Company Coverage
Fuyao Glass (3606 HK): 2Q26: Core Earnings Up 10% yoy On Margin Gain, Missing Our Estimates But Meeting Consensus; Cut Target Price To HK$84
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
HK$58.30
HK$84.00
44.1%
HK$100.00
Analyst
Highlights
- 2Q26 core net profit grew 10.4% yoy and 24.9% qoq to Rmb2.6b, missing
our estimate but meeting consensus forecasts. The 2Q26 earnings miss
stemmed from a top-line miss, offsetting the margin beat.
- We trim our 2026-28 net profit forecasts by 3%/2%/4% to
Rmb9,615m/Rmb11,658m/Rmb13,132m respectively on lower sales volume
and higher gross margin.
- Management stated that 2Q26 was the industry trough, and customer rolling
forecasts point to a recovery in 3Q26.
- Maintain BUY and cut target price from HK$100 to HK$84, as we lower target
PE multiple from 23x to 16x.
Analysis
- Fuyao Glass' (FYG) 2Q26 net profit came in below estimate at
Rmb2,259m (-18.6% yoy/+32% qoq) on forex loss. This brings 1H26 net
profit to Rmb3,970m (-17.4% yoy), representing 40% of our full-year
estimate. Forex gains/losses swung to a net loss of Rmb364m/Rmb803m in
2Q26/1H26 from a net gain of Rmb366m/Rmb600m in 2Q25/1H25. We now
factor in Rmb803m in forex losses for 2026, vs Rmb439m previously.
- Core net profit grew 10.4% yoy and 24.9% qoq to Rmb2.6b, below our
estimate of Rmb2.8b but in line with consensus forecasts. This takes
Fuyao Glass’ (FYG) 1H26 core net profit to Rmb4,682m (+14% yoy),
representing 43% of our full-year estimate. The earnings growth in 2Q26 was
driven by margin gains rather than top-line growth. 2Q26 core earnings
missed our estimates, with revenue miss offsetting the margin beat.
Highlights
- 2Q26 core net profit grew 10.4% yoy and 24.9% qoq to Rmb2.6b, missing
our estimate but meeting consensus forecasts. The 2Q26 earnings miss
stemmed from a top-line miss, offsetting the margin beat.
- We trim our 2026-28 net profit forecasts by 3%/2%/4% to
Rmb9,615m/Rmb11,658m/Rmb13,132m respectively on lower sales volume
and higher gross margin.
- Management stated that 2Q26 was the industry trough, and customer rolling
forecasts point to a recovery in 3Q26.
- Maintain BUY and cut target price from HK$100 to HK$84, as we lower target
PE multiple from 23x to 16x.
Analysis
- Fuyao Glass' (FYG) 2Q26 net profit came in below estimate at
Rmb2,259m (-18.6% yoy/+32% qoq) on forex loss. This brings 1H26 net
profit to Rmb3,970m (-17.4% yoy), representing 40% of our full-year
estimate. Forex gains/losses swung to a net loss of Rmb364m/Rmb803m in
2Q26/1H26 from a net gain of Rmb366m/Rmb600m in 2Q25/1H25. We now
factor in Rmb803m in forex losses for 2026, vs Rmb439m previously.
- Core net profit grew 10.4% yoy and 24.9% qoq to Rmb2.6b, below our
estimate of Rmb2.8b but in line with consensus forecasts. This takes
Fuyao Glass’ (FYG) 1H26 core net profit to Rmb4,682m (+14% yoy),
representing 43% of our full-year estimate. The earnings growth in 2Q26 was
driven by margin gains rather than top-line growth. 2Q26 core earnings
missed our estimates, with revenue miss offsetting the margin beat.
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
HK$58.30
HK$84.00
44.1%
HK$100.00
Analyst
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This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
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