\u3000\u3000 Fuyao Glass Industry Group Co.Ltd(600660) (600660)
Global automotive glass benchmark enterprise, intelligent electrification has become the catalyst for the next round of rise: Fuyao is the leading target of global automotive glass (it is estimated that the global / Chinese market share of current automotive glass sales is about 31% / 70% respectively). From the perspective of resumption, we believe that Fuyao’s success can be attributed to 1) based on the company’s accurate positioning and industrial chain layout, 2) reasonable prediction of the trend of the automobile market outside China (successfully extending China’s model to overseas markets), 3) sustained high R & D investment (Technical reserve of high additional products), 4) execution and lean operation and management ability. We expect intelligent electrification to become the catalyst for the company’s third round of step-up.
The value of 2025e automobile glass bicycle may rise to nearly 1200 yuan: at present, the global automobile market is still in the early stage of transformation of intelligent electrification. The company has clearly increased the R & D investment of high value-added products since 2014 (the R & D expense rate in 2014-2020 has stabilized to about 4% vs. about 2% – 3% in 2010-2013). We judge that 1) smart cockpit is the main driving force leading the rapid growth of automotive glass market in the next stage; 2) The company has the industry-leading technical reserve of high value-added products and the technical ability to develop new products simultaneously with the main engine factory. It is expected that the penetration rate of sky curtain and head up display will increase steadily, and the proportion of high value-added functions such as edging products / sound insulation / heat insulation / HUD / dimming / atmosphere lamp / Cecep Solar Energy Co.Ltd(000591) will continue to increase (the volume and price of single car glass will rise together, and the prospect is promising), We expect that the annual growth rate of the value of Fuyao automobile glass bicycle from 2020 to 2025e is expected to reach 10%.
The market share of automotive glass has increased + the extension of aluminum trim business is expected, and the gross profit margin is expected to rise steadily: 1) Fuyao’s automotive glass business positioning, technology and R & D capability (high value-added product reserve), lean management and cost control capability are all industry leaders, It is expected that the global market share of the company will continue to grow with a promising prospect (we expect that the global OEM market share of 2023e / 2025e is about 35% / 40%, and the AM market share of 2023e / 2025e in China is about 30% / 40%); 2) In view of the high input-output ratio of aluminum trim business (we expect about 1:3vs. Automotive glass business is about 1:1), we are optimistic about the improvement prospect of aluminum trim business driven by the gradual release of orders / capacity utilization and the long-term business synergy prospect corresponding to the trend of product integration; 3) The proportion of lean management / cost control and the application of high value-added products increases, or drives the gross profit margin to rise steadily (among them, the upward elasticity of gross profit margin is expected to mainly come from the improvement of Sam capacity utilization and its gross profit margin).
For the first time, we gave A-share “buy” rating and H-share “buy” rating: we predict that the net profit attributable to the parent company of Fuyao in 2021e / 2022e / 2023e is about RMB 3.53 billion / 4.49 billion / 5.64 billion respectively (corresponding to the year-on-year growth rate of about 35.7% / 27.3% / 25.4% respectively). We are optimistic about the growth trend of the company’s performance and the upward movement of PE valuation center driven by intelligent electrification, covering Fuyao Glass Industry Group Co.Ltd(600660) A shares for the first time, giving a target price of 60.19 yuan (about 35x2022epe) and a “buy” rating; Covering Fuyao Glass Industry Group Co.Ltd(600660) H shares for the first time, giving a target price of HK $53.24 (corresponding to about 25x2022epe) and a “buy” rating.
Risk tip: exchange rate risk; The supply chain shortage is alleviated less than expected; The application proportion of intelligent electrification promotion / high value-added products increased less than expected; The gross profit margin is lower than expected; Cost control is less than expected; Sam in Germany continues to drag down risks; Globalization is not advancing as expected; Increased competition; Market and epidemic risk.
