FYG,FUYAO GLASS(SH:600660)2025-04-21 05:09Investment Rating - The investment rating for Fuyao Glass Industry Group is Equal-weight [5]. Core Viewpoints - Fuyao's 1Q25 earnings increased by 46% year-over-year (YoY) and 1% quarter-over-quarter (QoQ) to Rmb20.3 billion, surpassing market expectations due to higher finance income driven by USD appreciation against CNY [1]. - The group's revenue for 1Q rose by 12% YoY but fell by 9% QoQ to Rmb9.9 billion, outperforming the global light vehicle production trend [2]. - The gross margin decreased by 1.6 percentage points YoY to 34.6%, attributed to ongoing price pressure, although there was a sequential increase due to foreign exchange (FX) tailwinds [2]. - The operating profit rose by 18% YoY to Rmb2.0 billion, aligning with top-line growth, resulting in an EBIT margin of 20.4% [2]. Summary by Sections Financial Performance - 1Q25 earnings: Rmb20.3 billion, +46% YoY, +1% QoQ [1] - Revenue: Rmb9.9 billion, +12% YoY, -9% QoQ [2] - Gross margin: 34.6%, -1.6ppt YoY, +3.2ppt QoQ [2] - Operating profit: Rmb2.0 billion, +18% YoY [2] Market Outlook - Domestic demand in China is expected to remain crucial, with a focus on US auto demand post-tariff hikes [3]. - Key areas of focus include the 2Q vehicle production outlook, average selling price (ASP) pressure, and the adoption of high-value products amid pricing competition [3]. Valuation Metrics - Price target set at HK$51.50, with a 5% upside from the current price of HK$49.15 [5]. - Market capitalization currently stands at Rmb136,943 million [5]. - Projected EPS for the fiscal year ending December 2025 is Rmb3.55 [5].