Summary of Fuyao Glass Industry Conference Call Company Overview - **Company**: Fuyao Glass Industry (3606.HK/600660.SS) - **Industry**: Auto Glass Manufacturing - **Market Position**: Over 70% share in China's domestic auto OEM glass market with a strong presence in overseas markets [22][26] Key Financial Insights - **Earnings Estimates**: FY25-27E earnings estimates raised by 13-16% following a margin beat in 1H25 [1] - **Target Prices**: - H-share target price increased from HK$64.0 to HK$92.0 - A-share target price increased from Rmb65.0 to Rmb90.0 - Target prices reflect a PEG multiple of 1.1x for H-shares and 1.2x for A-shares, based on an 18% NP CAGR for 2026-28E [1][2] - **Gross Profit Margin (GPM)**: Revised GPM for 2025-27E to 37.4%/38.1%/38.6%, up from 35.5%/35.4%/35.3% [2] Margin Expansion - **2H25 Margin Expectations**: Anticipated margin expansion driven by: - Increased operational efficiency and leverage - Production ramp-up at the US factory, particularly for panoramic sunroof and coated glass - Decrease in shipping costs [3] - **Operational Efficiency**: D&A and human staff costs as a percentage of revenue decreased by ~0.4ppt YoY [3] Production Capacity - **Capacity Expansion**: Completion of capacity expansion at Fuqing and Chuzhou factories (1 million units each) expected by November 2025, leading to a production capacity utilization of 80-85% in 2025E [4] Investment Strategy - **Rating**: Fuyao shares rated as Buy due to: - Improvement in SAM integration and auto glass delivery volume growth - Global expansion and increased product mix of high ASP products - Disciplined cost control efforts to safeguard margins [23][27] Valuation - **Valuation Method**: PEG valuation used to capture medium-term recovery, with a target price of HK$92 for H-shares and Rmb90 for A-shares [24][28] Risks - **Downside Risks**: Potential risks include: - Worse-than-expected ASP - Higher-than-expected raw material and production costs - Weaker-than-expected demand [25][30] Additional Insights - **High-Value-Added Products**: High-value-added products accounted for 50.7% of auto glass revenue in 1H25, an increase of 4.8ppt YoY [2] - **Revenue Forecasts**: Revenue forecasts for 2025-27E remain intact, with NP forecasts increasing to Rmb9.7/11.1/13.1 billion respectively [2] This summary encapsulates the critical points discussed in the conference call regarding Fuyao Glass Industry, highlighting its financial performance, strategic outlook, and potential risks.

22 August 2025 | 9:04AM CST Fuyao Glass Industry Group (600660.SS/3606.HK) 2Q25 Earnings Review: Strong beat with continued ASP/margin expansion ahead; Buy Fuyao Glass delivered a clean beat in its 2Q25 results, with revenue/gross profit/EBIT +4%/+13%/+20% vs. GSe. Key areas of surprise: (1) revenue was +4% vs. GSe mainly from faster overseas revenue growth (+19%/+14% yoy in overseas/domestic market in 1H25, vs. +11%/+12% in 1Q25). We also see accelerated volume/ASP growth in 2Q25 at +11%/10% vs. +8%/+3% in ...

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific companies Core Insights - The China Export Tracker focuses on the dynamics of China exports to the US amid tariff escalations, analyzing data from 48 corporates representing nearly 70% of China export value to the US [2][41] - Export orders from the US to Chinese corporates have stabilized at 92% of pre-tariff levels as of April 28, 2025, showing a slight recovery from 90% in mid-April [3][12] - The report indicates that nearly 20% of corporates have seen improvements in exports to non-US regions, particularly in sectors like pet treats and construction machinery [4] - China shipments and production are in substantial decline, with 35% of US orders being filled from China and 57% from ex-China facilities [11][17] - Corporates report that 40% of their products are experiencing high impacts on shipments to the US, with a significant portion seeing declines of over 50% [12][18] Summary by Sections Export Orders and Shipments - Export orders from the US have largely remained unchanged, with a slight increase noted [3] - Shipments from China are significantly impacted, with many corporates reporting a decline in production and shipments [5][12] Supply Chain Adjustments - Corporates are adjusting supply chains, with many utilizing ex-China production facilities to fulfill US orders [11][13] - Nearly half of the corporates have reported stable or increasing inventory levels in the US, providing a buffer against supply chain disruptions [21][23] Pricing Discussions - Approximately 60% of corporates are engaged in pricing negotiations, with expectations that end users will absorb most tariff costs [25][29] - There is a consensus that tariffs above 30-40% could become unmanageable for the global supply chain [26][31] Capital Allocation and Expansion Plans - Nearly 60% of corporates have ex-China production facilities, with 63% planning to expand or establish overseas capacity despite tariff uncertainties [32] - Corporates are cautious about capital expansion plans, particularly in Mexico and the US, due to ongoing uncertainties [59][61] Container Shipping and Import Data - US container imports from China showed a year-on-year increase of 9% in Q1 2025, but projections indicate a decline of 15% in Q2 and 27% in Q3 2025 [33][35] - Container shipping data has not yet reflected the anticipated decline, with current volumes still showing positive growth [35][36]