Investment Rating - The report maintains a "Buy" rating for both A-shares and H-shares of Fuyao Glass [4][6]. Core Views - Fuyao Glass's 1H25 performance exceeded expectations, with total revenue increasing by 16.9% year-on-year to RMB 21.45 billion, and net profit attributable to shareholders rising by 37.3% to RMB 4.81 billion [1]. - The company is expected to benefit from the acceleration of industry intelligence, leading to an upward revision of net profit forecasts for 2025E, 2026E, and 2027E by 15%, 13%, and 14% respectively [4]. Summary by Sections Financial Performance - In 1H25, Fuyao's automotive glass sales grew by 9.3%, with average selling price (ASP) increasing by 6.2%, resulting in automotive glass revenue of RMB 19.5 billion, a year-on-year increase of 16.2% [2]. - The gross margin for 1H25 was 37.1%, with a notable improvement in 2Q25, where the gross margin reached 38.5% [2]. Capacity Expansion and Business Synergy - The company invested RMB 2.86 billion in capital expenditures in 1H25, focusing on the second phase of the U.S. factory and new plants in Anhui and Fujian [3]. - Fuyao has established synergy between its automotive glass and aluminum trim businesses, enhancing its market position [3]. Profitability and Valuation - The report projects a steady increase in gross margin due to cost control and operational efficiency, with expectations for continued growth in 2H25 as the U.S. factory ramps up production [2]. - The target prices for A-shares and H-shares have been adjusted to RMB 77.58 and HKD 84.97 respectively, corresponding to a PE ratio of approximately 20x for 2025E [4].

Investment Rating - The investment rating for the company is "Buy" (maintained) [4] Core Views - The company reported a strong performance in Q2 2025, with revenue of 11.54 billion yuan, a year-on-year increase of 21.4%, and a net profit of 2.78 billion yuan, up 31.5% year-on-year [6] - The company is expected to benefit from the increasing penetration of high-value automotive glass products, which will enhance its average selling price (ASP) and market share [6] - The company has plans for significant capacity expansion, which is expected to further improve its competitive position in the global market [6] Summary by Sections Financial Performance - In H1 2025, the company achieved revenue of 21.45 billion yuan, a year-on-year increase of 16.95%, and a net profit of 4.8 billion yuan, up 37.3% year-on-year [6] - The gross margin for Q2 2025 was 38.5%, reflecting a year-on-year increase of 0.76 percentage points and a quarter-on-quarter increase of 3.09 percentage points [6] Revenue Growth Drivers - The revenue growth is attributed to the rising proportion of high-value products, which increased by 4.81 percentage points year-on-year in H1 2025 [6] - The company is also benefiting from enhanced global competitiveness and new capacity contributions from its U.S. operations [6] Future Outlook - The company has revised its net profit forecasts for 2025-2027 to 9.9 billion yuan, 11.5 billion yuan, and 13.4 billion yuan, respectively, reflecting expected growth rates of 32%, 16%, and 17% [6] - The company maintains a high dividend payout ratio, with a projected payout ratio of 62.65% for 2024 [6]