FYG,FUYAO GLASS(SH:600660) Guohai Securities·2024-10-14 11:31Investment Rating - The report maintains an "Accumulate" rating for Fuyao Glass [1] Core Views - The automotive glass industry requires high certainty in demand to support capacity expansion due to its heavy asset nature and continuous production requirements. Fuyao Glass is currently in a new round of capital expenditure expansion, which is expected to drive global market share and revenue growth [3][10][24] - Fuyao Glass has experienced three rounds of capital expenditure acceleration since 2010, with the current round (2021-2024) showing significant increases in investment, particularly in projects in Fujian and Anhui, as well as expansions in the U.S. [3][19][21] - Revenue growth for Fuyao Glass is driven by global market share, average selling price (ASP), and increased glass area per vehicle, with strong growth expected in the coming years [4][30][24] Summary by Sections Automotive Glass Industry - The automotive glass industry is characterized by high capital investment and continuous production requirements, necessitating strong demand certainty for capacity expansion [10][12] - Fuyao Glass maintains a fixed asset to total asset ratio above 25%, indicating its heavy asset nature and the significant capital required for production facilities [10][12] Fuyao Glass Capital Expenditure Review - Fuyao Glass has undergone three major capital expenditure expansions since 2010, with the current expansion expected to lead to significant revenue growth in 2025-2026 [3][19][21] - The first round (2010-2013) saw capital expenditure increase from 1.07 billion to 1.88 billion yuan, with revenue growth lagging by about two years [16] - The second round (2014-2018) involved investments in multiple production bases, leading to revenue growth from 16.6 billion in 2016 to 33.2 billion in 2023 [17][19] - The third round (2021-2024) has seen capital expenditure rise from 2.33 billion in 2021 to a planned 8.12 billion in 2024, focusing on new production lines and expansions [19][21] Investment Outlook - Fuyao Glass's revenue growth is highly certain, driven by market share increases, ASP improvements, and larger glass areas per vehicle [30][24] - The company’s global market share reached approximately 34% in 2023, with expectations for further increases due to reduced competition from rivals [24][30] - ASP for automotive glass has risen to 213.2 yuan per square meter in 2023, reflecting a 5.94% year-on-year increase, driven by a higher proportion of high-value products [26][30] - The average glass area per vehicle is expected to increase, particularly with the rising popularity of SUVs and panoramic roofs [28][29]