Changjiang Securities·2024-08-09 01:31Investment Rating - The investment rating for Fuyao Glass is "Buy" and is maintained [7]. Core Views - Fuyao Glass continues to see growth in high value-added product penetration and global market share, with Q2 revenue growth outpacing domestic downstream market performance. The scale effect combined with the decline in raw material costs has significantly improved the company's profitability. Looking ahead, as the leading global automotive glass manufacturer, Fuyao's competitive advantage is expected to widen, highlighting its long-term investment value [2][5]. Summary by Sections Financial Performance - In Q2 2024, Fuyao Glass achieved operating revenue of 9.5 billion yuan, a year-on-year increase of 19.1% and a quarter-on-quarter increase of 7.6%. The net profit attributable to the parent company was 2.11 billion yuan, up 9.8% year-on-year and 52.1% quarter-on-quarter. The gross profit margin for Q2 reached 37.7%, an increase of 2.8 percentage points year-on-year and 0.9 percentage points quarter-on-quarter [5][6]. Market Dynamics - The global automotive production and sales have shown good growth, with China's passenger car production increasing by 4.5% year-on-year and 12.0% quarter-on-quarter. In the U.S., light vehicle sales slightly decreased by 0.4% year-on-year but increased by 9.1% quarter-on-quarter. European automotive sales grew by 4.0% year-on-year and 2.7% quarter-on-quarter [5][6]. Future Outlook - Fuyao is expected to continue rapid growth driven by the increasing penetration of panoramic roofs and HUD technologies. The company’s high value-added products accounted for a 4.82 percentage point increase in revenue share year-on-year in the first half of 2024. The company’s profitability in automotive glass significantly exceeds that of competitors, who have shifted focus due to poor profitability in glass business. Fuyao is also expanding its boundaries in the "one glass" concept, enhancing research on smart glass and integration trends, which will bring substantial long-term growth [6][5]. Valuation - The projected net profits for Fuyao Glass from 2024 to 2026 are 7.49 billion, 8.43 billion, and 9.98 billion yuan, respectively, with corresponding PE ratios of 14.9X, 13.3X, and 11.2X. The company is expected to enjoy a valuation premium as a leading player in the industry, with a dividend payout ratio of 60.27% in 2023, indicating strong long-term investment value [6][5].