福耀玻璃：继续兑现优质成长

Investment Rating - The investment rating for Fuyao Glass is "Buy" (maintained) with a target price of HKD 60.99 for 3606 HK and RMB 66.06 for 600660 CH [2][3]. Core Insights - Fuyao Glass reported a net profit attributable to the parent company of RMB 1.98 billion for Q3 2024, representing a year-on-year increase of 53.5%, which is in line with market expectations [5]. - The company's revenue for the same quarter was RMB 9.97 billion, up 13.4% year-on-year, although the growth rate has slowed compared to the first half of 2024 [5]. - The slowdown in growth is attributed to a decrease in domestic automobile production, which fell by 3.2% year-on-year in Q3 2024 compared to a 4.9% increase in the first half of 2024 [5]. - The report anticipates that increased subsidies for replacing old vehicles will support domestic demand growth, and the potential for profit margin improvement due to declining cost factors is expected to further enhance the company's competitive advantage [5]. Summary by Sections Financial Performance - Q3 2024 gross margin improved to 38.8%, up from 36.6% in the first half of 2024, driven by a higher proportion of high-value-added products and improved capacity utilization [6]. - The comprehensive expense ratio for Q3 2024 was 14.9%, slightly up from 14.1% in the first half of 2024, but improved to 13.6% when excluding foreign exchange losses [6]. - The core net profit margin for Q3 2024 was 21.1%, an increase from 20.3% in the first half of 2024 [6]. Market Outlook - Despite a slowdown in domestic automobile production and sales in Q3 2024, positive signals have emerged from government initiatives to increase vehicle scrappage subsidies, which have accelerated applications for subsidies [7]. - As of October 7, 2024, there were 1.27 million applications for vehicle scrappage subsidies, a significant increase from 113,000 applications by June 25, 2024 [7]. - The report expects that the release of pent-up demand for vehicle replacements will provide stronger support for domestic automobile production and sales [7]. Cost Factors - Since Q4 2023, the price of soda ash has been declining, with the average price in 2024 year-to-date down 23.0% compared to 2023 [8]. - The report anticipates that the downward trend in cost factors will continue to release potential for profit margin improvement [8]. - Based on higher gross margin assumptions, the report has raised the EPS estimates for 2024, 2025, and 2026 by 6.6%, 14.5%, and 20.4% respectively, leading to an increase in target prices for Fuyao Glass [8].