Fuyao Glass (600660) Quarterly Review: Improved profitability, improvement and diversification, and continued strength

Fuyao Glass (600660) Quarterly Review: Improved profitability, improvement and diversification, and continued strength
Key points of investment: The company released the third quarter report of 2019: the first three quarters achieved operating income of 156.34 ppm, a 10-year increase3.38%; net profit attributable to mother 23.5ppm, an increase of -28 in ten years.07%; budget benefit 0.94 yuan, net assets 8.33 yuan. Ping An’s point of view: 3Q revenue growth has outpaced the industry, and profits have increased after the impact of foreign exchange and asset disposal was eliminated.Revenue for the third quarter of 201953.500 million, an increase of 6 in ten years.14%, net profit is 8.41 ppm, a reduction of 39 per year.65%, after deducting the impact of foreign exchange gains in the third quarter of 2018 and the disposal of 51% of the equity of the subsidiary Fuyao Group Beijing Futong Safety Glass Co., Ltd., the net profit attributable to the mother increased in the third quarter of 2019.1%, the first may be the further improvement of the US business. The gross profit margin increased month-on-month and the expense ratio decreased.Gross profit margin for the third quarter of 2019 was 37.2%, an increase of 1 over the second quarter.1 unit.Management expenses expense 9.8%, a decline of 0 per year.4 units, the sales expense budget is 7%, which is basically the same every year, and the R & D expense ratio is 3.6%, down by 1 every year.1 unit.The financial expense ratio is basically the same every year, of which the exchange gain is 2.540,000 yuan, compared with 3 in the same period in 2018.04 billion.Monetary funds at the end of the period94.40,000 yuan, an increase of 48 from the beginning of the year.36%.Short-term borrowings increased by 60 from the beginning of the year.12%, long-term borrowing increased by 49 compared with the beginning of the year.65%. The US plant continues to climb, and aluminum trims are integrated as planned.The US plant plans to replace 3.9 million units in 2019 and 4.6 million units in 2020.Fuyao’s customers are scattered in the United States. In addition to GM, Ford and other American brands, there are also other brands such as Toyota and Honda, which are expected to continue to increase market share.The European SAM assets and integration are carried out in an orderly manner. In the future, the resources of Sanfeng Group and Tongliao Fine Aluminum will be further integrated to improve the industrial chain and make the aluminum trim business a new growth point for the company. Earnings forecast and investment advice: Based on China’s automotive glass business, the company will copy its core advantages to overseas markets and new automotive aluminum trim areas. It 深圳SPA会所 is optimistic about increasing its share in the US market. It is recommended to pay attention to the business progress of aluminum trim.Maintaining the performance forecast, the EPS for 2019-2021 is expected to be 1.46 yuan, 1.75 yuan and 1.9 yuan (net profit to mother is 36.700 million, 43.900 million and 47.5 ppm), corresponding to 14 for PE.7, 12.3 and 11.4 times, maintaining the “recommended” level. Risk warning: 1) The growth rate of the automobile industry is lower than expected: If the sales volume of the automobile industry continues to decline, it will affect the company’s profitability.2) Exchange rate fluctuations: The company has more than 40% of its revenue from overseas, and exchange rate fluctuations will have a transmission effect on the company’s profits.3) Price fluctuations of upstream raw materials: The main raw materials of automobile glass such as soda ash, PVB, etc., if the price rises, it will put pressure on the company’s costs.4) Sino-US trade war: Automotive glass belongs to the 250 billion tax increase list. If the Sino-US trade war continues or intensifies, it will affect the company’s profitability.5) Aluminum bar penetration rate is lower than expected: If the cost reduction of aluminum bar is small and the penetration rate in the luxury car segment is lower than expected, it will affect the company’s operating income.

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