion, each year +7.7% /-31.1%. Under the pressure of comprehensive gross profit margin, it is expected to stabilize and improve in the future.19H1 company’s comprehensive gross profit margin 37.5%, with 19Q1 / 19Q2 gross profit margins of 39 respectively.1% / 36.1%, the highest gross profit margin in 19Q2 / QoQ were -5 respectively.9pct / -3pct; the company’s overall gross profit margin growth rate is expected to be affected by the following two factors: 1) domestic car sales under pressure, the domestic business gross margin has improved; 2) the proportion of overseas business with low gross margin continues to increase.Subsequent gradual stabilization of domestic automobile sales is expected, and the gross profit margin of domestic business is expected to stabilize and rebound; the profitability of US factories is gradually improved, and there is room for improvement in the gross margin level of overseas business. SAM integration brings new breakthroughs in product extensions and maintains a “prudent increase” rating.Fuyao’s domestic auto glass market share has remained basically stable. With the expansion of production capacity in the US plant, the company’s overseas revenue share has gradually increased, and its overseas business profitability has continued to improve.The acquisition of SAM adds new aluminum trim business, new breakthroughs in product extension, and open up space for the value of supporting bicycles.At the same time, the company is good at accumulating high-quality customer resources, and it is expected to achieve synergy between aluminum trim and auto glass business, and open up channels for increasing performance.We have adjusted the company’s profit forecast. It is estimated that the company’s net profit attributable to the parent will be 31 in 2019-2021.3 billion / 36.900 million / 43.700 million, maintaining the level of “prudent overweight”. Risk warning: Domestic passenger car sales are lower than expected; SAM integration progress is lower than expected; Sino-US trade friction is escalating

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