报告名称：Fuyao Glass Industry Group-H(03606)Crystal clear outlook
报告类型：港股研究
报告日期：2016-03-22
研究机构：摩根大通
股票名称：福耀玻璃
股票代码：600660,03606
页数：12
简介：Fuyao’s 2015 results beat our expectation by a moderate 5%, mainly on bettermargins due to operational efficiency and cost-saving initiatives. The 72%dividend payout (up from 68% a year ago) was a pleasant surprise, placingFuyao among the highest-payout companies under J.P. Morgan autocomponents coverage globally. The shares have outperformed China autos by~6% YTD. We lift our 2016E/17E earnings by 9-14% and remain OW. Fuyaois among our top picks in the China auto parts space, after Minth and Nexteer,considering relative upside to our PTs.
Recap of our thesis and management briefing highlights: (1) BlendedASP rose 4% yoy despite pricing pressure from OEMs, showcasing thecompanyˇs ability in product innovation, e.g., UV cut glass, to sustainpricing. We conservatively forecast that Fuyao will continue to increaseASP by 1-2% p.a., as it has (~3%) in the past. (2) Margin expansion alongwith a production ramp in China and overseas plants, while lower naturalgas cost should further boost profitability. (3) Russian and U.S. plants areexpected to break even or turn profitable this year due to customer wins andhigher utilization rates. (4) Dividend payout should stand high at 65-70%,in our view, translating into 5-6% yields (vs. the global component averageof ~2% in FY16). Management also emphasized its focus on capitalmanagement; we estimate that ROE will stand at 18-19% going forward.
We remain OW and lift our PT to HK$18.50 on a 12.5x P/E with aDec-16 timeframe (from HK$17 with a Jun-16 timeframe). Risksinclude worse-than-expected earnings.

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